Since the onset of the global financial crisis in 2008, one country more than any other has provided the “heavy lifting” to support global economic growth. That country is China, the world’s second-biggest economy. The most compelling piece of evidence comes from China’s balance of payments position. In 2007, China posted a current account surplus the equivalent of 10.1 per cent of gross domestic product. Last year, the surplus was down to a mere 2.1 per cent of GDP.

This adjustment — enormous in the history of such things — occurred for two key reasons.

First, in the light of faltering export growth, Beijing shifted towards a “domestic demand first” policy, thanks to massive stimulus of infrastructure investment. Total investment spending rose from 41 per cent of GDP in 2007 to 47 per cent in 2013. Domestic investment thus rose relative to domestic savings, thereby reducing net capital account outflows.

匠攀挀漀渀搀, despite softening exports, Beijing tolerated continuous currency appreciation. In effect, the rest of the world devalued against the renminbi. Put another way, the combination of an ever-strengthening renminbi and, by international standards, a relatively high inflation rate left China nursing significant competitiveness losses even as others made competitive gains.

Take these two factors together and it is clear that, in recent years, China was the world’s “consumer of last resort”, a role more traditionally played by the US. As many other nations — particularly the US and much of Europe — embarked on a “great deleveraging”, Beijing provided the counterweight. As others saved, China borrowed — most obviously through a rapid expansion of so-called shadow banking.

Had China not performed this role, the world would have faced a far greater crisis.

Imagine that Chinese infrastructure investment had not surged. Commodity prices would not have recovered in the immediate aftermath of the financial crisis. Many emerging nations would have found themselves short of export revenues and, in some cases, faced with immediate balance-of-payments crises.

Or imagine the renminbi had not soared. The rest of the world would not have devalued, monetary conditions for many countries would have been tighter and, as a result, global deflationary pressures would have been far more intense than they have proved to be.

So China has been the shock absorber for the global economy, a punch bag seemingly able to soak up the recessionary blows that would otherwise have derailed global growth.

Playing the punchbag role has, however, left the country’s economy vulnerable. One simple way to demonstrate this is via changes in consensus expectations for Chinese economic growth. Since 2010, initial growth expectations have simply been too high, a trend that has become worryingly entrenched as the renminbi has strengthened.

Unfortunately, China’s role as a “stabiliser” for the global economy has contributed to instability within the country itself: an overheated property market, a substantial increase in indebtedness, a roller-coaster ride for the stock market and a declining marginal rate of return on capital spending. So the People’s Bank of China’s actions in the second week of August — interpreted variously as either the beginnings of a major devaluation or a modest market-led adjustment — might be regarded instead as part of an attempt to shift the balance of risks away from China back to the rest of the world.

After all, no economy can forever be a shock absorber. The last decade has shown that: the US bumped into the subprime crisis, the eurozone periphery ended up with a series of sovereign bond crises and Greece ultimately suffered an economic collapse on a par with the Great Depression.

China’s currency actions should be seen in this light. The last thing it now needs is a further appreciation of the real exchange rate. To countenance an additional upward move would potentially create imbalances reminiscent of those the European periphery saw in the years before the onset of the 2010-2012 eurozone crisis.

This implies that the global economy may need a new shock absorber. Many have pinned their hopes on a sustained US recovery yet, to date, any acceleration in growth has been, to say the least, modest. Moreover, if the Federal Reserve decides to raise interest rates before the year is out, the US economy’s ability to act as a shock absorber may be compromised.

The alternative is for the US dollar — rather than the economy — to play the role. China may not have intended to fire a shot across the Fed’s bows but the warning is clear: should the Fed choose to raise interest rates alongside a new “market-led” attitude from Beijing, the danger is that the dollar could climb into the stratosphere. Under those circumstances, we could see collapsing emerging market currencies, a currency-led tightening of US monetary conditions and an American recovery that all too quickly melts away. From a global perspective, it would make more sense for the Fed to leave monetary policy on hold.

It is easy to criticise China’s internal imbalances. But failing to take into account the role these played in stabilising the global economy is a major mistake. It doubtless makes sense for China now to address its imbalances. Yet, as it does so, the rest of the world will need to find a new shock absorber. It’s not at all obvious whether any economy is up to the task.