Over recent weeks, as Europe's power brokers have forced Greek politicians to enact new austerity measures against bitter popular opposition, there has been a great deal of misguided talk about how China could bail out the euro zone's debt-stricken economies.
Forget about China riding to Europe's rescue. What no one seems to have considered - not the handful of senior officials who now make up the euro zone's political elite, not the 199 members of the Greek parliament who voted in the new austerity bill, not the tens of thousands who protested against it in the streets of Athens, and certainly not the 300 million or so ordinary citizens who inhabit the euro zone's other member states - is how China's economic rise contributed to the continent's debt crisis in the first place.
China has been blamed before for causing America's subprime debt crisis. The idea there was that China's lack of a social safety net, coupled with Beijing's low interest rate and currency policies, pushed household and corporate savings in China well above the rate needed to fund domestic investment.
This savings glut unleashed a flood of liquidity on to global financial markets, which depressed long-term interest rates in the US, igniting the housing boom and prompted investors to take ever greater risks in their search for yield.
The result was a classic credit-fuelled investment bubble, which eventually burst, triggering the crisis.
This notion that Chinese government policies could have caused the US crisis gets short shrift from many prominent economists. For example, in a paper published last month, World Bank chief economist Justin Lin Yifu placed the blame firmly on the interest rate cuts that the US Federal Reserve made following the dotcom bust, coupled with an excessive demand for credit from American consumers.
Lin may be China's best-known economist, but there is a basic flaw in his reasoning here. If the credit boom's main cause was excessive demand, then the price of credit - as represented by long-term interest rates - would have risen, despite the Fed's short-term rate cuts.
