Yanliang Miao is right that it would be a mistake to assume that China’s economy is running out of steam simply because property and infrastructure investment are weakening. But I disagree with his suggestion that China can largely replace the old investment-driven growth model with a technology-driven one as it rebalances toward domestic demand. The problem is that China’s extraordinary technological competitiveness is itself mostly a consequence of the imbalances that created the old model. China’s challenge, in other words, is not simply to find new engines of growth by continuing to fund technological progress in the same way it has in the past. It is to develop new engines of growth even as surging debt and growing international tensions force it to reverse the very conditions that created its past technological progress – excessively high investment and excessively low consumption. This was the same challenge the USSR faced in the 1960s and Japan in the 1980s, and neither was able to do so. Their failure was not an accident. As with China today, it was precisely their highly unbalanced economies that funded their spectacular technological advances until debt capacity limits forced a reversal. That’s the problem. Until it figures out how to maintain technological progress while dramatically restructuring the conditions that created it in the past, Beijing will continue to try to “solve” the supply-side “problem” China doesn’t have while worsening the real constraint on its economy, its unbalanced demand.