William Bratton is author of "China's Rise, Asia's Decline." He was previously head of equity research, Asia-Pacific, at HSBC.

For all those warning us about the perils of China's debt-fueled growth, it is easy to see the recent bond defaults by Evergrande and Fantasia as the country's Minsky moment, when asset prices collapse after an extended period of growth.

From their perspective, fears over unsustainable debt levels have now been proven with potentially catastrophic consequences. As such, China's hopes of challenging the U.S. as the world's largest economy have been firmly kicked into the long grass.

If only it were so simple, especially as we have been here so many times before. In fact, every stage of China's rapid rise has been accompanied by a chorus of Western critics who appear either unable or unwilling to believe that its model of development could be successful.

They have instead continually searched for flaws that, they hoped, would either slow the country's economic growth or lead to a USSR-style collapse.

In the 1990s, for example, it was in vogue to argue that China's reforms would fail due to entrenched vested interests. By the 2000s, this had evolved into the theory that its low-cost export-orientated model was unsustainable. In the 2010s, critiques revolved around the perils of China's debt-fueled growth, capital misallocation and expectations of an economic hard landing.

Despite all these fears, China has powered ahead. Its gross domestic product, for example, has increased more than tenfold since Gordon Chang's "The Coming Collapse of China" was published in 2001. It is curious, therefore, how persistent the permabears remain, despite all the evidence that their earlier negative views were misplaced or exaggerated.

Nobel Prize-winning liberal economist Paul Krugman was at again last week in his latest New York Times column titled "Is China in Big Trouble?" Conceding that "warnings about the Chinese economy aren't new" and that worriers like himself "have been consistently wrong," Krugman nevertheless went on to argue that China was once again teetering on the brink.

Many such critics, however, appear driven more by ideological differences than economic realities. They view China very much through the prism of it being a rigid command-and-control Communist system doomed to follow the Soviet Union to eventual failure, thereby proving the superiority of Western systems. And this entrenched expectation subsequently frames the way they instinctively, and negatively, interpret the actions of its government.

But the idea that China's economic system is Communist in the traditional sense is well past its sell-by date. It is now very much a mixed economy with a complex and vibrant private sector accounting for the majority of its employment, exports, investments and innovation. And as a result, it now faces many of the same issues as Western economies, including inequalities that are as bad as any found in the West.

Daily wage laborers wait for work in Suifenhe, in April 2020: China now faces many of the same issues as Western economies,   © Reuters

Furthermore, many permabears mistakenly believe that China's authoritarian governance structure cannot flex existing policies nor adopt new ones. But China cannot be compared to the USSR, which was economically disconnected from the West and stubbornly sleepwalked into economic oblivion. In fact, it has consistently demonstrated a high degree of policy flexibility over the last five decades in its pursuit of longer-term objectives.

Permabears also assume that the country is incapable of learning from policy lessons elsewhere, as if only the West has the capabilities and resources to resolve complex economic topics. This creates a rather odd contradiction in the permabears' position: that economic or social challenges in the West can be addressed through appropriate policies, but the same issues in China are negative or even existential risks. This has been particularly apparent in the various responses to China's flurry of recent regulatory announcements.

To realists, many of the new policies are valid responses to problems often shared with Western countries. They address widening inequalities, strengthen weak regulatory frameworks and assert the state's primacy over big businesses, as is the case in most developed economies. But to dogmatic permabears, these signal an economic great leap backward and the rejection of capitalism. This schism is starkly reflected in the various reactions to China's efforts to encourage greater wealth redistribution.

Cynics have seized upon its adoption of "common prosperity" as proof that the country's administration is returning to Maoist economics. But this interpretation overlooks the tilt to more left-leaning economic policies across many Western countries, including the U.S., Germany and the U.K., in response to worsening imbalances. And although the efficacy of China's chosen mechanisms can be debated, its objectives are in many ways comparable to those in the West: an urgent need to address these inequalities.

Permabears, however, will never adopt such a level view because that is not what they want to see. And this is the danger of listening to them.

It is not just that they have been consistently wrong as a result of continually underestimating China's policy flexibility, but that their dogma is actually more dangerous longer-term than being realistic about China's future. Put simply, it provides false hope of a future in which the People's Republic of China joins the USSR as a footnote in history, thereby preserving the existing Western-dominated world order and U.S. global hegemony.

But China cannot be wished away. Of course, it faces economic challenges which may result in periods of volatility, including the unwinding of leverage in the property sector. But the country already has substantial experience of restructuring highly indebted companies and has the resources to recapitalize its financial system. Furthermore, it could be argued that allowing companies to default is a necessary part of the longer-term transition to a more market-based and risk-aware economy.

The recent developments will, therefore, not change China's longer-term economic trajectory, no matter how much some may want. The country is set to break the middle-income trap as a result of its policy flexibility and economic complexity, resulting from its vibrant private sector, hypercompetitive industries and innovative zeal.

As such, its dominance of the Asian economic system will further grow, with difficult consequences for the rest of the world. To assume otherwise is foolhardy.