The will-they, won't-they argument over the sustainability of China's capex-driven growth and the transition from an investment-led/high-growth economy to a consumption-driven/lower-growth model is becoming more polarized every day. Pivot Capital Management's take on the slowing growth and muddling transition will make the shift more painful and will likely lead to a credit bust. Their thesis focuses on the balance sheet transformation of the Chinese economy that has attempted to postpone such a transition at a time when the pro-cyclical shadow of global growth expectations demand it. They expound on three main reasons for the proximity of credit bust in China: shadow banking pushing credit expansion to the edge of a crisis (as the regulated markets lose control), real estate and infrastructure investment are at a critical juncture (as worsening fundamentals significantly dampen flows), and interdependence in China's financial system. They fully expect the upcoming credit bust to require government intervention, they expect this to dramatically slow the investment-led growth model and obviously this would be a global event as the world's reliance on China's 'economic miracle' is brought into question.