Since the financial crisis, central banks around the world have acted cautiously to nurse capital markets back to health. Their policies have not pleased everyone, but they did manage to prevent the crisis from escalating. Critics point to the increase in global debt (it hit an all-time high of $247 trillion.

Investors are wondering how much capacity China has to swoop in and bail out the next emerging market to face the kind of turmoil that has gripped Turkey in recent weeks.

“Quite limited,” is the answer according to Nomura Holdings Inc.

While the world’s second-biggest economy is insulated from the broader sell off thanks to $3.1 trillion in reserves, policy wriggle room and other buffers, its pockets aren’t as deep as before, according to economists led by Ting Lu. The risk of more frequent quarterly current account deficits and moderating foreign direct investment, at a time when corporate dollar debt has soared, will limit China’s capacity.

“In the coming years China may have to more carefully manage its FX reserves and external debt to deliver a stable currency and financial system,” the analysts wrote in a note. “Further scope for China to spend its own hard-earned FX assets, including reserves to aid other EM nations, seems rather limited. Despite China’s ambition to internationalize RMB, we believe it will remain cautious in expanding the RMB-denominated “panda bond” market.”

They say the key indicator to watch is the current account position, which turned a deficit in the first quarter for the first time since China joined the World Trade Organization in 2001.

“While this deficit may prove seasonal, in our view the long period of consistent surpluses may come to an end in the years ahead,” the Nomura economists wrote. “We expect China’s once-significant goods trade surplus to narrow steadily, while the services trade deficit seems poised to widen further. Negative net investment gains are also likely to widen and weigh on income components.”

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