THE assurance that China's rate of inflation is still within the people's endurance limit, made by State Economic and Trade Commission Minister Wang Zhongyu, will do little to calm growing fears about the high speed building up on the mainland reform train. The eight per cent figure Mr Wang said was acceptable is well below the rate at which prices are rising in China's cities, which is nearly twice that. More encouraging is the apparent acceptance that market forces are going to have to be called on to help solve the problems. For this is no time for complacency or dogma: unless the Chinese economy is given a judicious easing of pressure, something is going to blow. If that means an eventual emergency yanking of the taps, the resulting explosion will catapult all the forecasts out of the windows of Exchange Square. Rather than worrying about the short-term effect of China's heated economy, perhaps Hongkong and the rest of the world should be looking forward to the cathartic effect a full-blown economic crisis might have in restoring the mainland to controllable growth. Looking beyond the next trading session is a speciality of Mr Alan Butler-Henderson of the W.I. Carr broking arm of Banque Indosuez. In a paper now being enjoyed by his rivals as well as his clients, The End-Game, Mr Butler-Henderson argues that the failure of the Communist Party to manage the Chinese economy will lead to its downfall: not necessarily to fighting in the streets, moreto an admission that no one can handle the crisis by using any of the old tools. The key area in the ensuing changes will be Guangdong, which will not want to see its achievements undermined by the problems facing most of the country's other regions. A political merger with Hongkong will follow, Mr Butler-Henderson forecasts, so complementing the economic merger that has already happened. The argument about Hongkong's sovereignty will wither as an issue, and the territory will become independent within the umbrella of the ''Southern Enclave''. With the political uncertainty removed, the Hang Seng Index will end its era of undervaluation to the rest of the region, and one of the great golden moments in the history of investing will have arrived. Nice idea, but meanwhile, the Chinese authorities have got to try to play the present game. Encouragement comes from the apparent admission in Beijing that interest rates must go up, whatever the consequences for the rank and file and the immediate effect on inflation figures. With state lending doing so much to raise the pressure, the need to slow down is urgent. Whatever the politics involved, the economics must be the master now. If the people are not convinced that the economy is in good hands, the renminbi's devaluation will accelerate in real terms as mainlanders rush to get their savings into hard currencies and the current account deficit, which W.I. Carr predicts is headingfor US$12 billion next year, will swell still further. The end-game might, after all, surprise everyone, but right now, some well thought out moves are required by the mainland authorities.