The visual benefits of a great year of growth may be seriously offset by unseen financial risks beneath the surface. China's debt rate is now approaching the international warning line.
Growth this year was predicted at 8 per cent. It is now 9 per cent. Official projections for next year are 8 to 8.5 per cent GDP growth. It's interesting a half percentage leeway has been set. This has never occurred before which indicates lack of central confidence that macroeconomic control measures can contain hyper-growth in the coming year. In looking towards China's economy next year, Premier Wen Jiabao identified four factors. They are: maintain continuous rapid economic development to avoid fluctuations; strengthen macroeconomic controls to contain inflation; closely monitor international finance and oil price shocks to secure national economic stability; and address the people's interests for a harmonious society.
He has identified where the problems lie, shifting from the former administration's focus on economic growth to balanced growth with a social conscience.
The execution of Mr Wen's programme falls on the National Development and Reform Commission chairman Ma Kai , who added his four points to implement Mr Wen's agenda.
Mr Ma's four points are: adhere to improving macroeconomic controls to abolish unhealthy economic elements to maintain stable development; use reform to solve problems that are obstacles to economic and social structural development; adjust structures to change the methods of economic development to overcome one-sided growth; and to emphasise humanity to improve people's living standards.
Hyper-growth driven by real estate and fixed-asset spending benefits only a few. These people attend conferences in five-star hotels in Beijing and Shanghai. The beneficiaries, who park BMWs and Mercedes-Benzes outside, make speeches about the potential of Chinese brands inside.
Meanwhile a pattern of social ugliness has been seen in several rural cities, which points to an imbalance or distortion in growth, where many have not benefited from the surging economy. Danger is apparent in a possible economic dislocation just around the corner. Any major international event could stimulate this meltdown.
