Economic data due for release tomorrow will show that that the Chinese economy continues to power ahead at dangerously fast speeds. Yet, even though fears of economic overheating are running high, the authorities are likely to continue to shy away from radical steps to slow the pace of growth, opting instead for more small interest rate increases and a clutch of further administrative measures.
Tuesday's figures are unlikely to come as much of a surprise. Mainland media let the cat out of the bag last week, reporting year-on-year growth of 10.9 per cent in the second quarter, even faster than the 10.3 per cent rate recorded in the first three months of the year.
Pinpointing the source of that growth is easy enough. The mainland's trade surplus continues to set records, hitting US$14.5 billion last month, up from US$13 billion in May.
Together with inward investment, all that money is flowing back into the domestic economy, creating a huge pool of ready cash. Last month, the central bank's foreign exchange reserves rose by US$16 billion, indicating that some 128 billion yuan flowed into the mainland's money markets.
The central bank is doing its best to mop up the liquidity by issuing short-term bills - it has nearly three trillion yuan worth outstanding - but it is fighting a losing battle. The country's financial system is flush with cash and with deposits exceeding loans by 50 per cent, its banks are eager to lend.
A lot of that money is unsurprisingly getting invested in new projects. According to mainland press reports, investment in fixed assets rose 35 per cent year on year last month, faster even than May's 30 per cent growth.