When the old codgers of the Communist Party shuffle into the Great Hall of the People in November for the 17th party congress, they will have a lot to congratulate themselves about. In the five years since their previous get-together, the mainland's economy has almost doubled in size. In the past 12 months alone, economic output has grown by three trillion yuan, or roughly US$400 billion. To put that into perspective, it is as if the mainland had successfully annexed Taiwan in a sudden invasion during the past year and added the island's economy to its own. Of course, if the mainland really had taken over Taiwan, the rest of the world would be justifiably alarmed. In a similar - although more moderate fashion - yesterday's announcement that the mainland's GDP grew at a breakneck 11.9 per cent pace in the second quarter is sure to make waves internationally. Beijing's critics will seize on the 74 per cent growth in the mainland's trade surplus, the 28 per cent growth in fixed asset investment and the sharp rise in consumer price inflation to 4.4 per cent in June from 3.4 per cent in May as evidence that the country's currency is deeply undervalued, and that as a result its monetary policy is far too weak. Many will call for drastic action including a one-off revaluation of the yuan to avert the danger of overheating. Beijing leaders will be a lot less concerned. Although second quarter growth was certainly quicker than they wanted, that was partly the result of a surge in exports by companies eager to ship their goods ahead of deep cuts in export tax rebates at the end of June. It is likely that export growth will make a smaller contribution to overall GDP growth in the third and fourth quarters of the year. Equally, policy-makers will be encouraged that investment growth, while fast, appeared more balanced than in previous quarters. Investment in the poorer countryside and underdeveloped western provinces outstripped that in the overheated coastal cities and the overall pace was down heavily from the dangerously high rates seen a few years ago. With corporate profit growth high, Beijing can be reasonably satisfied that companies are not wasting money investing in un-needed capacity. The mainland's leaders will also be happy that domestic demand, especially for services, appears to be picking up. If the trend continues the nation's economic mix will begin to look healthier, with less reliance on investment and manufacturing for export. Inflation is a concern. But June's unwelcome up-tick was driven almost entirely by increases in food prices caused by supply disruptions, which will hopefully prove temporary. Non-food and wholesale inflation rates remain low, indicating that headline consumer price rises should abate over the coming months. All of which means Beijing will be reassured that its current policies are the right ones. Monetary policy is still too loose but further tightening measures will be incremental and follow much the same pattern as in the first half of the year. More small interest rate increases are likely - possibly as early as today - along with further steps to drain liquidity from the banking system. Beijing will also continue to use administrative measures to cool activity in overheated sectors. Expect a crack-down on investment in energy-hungry sectors and pollution-spewing industrial plants, while further cuts in both fuel subsidies and tax breaks are on the cards. What is not likely is either a sudden revaluation of the yuan or a marked rise in the currency's rate of appreciation. The first would contradict the leadership's pledge to maintain exchange rate stability and the second would only encourage hot money inflows, making domestic liquidity even harder to manage. The currency inertia will upset Beijing's foreign critics but their complaints are hardly likely to disturb the self-satisfaction of the party leaders in the Great Hall of the People come November.