Almost everywhere you looked last week, people and organisations were scrambling to revise up their forecasts for China's economic performance.
On Thursday, the World Bank said it now expects the mainland's gross domestic product to grow by 7.2 per cent this year. That's a good deal faster than the 6.5 per cent rate it predicted back in March.
The World Bank was not alone in having second thoughts about China's economic prospects following the recent massive increase in state-directed bank lending. Last week, Standard Chartered raised its 2009 GDP growth forecast to 7.4 per cent from 6.8, while economists at British bank Barclays jacked up their own forecast to 7.8 per cent from 7.2. Nomura predicted an 8 per cent rate this year, and increased its 2010 growth forecast to 10 per cent from 8.5 per cent.
In revising up their numbers, the banks are belatedly concluding what many equity investors decided months ago: that China is heading for an early V-shaped recovery in its economy thanks to Beijing's stimulus efforts. As a result, they have pumped tens of billions of US dollars into the stocks of mainland companies listed in Hong Kong, pushing the H-share index up by 60 per cent since the beginning of March.
Not everyone shares their rosy view of China's economic outlook, however. In a research note sent to clients last week, Albert Edwards, chief global strategist at Societe Generale in London, argued that investors' confidence in the mainland's economy is dangerously misplaced. 'The markets are relying on a combination of hype, lies and wishful thinking,' he warned.
Mr Edwards is worth listening to; he's been right about this sort of thing before. Back in 1996, he criticised the economic policies of Malaysian prime minister Mahathir Mohamad, denouncing his government's focus on generating high growth rates while ignoring the danger of a swelling current account deficit as 'Noddynomics'.
Horrified at the damage such an insult would inflict on its Malaysian business, his employer at the time - Dresdner Kleinwort Benson - recalled and promptly pulped the offending report, and issued a grovelling apology to the Malaysian government.
