China's Economy 'Overheating'

Some quotes from a Washington Post column by David Ignatius:

The new Chinese leadership seems to understand the danger of overheating, and in the past few months it has taken some gentle steps to slow the economy from last year's 9.1 percent growth rate. But like Alan Greenspan's 1996 warning about "irrational exuberance" on Wall Street, these calls for restraint haven't had much effect. During the first quarter, economic growth actually increased to 9.7 percent. [...]

"Some people think that China's economy is already overheated; others think it's in the process of becoming overheated," explained Zhao Qizheng, the minister who runs the State Council Information Office. He told me that China needs "sustainable" growth, and he's right. [...]

"To get rich is glorious," said the late Deng Xiaoping in what has become a motto for the Chinese economic transformation over the past two decades. Yes, but beware of becoming too rich too fast. Even in the new China, the law of gravity has not been repealed.

I have an idea: how about leaving the economy alone and letting its own self-correcting feedback mechanisms work?

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Ah, but they fear that

Ah, but they fear that letting the system correct itself, or trying to cool the economy through policy, will cause the financial system to implode in similar, those possibly worse, vein as happened in SE Asia in 1997-1998. China has been very guilty of "directed development" and its banks are shot through with non-performing loans. Only growth masks the problem, as in all bubbles and pyramids. They've already recapitalised a couple of banks (which was like dripping a bit of water on a very hot pan - not much net effect) and fear that they may have to intervene much more aggressively. Lack of banking supervision, "crony communism", and imperfect market functions are conspiring to create a dismal situation which is tying their hands.....

I have an idea: how about

I have an idea: how about leaving the economy alone and letting its own self-correcting feedback mechanisms work?

if u don't know,better don't say that...u totally not understand the situation of a country. just sitting in the bottom of the well like a toad.