CHINA: The great debate at the moment is whether the burgeoning economy will have a hard or soft landing, writes Clifford Coonan in Beijing
Will Chinese economic growth turn sour and cause political unrest in the world's most populous nation? In the pessimistic view, China is perilously close to boiling point and many are asking whether the economy will have a hard or soft landing.
But the optimists think Chinese growth still has a way to go and any slowdown will be just time to catch breath before the economy continues to sizzle.
It only takes a glance around the capital, Beijing, to see that China's burgeoning growth is giving a near-tropical thermometer reading.
Restaurants are full of diners, the skyline is dotted with cranes and shiny new Volkswagens and Buicks feed an ever-swelling morass of traffic. More and more neon signs glow on the front of new shops selling exotic western goods. Delivery boys with fantastically over-laden carts of goods hooked to their bicycles are pedalling furiously to keep supplies coming. This is a boomtown, which has prompted the great debate: how long can this go on? In political terms, an economic crisis could spell bad news for the ruling Communist Party and the new, business-friendly leadership of President Hu Jintao and Prime Minister Wen Jiabao.
Many analysts believe growth in gross domestic product (GDP) - running at 9 per cent a year on average for the last quarter of a century - will slow somewhat and they say fears that China is inexorably headed for a hard landing are greatly exaggerated.
The Middle Kingdom is the sixth biggest economy in the world and the government in Beijing has set itself a target of tripling per capita GDP between 2000 and 2020.
Even though there is a growing gap between China's nouveau riche and the predominantly rural poor, real income per capita in both the cities and in rural areas is five times higher now than 25 years ago.
Real per capita income - both in cities and in rural areas - has multiplied over five times in the last decade.
Ernesto Zedillo, the former president of Mexico, who is now director of the Yale Centre for the Study of Globalisation, points out in an article in Forbes magazine how strong growth has translated directly into an improvement in the general lot of the people - there are 400 million fewer people living in absolute poverty now than 20 years ago. It all seems too good to be true.
Enter Federal Reserve chairman Alan Greenspan, who warned Congress last week that economic problems in China could "create significant problems" for the US.
The bears are pointing to a meltdown, saying the economy is going to overheat and the China growth story of the early 21st century will be consigned to the same waste-basket that houses the dot.com bubble story and tales of the Asian tigers of the 1990s.
Business Week magazine is worried that China is "headed for a crisis", while US investment house Merrill Lynch has raised its forecast for growth in China in 2004 to 9.5 per cent from 8.5 per cent because it says the government's efforts to slow the booming economy don't seem to be working.
"Growth momentum remains high, and the rationale for investment remains compelling to individuals and firms. Without tighter policies, the economy would probably not slow to a sustainable rate of growth," says T.J. Bond, the bank's chief economist for the Asia-Pacific Region.
There are also fears of a banking crisis because of huge numbers of bad loans and the government has had to step in with injections of cash to keep expansion on track.
The pessimists point out how we've been here before on China, back in the early 1990s, when China fans were "maximum bullish" on the economy.
They were made to eat their words when overheating and runaway inflation forced the government to brake growth by imposing controls on lending by state-owned banks.
But another, increasingly vocal school of opinion believes that the growth rates seen in recent years merely reflect years of reform and opening up of the economy.
The Organisation for Economic Co-Operation and Development in Paris has warned that China's economy could overheat, but says measures such as slowing credit growth made a "soft landing" the most likely scenario.
One of the main reasons why people are more confident China can weather a slowdown better now than in the 1990s is that China is a very different place these days.
Since the 1990s, the government has revolutionised the economy, joined the World Trade Organisation, restructured ailing state-owned companies and moved millions of rural workers to the cities.
Economic data is reflecting an improvement in the outlook. There are signs that inflation could be easing - steel prices, for example, have fallen slightly after rising for a sustained period. Rising raw material prices were one of the key factors worrying China's central bank and other government bodies.
"Beijing's apparent willingness to use tougher and more effective measures will likely be more credible to cool down investment demand," says Hong Liang, an economist at Goldman Sachs in Hong Kong.
"We acknowledge that a policy-triggered hard landing is a distinct risk to our view, but on balance, we do not see these risks as large enough to change our central forecast," Ms Hong said.
The optimists reckon that strong growth is a manageable problem. After all, higher temperature readings on a thermometer don't always have to be a bad thing.