The Echoes of Beijing

China US relations – at Moneyweek.co.uk - the best of the week's international financial media.

Over the years, I have made probably ten visits to the Temple of Heaven in Beijing. But this time it literally took my breath away. Built in the 15th century, it is one of Ming China's greatest monuments an extraordinary complex of sacrificial buildings that is three times the size of the Forbidden City. The centerpiece the magnificent three-level white marble Altar of Prayer for Good Harvest was the scene for the major social extravaganza of the just-completed Fortune Global Forum. Staged by the Beijing municipal government, the Temple of Heaven was magically transformed by lights, music, opera, and traditional costumes and dancing into what had to be a preview of the opening ceremony of the 2008 Olympics. It was a truly spectacular event. On the surface, the China boom never looked more glorious.

Beneath the surface, however, there is a growing sense of unease in China. Don't get me wrong the backward looking data flow still looks terrific. GDP growth continues to soar gains in 2003 were just revised upward to 9.5% (from 9.3%) and the Chinese economy was estimated to be holding at that pace in the first period of 2005. The latest update of the more reliable industrial output figures paints an equally impressive figure a reacceleration to 16% y-o-y growth in April versus somewhat more subdued year-end 2004 comparisons of 14.4%. Growth is not the issue in China. There has been plenty of it in recent years and there is an ample reservoir of considerably more growth to come in the pipeline. The issue is the consequences of that growth.

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