The world has watched in awe as China has sailed, seemingly without effort, through the worst global financial crisis in decades. In 2009, the economy barely paused for breath, racking up 8.7 per cent growth. This year, Beijing's challenge is to prevent overheating without slamming on the brakes too hard.
But China's never-ending-growth story is not magic. It has been achieved through a huge public-sector stimulus, most tellingly a massive expansion of credit by the state-controlled banking system.
This has hidden costs. It has rolled back a decade of reforms designed to liberalise the financial sector and promote a more market-oriented allocation of capital. Last year's increase in lending exposed as false banks' claims to lend purely on commercial grounds. Of course, the supposed infallibility of the market in allocating capital has been debunked. But it would be foolish to jump to the opposite conclusion that banks, lending according to the wishes of state planners, are not prone to crisis.