Chinese growth may not be so great in the long term

“When you have such a large amount of bank lending going on, you have to be worried,” said Louis Kuijs, senior economist for the World Bank in Beijing. “The authorities ... have concluded that the downside risk to growth (is) so important that they would rather keep the expansionary plan.”

Some analysts, including Andy Rothman, an economist at brokerage and investment group CLSA Asia-Pacific Markets, laud Chinese policymakers for solid stewardship during the global downturn. China's stimulus plan, he said, was never intended to rebalance the economy and Beijing deserves credit for delivering solid growth.

“They just needed to keep the economy going,” he said. “China still needs a lot of investment. They're not building bridges to nowhere.”

Still, experts concede that Beijing must do something to address the fundamental imbalances in China's export-led economy. That means getting more money into the hands of ordinary citizens to promote domestic consumption in order to insulate the economy from export declines.

Such reform is already underway, including a US$125 billion health care plan and subsidies for rural residents to buy consumer goods. Gao Jinghong, a wheat farmer in central Henan province, said a 13 percent government rebate persuaded him to buy his first refrigerator.

“I don't remember the last time I spent this much money,” said Gao, whose appliance cost about US$300. “I know I wouldn't have done it if it wasn't for the rebate.”

Rebalancing the world economy has become the mantra of organizations such as the World Bank and the International Monetary Fund. Leaders at the Group of 20 summit last month in Pittsburgh also called on China to do its part by boosting private entrepreneurship, expanding social services and liberalizing its financial sector.

Any rebalancing will eventually need to address the value of China's currency.

The Obama administration said last week it had serious concerns about the value of the renminbi, which is commonly known as the yuan. But U.S. officials stopped short of accusing China of manipulating its currency, a designation that would require potentially damaging sanctions.

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