China now says its economy could grow at the shockingly fast rate of 16 percent, news that has some wondering if inflation and a property bubble will result.
Exports are zooming, China is now the biggest exporter in the world, ahead of Germany, and it has surpassed the United States in auto sales.
China can in fact grow at a clip that is well above a fully developed country.
Despite now passing up the United States and Europe on some indicators, the fact remains that the country is huge and poor.
Growth, even double-digit growth, is necessary and desirable.
With that said, the government still must rein in excessive growth or risks serious consequences.
They tend to first do this by reining in the amount that banks can lend by increasing their reserve requirements.
The more a bank is required to hold in reserves, the less it can lend out and the slower expansion generally becomes.
They've already done this recently and historically have been known for making several adjustments in a short amount of time during times like this.
So that's their first line of defense.
Also keep in mind that China is developing index futures and other products that can help them to hedge at least some risks in their stock markets in the case that things should get a bit frothier.
Right now, it's China's growth that has helped to save the world over the last couple of years.
So "above average" growth is really needed from them in this critical time in the global economy.
With that said, though, if left unchecked, it could be their undoing.
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