Stephen Roach, chief economist of Morgan Stanley, recently said China is a special case where economic development is dominated by such capital-intensive activities as urbanization, infrastructure, and industrialization. As a result, the investment share in China's GDP growth would naturally expand more quickly, as internal consumption lacks support and the impetus to export remains strong.

"But this unbalanced growth model has now gone to excess," Roach declared in a recent writing.

In their heydays, investment shares in Japan and Korea never went above 40 per cent of GDP. Now, in Roach's forecast, China's investment is likely to hit 50 per cent of GDP in 2006 underscoring the looming risk of excess supply in credit and land.

The central government has been seeking to curb this trend since 2003, with NDRC having issued directives nationwide, constraining project approvals in over-heated industries like aluminium, cement, ferrous alloys, coal, carbide-based PVC, and real estate development.

However, the growth momentum has remained stronger than officials would like to see.

Wu Jinglian, an economist with the State Council Development Research Centre, a central government think-tank, said recently that such galloping growth is mainly a result of the local governments' investment urge, and of their meddling with the land rights and the prices of resources.

"Government offices all need to learn to redefine their roles in the market economy," he veteran economist said.

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