China is not a "bubble economy", but it is an economy prone to bubbles. There is a big difference.

Over the last decade many have predicted imminent doom for China. They have been wrong. China's economy has soared in the wake of the west's financial crisis. Despite this, risks have mounted. Rising wages and commodity prices are fuelling inflation. High food prices hit the poor hard. China has faced several challenges over recent decades, and come out on top. Its institutions and policy tools have worked well. Now, its immediate challenges are more intense than ever.

First, the need to rebalance its economy is greater than before. China must shift from investment and exports towards consumption. This domestic imbalance has not improved in the last two years.

The global recession showed China can no longer rely on selling low value-added goods to heavily indebted western consumers. Hence, the 12th five-year plan, scheduled to be rubber-stamped at this March's National People's Congress, seeks to move the economy up the value-curve and focus more on domestic demand.

David Fuller's view I recommend that subscribers read the full article and also the report posted immediately below.