While China has spent two years battling to rein in its runaway economy, senior economists and government advisers now warn that the economic powerhouse needs fiscal spending if it is to avoid a looming slowdown.
Despite impressive headline numbers, there are big underlying problems which need to be confronted, they say.
They echo calls to relax China's fiscal stance, dust off the policies of former premier Zhu Rongji (朱鎔基) and start issuing a greater number of treasury bonds to finance public works, helping to mitigate what they say is a dangerously slowing economy.
Cooling import growth, worryingly low inflation and shrinking industrial profits all suggest the expansion which began in earnest three years ago is under threat, said He Fan (何帆), a researcher with the Chinese Academy of Social Sciences (CASS) and adviser to the government on economic matters.
"If there was only one of these three signals, we should hesitate to say the economy is slowing down. But all three are happening together so we are quite confident in saying that there is a danger of a slowdown," He said.
Yet first-half gross domestic product data and July indicators clearly underlined there was little real statistical evidence of a slowdown. The debate about economic stimulus, it seems, remains just that.
The headline numbers continue to shine and the government has revealed little about future policy direction, preferring to stick to its mantra of pursuing "a prudent fiscal and monetary policy."
Data released in recent weeks shows fixed asset investment -- one of the government's more closely watched indicators -- growing at 27.2 percent in the seven months to the end of last month, marginally faster than in the first six months.
Other data remains similarly heady, and most economists in Hong Kong's investment banking community are telling clients to expect only a modest and comfortable slowdown starting in the second half of the year.
But their opinions are in stark contrast to economists in state-run think tanks and research outfits under the government, who warn that China's expansion is poised to burn itself out and that the government will need to respond.
"The government can certainly achieve impressive figures, but there are big underlying problems," said Yuan Guangming (袁光明), another CASS economist.
This is not to say growth is set to screech to a halt. Few economists forecast growth at below eight percent this year or next.
But CASS' He said the economy, which grew at 9.5 percent last year, needed to expand by at least 8.5 percent if the government was to meet its target of creating 8 million jobs.
If it drops below 8.0 percent "there will be a problem."
Beijing's last response to a slowdown, during the 1997 to 1998 Asian financial crisis, was to ramp up a massive Keynesian spending program, which has so far seen the issuance of 910 billion yuan (US$112 billion) in long-term construction bonds.
After peaking at 150 billion yuan a year between 2000 and 2003, the issuance program has been gradually cut back, with only 80 billion yuan planned for this year.
But He said moves to cut back on government spending were looking increasingly misguided as evidence mounted of a slowdown.
"It may be that a lot of government officials have been brain-washed by the Washington consensus and care too much about fiscal discipline and budget balancing," he said. "We need a more proactive fiscal policy."
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