And what about the many structural defects in the economy? Perhaps the most pernicious of these problems has been deflation. Although it seems to have disappeared from official data, it is likely that it is masked by inflows of foreign capital that have allowed money supply figures to increase and to create more funds to be squandered by state-owned enterprises (SOEs).
Logically, deflation is a continuing threat as long as there is a large hangover of bad debt, as is the case in China. With real interest rates reaching as high as around 10 percent recently and with the high degree of inefficiency of many SOEs, it is not surprising that the proportion of non-performing loans became so large. Beijing's recently revised its own data on bad debts held by state banks that was set at nearly 12 percent of GDP. Estimates of outside observers put non-performing loans closer to 25 percent of GDP or more.
As it is, investments in China are beginning to take on the air of a Ponzi scheme. Having reached the plausible limits of wasting the savings of the citizenry through the banking system, now the government has a new scheme for commandeering wealth by undertaking "reforms" of domestic capital markets that opens them more widely.
Unfortunately, without accompanying changes in the operations and efficiency of enterprises with state connections, punters in these markets will face steep losses. Ironically, Beijing will almost certainly blame the faulty operation of markets for future losses in shareholder values, even though these are predictable and have been essentially orchestrated as a matter of policy.
With a range of a few rotten options, it is understandable why Chinese citizens can be suckered into going along with Beijing's evil plan. However, it remains a mystery why so many outsiders buy into this wobbly situation.
Portraying both portfolio and direct investments as a "pyramid scheme" is an apt analogy for China. Should be a significant slowdown in the inflow of foreign capital, China would almost certainly face the specter of a banking crisis and possible industrial collapse.
It is unlikely that China's economy can defy the drag of gravity from the slowdown in the global economy. One has to question why so many people stubbornly cling to such a fairy tale.
Christopher Lingle is global strategist for eConoLytics.com and author of The Rise and Decline of the Asian Century.
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