It's getting harder and harder not to think that the Chinese Government and its key economic regulators might be on the wrong side of their continued battle to cool the hot Chinese economy.
Numerous interest rate rises and increases in reserve asset ratios to dampen boom time levels of lending seem to be having no impact.
We in Australia fret about whether our interest rates should be rising: in China they have to rise otherwise the economy will career out of control.
Aggressive lending by banks is proving almost impossible to control, and yet here in Australia the Reserve Bank and other regulators are punting on a rise in non-official rates to help slow our strongly growing economy, with business lending running at a 20% plus annual growth rate in recent months.
Clearly we have a strongly performing economy with 4%-plus growth: so does China with 11%-plus growth.
We depend more on that heady level of Chinese growth continuing than China does on us performing at our peak.
China's boom is feeding our boom, but as we saw last week the boom is maturing and slowing. Exports of commodities are slowing sharply and all it will take for a fall in real terms will be slower growth in China next year, which the authorities now seem to be trying hard to achieve.
At the weekend China again moved, for the second time in a month, to order banks to set aside more assets to try and bring lending under control.
The Bank of China says lenders must, from Christmas Day, set aside 14.5% of deposits, up from 13.5% which was set last month.
A sign of the increasing pressures on the bank is that the one percentage point rise comes after a series of 0.50% increases ordered over the course of this year. There have been nine other increases ordered in the reserve ratio, meaning it has risen 5.5% since January, with no appreciable impact on lending.
The central bank and banking regulators have not chosen to increase interest rates this time: allowing the reserve ratio to rise 1.5% instead. There must be some opposition to using the blunt instrument of monetary policy within the Chinese leadership because a rate rise is overdue, given the continuing strong level of exports and investment, not to mention high inflation.
The new level for the reserve ratio is the highest since the Chinese Government started disclosing such statistics 20 years ago.
The move comes ahead of this week's meeting in Beijing between US Treasury Secretary Henry Paulson and officials and senior Chinese officials to talk about policy differences on the value of China's currency and Chinese trade policy.
The US wants the Yuan to appreciate at a faster pace to reduce the nation's record trade surplus.
China's record exports are pumping cash into the financial system, fueling inflation and concern the economy will overheat.
Bloomberg reported last week that Chinese leaders and officials expressed concern about the strength of the economy at three-day annual economic work conference, with 'evident' inflation underscored in reported public commentary.
News agencies reported the central bank as saying on its website: "The increase is in line with a tightening monetary policy after the central economic working conference, and aims to strengthen liquidity management and curb overly fast credit growth''.
Regulators have imposed limits and volume controls on lenders for the time being to try and curb investment. Even foreign groups involved in banking and finance, or in the servicing of those sectors, have been told to cut back.
There are reports banking regulators will cut permitted loan growth to an annual rate of 13% in 2008 from 15% this year. Official media in Beijing and Shanghai claim seven banks are banned from making new loans for the rest of this year because of their aggressive practices in earlier months.
There are signs the Chinese leadership will allow the controls on loans, government charges and fees, and on government administered prices, to extend into 2008. The Chinese leadership is known to be concerned there should be a smooth run up to the Beijing Olympic Games in August. And this means suppressing price rises so as to keep a lid on any social unrest.
China's consumer prices rose 6.5% in October from a year earlier. Inflation is high because of higher food, energy and labor costs. Supplies of pork, dairy products, chicken and cooking oil are scarce: there is a black-market in petrol and diesel in some parts of the country because the high world price for oil has not been matched at retail level because of continuing price controls.
Non-food price inflation is low, but many business economists in Australia fail to understand the high proportion of food costs in the cost of living in China, compared to Australia and the dangers that brings for social discord and unrest, which is something feared by the Communist Party Government.
The key CSI 300 Index of shares has climbed 147% in 2007 so far, even after declines since mid-October.
Besides the 10 increases in the reserve ratio, The People's Bank of China has lifted interest rates five times this year, boosting the key one-year lending rate to 7.29%, the highest since 1998.
The deposit rate is now 3.87%, but even with the recent falls in share prices, most stockmarket investors are comfortably ahead for this year.
The outlook though for 2008 is a different matter.
Will the Chinese economy grow at 11%-plus like it has this year?
The huge spending (over $US12 billion at least) in Beijing alone for the Olympics this year, will ease in 2008. That will reduce some of the constraints, but not until the second half.
And later today the trade surplus for November will be made public with best estimates around the $US26 billion mark. That will add to the pressure on China ahea
