The outlook for China, in comparison to the US and Europe, continues to look bright, as it has done for the past couple of years, and especially the past 12 months.
But the outlook for the country compared to its performance in the last two years should be noted by all investors because the head long, unchecked surge in growth is over.
Once the Beijing Olympic games are concluded we should expect a more subdued level of activity, but also some relaxation of pressure on resources.
Last week also saw the trade surplus figures for 2007 – a huge $US262 billion: but in the last quarter the growth in the size of the surplus slowed as imports rose faster than exports rose.
This was taken as a sign that the efforts by the government to slow growth are working.
And if they continue to work then that could very well mean a slowing in the growth of Chinese demand for raw materials, such as iron ore, coal, copper and the like. Not a fall, just a slowing in the previously explosive levels of demand.
But the growth rate will still be enough to make the rest of the world envious.
However inflation remains a concern.
It's running at 6.9% according to the latest figures (the new figures are due out this week). The Government has a target of cutting that to 4.6% this year, which indicates it doesn't see a quick return to its previous stated target of around 3%.
And it figures in the extension last week of price controls for a host of products, ranging from foods and oil and petrol. It's not that price rises will be banned: it's just what the Chinese Government has put in place that gives it flexibility to restrict or block price rises if politically inconvenient.
For example rises in the cost of pork, rice or petrol and diesel are more politically sensitive than are government fees or service charges.
Some commodities won't need approvals but the politically sensitive areas of food and energy will be tightly controlled for an indefinite period of time.
Commentators point out that the controls will be aimed at convincing ordinary Chinese that the Government is working to control food price inflation, while the Government will be pushing the message that it is trying to strive for social harmony, an important concept.
The Community Party doesn't want any nasty food riots or disturbances in the run up to the Olympics. It already knows there will be 10,000 world media at the games all looking for stories, and protests about rising prices would make great colour. And there have already been scattered protests about the rising cost of living, especially cooking oil and fuel.
The cost of food is rising inside and outside China, regardless of domestic supply concerns.
The price of cooking oil is being driven up by Chinese demand and by the impact of the growing biodisel industry in the west, especially in Asia (which has pushed palm oil prices to all time highs) and Canola oil (Rapeseed oil in Europe).
Grain prices are high because of drought, supply problems low reserves and, again, competing demand for corn from the US ethanol industry.
These pressures are being felt inside China and it's the continuing upward impact from outside the country which remains the concern, not domestic supply considerations.
The problem for China is energy prices: any move upward in oil prices over $US100 a barrel could be very damaging. The surge from $US90 a barrel to $US100 a barrel late last year has already produced price controls (relaxed to allow a 10% rise in domestic fuel selling costs in November) which have led to shortages and reports of black market dealings.
But China will still need to import more food, more energy (especially oil and gas) and various commodities.
China's trade surplus was still substantial, but below estimated and in fact narrowed in the month.
The surplus fell to $US22.7 billion from $US26.2 billion in November, according to what China's customs bureau said in Beijing.
Exports grew at their slowest rate in two years, indicating that the recent rise in the value of the Yuan, the cooling global economy and cuts to export tax incentives on polluting industries are having an impact.
The Yuan rose to its highest level last week since a dollar peg was scrapped in mid 2005, trading at 7.2620 per dollar at the close in Shanghai.
The currency has risen for five straight weeks and is now up 14% since the link ended. The Yuan actually rose 7% over all of 2007 as the central bank boosted interest rates to a nine-year high and the government took heed of the trade tensions with the US and Europe.
But China's trade gap jumped 48% overall last year to a record $US262.2 billion.
Exports rose 21.7% in December to $US114.4 billion, compared with November's 22.8% and the slowest December since 2005 (excluding the usual monthly distortions from Lunar New Year holidays in January and February each year).
China's foreign-exchange reserves, the world's biggest, rose 43% to a record $US1.53 trillion at the end of last year, according to a report from the central bank last week.
The most important indicator from the year's trade figures wasn't the actual record figure or the volumes, but what happened over the December quarter.
Import growth exceeded export growth in each of the final three months of 2007, a sign of the slowing economy and taken by commentators that the trade surge may have peaked.
The European Union also replaced the US as China's largest export market. Sales to the expanded EU grew by 29.2% in 2007, compared to just 14% to the US. That's a sign of the slowing in the US economy over 2007, especially in the last half.
But commentators pointed out that Europe's bilateral deficit remains well below that of the US, because the EU exports far more to China (ne
