China continues to grow at a blistering pace. It is emerging as one of the drivers of the global economy, sucking in exports from its neighbors and providing returns for investors. Increasingly, however, there are concerns that China is overheating: Growth is bound to stall as the business cycle asserts itself. Asia must be ready for that eventuality. Over-reliance on the China market will leave other economies dangerously exposed when the correction comes.
There is no mistaking China's impact on the global outlook. Last year, China accounted for 16 percent of growth in the world economy, giving it an impact second only to the United States. The country has been the recipient of nearly $500 billion in foreign direct investment. Its imports are projected to grow 40 percent this year to exceed $400 billion, allowing China to pass Japan for the first time and making it the third-largest importing nation after the U.S. and Germany. Since 1990, China's imports have grown more than 15 percent annually. Total annual exports have grown eight times over the same period and now top $380 billion.
The net result is torrid 9.1 percent year-to-year growth in the third quarter of this year. Other measures of activity are equally hot. The broadest measure of money expanded by more than twice that amount to 21 percent.