The nation is taking on record levels of debt to keep its economy humming. Some say that can’t last.

China buys the worldBy Bill Powell, contributor
Last Updated: November 11, 2009: 12:21 PM ET (Fortune Magazine) — In a world still awash in economic worry, China has stood apart as the one country that has come through the global slump with only the briefest of hiccups. Last quarter the nation grew at a brisk 8.9% rate, and many economists expect it to expand even faster over the remainder of the year. Profits at large, state-owned companies that have benefited from Beijing’s aggressive stimulus program are up sharply. Li Xiaochao, spokesman for the National Bureau of Statistics, summed up the zeitgeist in China these days: “The overall situation of the economy is good.” A lot of global CEOs, of course, are on the thank-God-for-China bandwagon, and it might seem a little churlish to question one of the world’s few good-news economic stories. Yet a growing number of observers believe that China is creating its own bubble economy. And they have a case to make. The U.S. fueled its housing and consumption bubbles by providing easy credit. China seems headed in the same direction, although the victims would be different this time. In the first nine months of the year, Beijing has shoveled $1.27 trillion in new loans into the economy, up 136% from the same period last year. That money has gone to three main areas: infrastructure, manufacturing, and real estate. …

China’s record debt has economists worried

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