The trouble with China's economic bubble

washingtonpost.com — The bubbly enthusiasm that many analysts express about the Chinese economy reminds me of the old-time variety show host Lawrence Welk, who banished worries each week with soothing sounds from his Champagne Music Makers.

China watchers should turn off the music and listen to Premier Wen Jiabao, who has been surprisingly frank in warning that overinvestment and lack of domestic demand are producing an economic bubble in his country.

"The biggest problem with China's economy is that the growth is unstable, unbalanced, uncoordinated and unsustainable," Wen cautioned at a March 2007 news conference during the National People's Congress. That comment had about as much effect as then-Fed Chairman Alan Greenspan's 1996 concern about the stock market's "irrational exuberance."

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