CHANGSHA, China -- The projects sound innocuous enough: ``Star Town," ``Dingji Mountain Villas," ``Rockefeller Center." A massive new traffic police headquarters. Sunhere International Mall, floor space sufficient to cover 123 football fields.
The flurry of construction in Changsha, a southern Chinese city astride a cocoa-colored river is typical of the building frenzy that has Beijing's economic planners worried.
Banks, companies, and local officials are pouring money into luxury housing, shopping malls, showcase government buildings, and factories, helping push the rocketing Chinese economy to a better than 10 percent growth rate. And more than two months after sounding the alarm about overheating, Beijing is having trouble slowing the pace.
``Chinese authorities are now scrambling to regain control over a runaway economy," Morgan Stanley economist Stephen S. Roach wrote recently. ``China needs a more serious policy tightening."
Construction projects featuring forests of cranes like on Changsha's horizon are just the most visible evidence of a nationwide investment binge that raised new spending on construction and factory equipment to $318 billion by the end of May, up 30 percent over the same period of 2005.
Such investments are forecast to exceed $1.3 trillion this year, nearly half of China's total economic output.
To finance that spending, China's big commercial banks, their already fat balances swollen by government bailouts and recent multibillion-dollar initial public offerings, issued new loans worth $267.5 billion in the first half of this year.
The worry is that too much of the money is going into ultimately unprofitable investments, risking a financial crisis. With China now an engine in the global economy and international investors joining in on the investment binge, a hard landing could jolt world markets.
``Investment is overheating. There's no doubt about that," said Qu Hongbin, an economist for HSBC Corp. in Hong Kong. ``It's not only the scale but the quality or efficiency that we are worried about this time around."