China's prosperity has huge future impacts for Australia's economy, but there are now fears the economic giant has developed a bubble economy.
Chinese growth rates of 8 per cent and up in recent years have powered Australia's resources export boom.But more and more economists are worrying that China has developed a bubble economy and the bubble could soon burst.
One of the key indicators they are looking at is the real estate market.
From the roof of the Shanghai skyscraper known as the Bottle Opener, the view is something to behold.
We walked up through a series of trapdoors and ladders and emerged on top of the highest building on the Chinese mainland.
From here when you look out over China's sprawling financial capital it would seem that this country's building boom could go on forever and drag the Australian economy along with it.
But there are fears that property speculators chasing quick profits are creating a real estate bubble.
On the top of the Bottle Opener we meet Michiho Kishi from the Japanese company that built the tower, Mori Building.
Mr Kishi believes the residential sector is partially a bubble economy.
"The current situation I can say is partially a bubble, partially there's a real economy," he said.
"Especially the residential market seems part of the bubble economy. Because now real demand for the people living in Shanghai. They can't afford their residence to buy - especially younger people, the people to be married. It's getting difficult for them to find houses for them to live."
The Chinese Government is also worried about this and is now capping prices and making some building loans harder to get.
But this theory that China is facing serious overcapacity problems goes beyond real estate.
Professor Michael Pettis lectures at Peking University:
Professor Pettis says China's understandable efforts to try and shield itself from the world economic crisis with a massive stimulus package may end up making its situation worse.
"Many people believe that we've reached a point in China where we're producing stuff or investing in infrastructure that is not economically viable; that in the future we're still not going to be able to use this stuff and we're still going to have to pay for it," he said.
"And when that happens that will exchange future growth in exchange for the growth that we got today.
"What we've seen in the last year has been a very robust reaction to the contraction in the export sector and to the threat of rising unemployment."
Professor Pettis says China entered the global financial crisis with an investment rate that was probably much too high.
"The economy was way too heavily dependent on investment. And because investment rates were so high there's a very, very strong reason to believe that a lot of this investment is being wasted," he said.
"So in reacting to the crisis they increased the level of investment and they made it much, much easier for investment projects to raise capital.
"Almost certainly one of the consequences will be that even more of this investment is going to be wasted. A lot of money is going into projects that have a negative economic value.
"All that money has to be repaid at some point in the future. So what you're doing is you're taking future growth and moving it forward. And you may be doing it very inefficiently."
When talking specifically about fears of a real estate bubble bursting there is probably nowhere that indicates it that more vividly than Kangbashi in Inner Mongolia.
This brand new city has been constructed in the desert because in China it has been ridiculed as a "ghost city".
There are rows and rows of new apartment blocks with nobody living in them. The odd car drives down the road. And there are no problems getting a seat at one of the few restaurants that has bothered to open up.
They are building a huge new theatre, museum and library but with barely a soul available to use them.
This may yet prove to be a bold piece of future planning which is yet to reach fruition as China once again confounds the critics.
Then again it might turn out to be the massive white elephant that marked the turning point for the once unstoppable Chinese economy
from -http://www.abc.net.au/news/stories/2010/05/19/2903142.htm
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