Go-Slow Approach to Fast-Growing China

This article was written by Richard Widows and Sam Patel of TheStreet.com Ratings.

The Chinese New Year is likely to burst in with a bit more flair than usual this week, as China prepares to welcome the world to this summer's Olympic Games, but the country's financial markets might not show the same sparkle going forward, at least in the near term.

China and Hong Kong have been profitable destinations for investments over the past several years, and the Chinese economy has been on a tear. But recent weakness indicates that these hot markets have gotten ahead of themselves. Also, some economists wonder about the sustainability of China's growth rate, which zoomed to more that 11% annually for the past two years

For one thing, China's infrastructure might be unable to cope with the ever-increasing demand placed upon it. Economists wonder if electricity production can be sustained at a level that will meet growing consumption. (Consumption of electricity, the magnitude and rate of expansion of which is commonly used a proxy for growth of an emerging economy, has been estimated as growing in China at 15% annually.) ...