Interestingly, in spite of a significant real estate inflation problem in Shanghai that parallels the bubble situation in some U.S. markets, China's country-wide inflation, at 3.6 pct, is under control.

As per the AP report, China regulators have been tightening credit and limiting lending for investments in property development and a number of booming industries, hoping to relieve strain on energy supplies and transport and achieve a more sustainable growth level.

The ADB said it expected a modest slowdown in China in 2005 due to an anticipated decline in growth in investment in construction and capital goods manufacturing factories. China's main index for fixed asset investment is forecast to rise 18 pct year over year in 2005, compared with 25.8 pct growth y/y for 2004.

ADB has financed major projects in China that have not managed to attract investment, such as the treatment of wastewater. High toxins in water is a serious problem for at least 100 cities in China.

AP reported that experts have warned that an additional 300 million rural Chinese, at least, lack clean drinking water since most waterways are fouled by industrial effluent, untreated sewage and runoff of agricultural chemicals from fields.

The official China news agency Xinhua reported that a survey in January found that 35 pct of ground water and 53 pct of water in major rivers is undrinkable due to pollution, while about half of all lakes are heavily polluted.

Industrial effluent, untreated sewage and runoff of agricultural chemicals from fields are directly causing diseases from drinking water that contains too much fluorine, arsenic, and sodium sulfate.

While government is investing significant capital ($2.1 billion over five years) to provide safe water to residents, local water resource managers are claiming that environmental protection standards are being ignored, causing massive health problems, which are now being reported by AP and CNN.

Could social responsibility be the ultimate control over economic growth in China?

After all, if we in North America would accept such living conditions, a much faster economic growth rate here would be a certainty, too.