China's mega-stimulus programme is like drinking poison to quench a thirst'."

We had recently warned you that the 'Next Dubai' could be closer than you think.

Ironically there are a few others who share this opinion. The European Union Chamber of Commerce in China is one of them. It believes that the country's overcapacity situation could finally lead the dragon nation to its doom. Besides, many are willing to bet on the possibility of China throwing up a Dubai-like shock. Of course, of a much bigger proportion. Much of China's 'overcapacity' has been driven by excessive capital spending and the artificial peg of the Chinese currency to the US dollar. These measures protect China's export-led manufacturing industry.

But that is not the end of the story. China's famous saving and investment history also has many critics. It seems China's investment to GDP ratio of 50% has broken all records. That of Germany's 27% in 1964, Japan's 36% in 1973, and South Korea's 39% in 1991. Also, the longest any country has sustained an investment to GDP ratio of over 33% was nine years. They were Thailand and Singapore. China is well into its 12th year of heavy investments. In fact a business daily has cited an interesting quote of a Chinese economist. "China's mega-stimulus programme is like drinking poison to quench a thirst'." Do we need to say more?