China's Q1 GDP: Too hot for comfort

Is there such a thing as too much of a good thing, well if the reaction to China's latest GDP figures is anything to go by, it surely is. But there are major fears of the dragon over heating.The bustle on China's streets reflects the boom in its economy with its people spending more, but it might be growing too fast and that's the fear of the government.

China's GDP in the first quarter of this year grew faster than expected at 11.1 per cent supported by consumption growth at 3.3 per cent against its Central Bank's target of 3 per cent.The county's trade surplus doubled to $46 billion taking the foreign currency reserves to all time highs.

Meanwhile inflation also touched is at two-year highs.

Worried central bank

While the Dragon is racing too fast beating all the expectations for its own good Central Bank is worried. And when China comes out of a binge the entire world gets a hangover.

With fears of overheating engulfing China's markets that government might clamp down by raising the interest rates China's market indices tanked nearly 5 per cent creating global fears.

Hong Kong's Hang Seng and Singapore's Strait Times lost 2.3, 3.2 per cent while Jakarta closed down by 2.1 per cent.

Markets are afraid that raising interest rates could threaten China's weak banking system or by letting the Yuan appreciate would hurt export growth.But everyone around the world is hoping that the dragon's landing is a soft one and not a thud that shakes all other markets.