Is China's growth getting out of hand?

Let's start with some recent news and happenings. According to a Chinese official, China is speeding up plans for a fuel tax. From the article:

Soaring demand for gasoline, diesel and kerosene will reach 230-250 million metric tons in 2020, up from 75 million tons in 2000, according to a recent Xinhua report.

Liao said the government is studying possible tax measures to promote use of renewable energy sources, including solar, geothermal, and hydropower, Xinhua said.

China's government says it wants to cut energy consumption per unit of economic output by 20 percent by 2010 while also reducing pollution.

I've already posted about what could be a large disaster with China's energy consumption, which makes a fast-growing economy all too worse. To have a fast-growing economy, you need a lot of energy coming in, and that is a huge problem. Rising oil imports has China concerned, but the problem won't get any better soon. You may be thinking about alternative fuel. Well, maybe cellulosic ethanol would work, but not ethanol from corn or wheat. Why? Because a fast-growing economy will also need food, and corn and wheat are simply too valuable and widely used to make a significant amount of ethanol. Biodiesel is an option, but it can't make nearly enough fuel to put a dent in the oil consumption. Basically, I don't think alternative fuels will do enough in a short enough time, and a fuel tax probably won't help a whole lot. If China has to continue to raise taxes to slow down economic growth, I just don't see that as a good way to ensure long-term success and stability. China's tax revenue has increased dramatically, which I think is fine, but if they have to raise the taxes, I see that as a bad sign.

Energy is probably the biggest factor to worry about right now, as even president Hu Jintao has recently spoken to try to slow down China's economic growth, and as the article mentions, he doesn't speak about the economy very often. He's more worried about the seperation between the rich and the poor, and higher taxes will not help that. If you make the poor rich, and the rich more poor through taxes, I again don't think that is what ensures long-term stability and success. As an example of the current tax situation, and article from March 22, 2006 (I can't get a link to you because the article has expired) tells about some of the items that have a very high tax:

China has announced several new sales taxes, on goods ranging from disposable wooden chopsticks to luxury items such as yachts, citing a need to protect the environment and redress the gap between rich and poor.

The Finance Ministry announced the change in policy, which takes effect April 1, on Tuesday, the official Xinhua News Agency reported.

Buyers of yachts, golf balls and golf clubs will face a 10 percent tax, while luxury watches will be taxed at a rate of 20 percent, it said.

A 10%-20% tax? China is in a very tough position right now, with surging exports, imports, and investment, which hasn't helped the blazing economy cool down. They already have almost no energy to spare. They need to find -- fast -- something that will quickly make the energy intake more efficient. But so far, I just haven't seen any improvement. A fairly recent article has some interesting information on Asia's energy and oil intake, and why it is becoming a large problem.

I think China is in trouble, and that is why I am staying away from an investment. Like I've said before, hype cannot beat reality over the long-term, and right now China's hype is slowly hurting the country. The pro-communist government makes it very hard for them to make any stable relationships and partnerships with oil/energy, and I feel that will come back to haunt them soon. India is in much better shape, they have made a lot of partnerships related to energy and oil, they have developed good relationships with many countries, and they are keeping their economic growth at a comfortable rate. In other words, they are ensuring their long-term growth, but China is not.