Further, that surging economy is stoking inflation to unacceptable levels. Inflation totaled about 6% for 2007. Economist David H. Wang believes actual inflation is higher in many parts of China.

"In most developing urban zones, the inflation rate, for a variety of factors, is much higher than the official Chinese government statistic. Inflation is too high," Wang said. "The 2007 GDP growth statistic clearly indicates that China must do more to slow its economy." Wang was born and lived in China for more than 20 years and continues to study its economy.

Engines of growth

Economists note that engines of growth by major economies are critical to maintaining both regional and global growth. However, too much growth places strain on commodities, raw materials and resources, and leads to substantially higher inflation, among other concerns.

"When I grew up in China, my father in the summer had a saying,: 'If only I could bottle this heat for the winter.' Well, that's what many economists would like to do now, bottle some of China's growth and send it to the United States," Wang said. While China's economy continues to expand at a double-digit rate, the U.S. economy is in slow-growth mode, growing about 1.0-1.5%, Wang said, and is skirting with a recession in 2008, stemming from the U.S. housing sector's correction.

Of course, the world can not simply transfer national GDP growth from one region to another, but Wang said two international strategies that could re-balance the world economy would be increased investment flows from China to the U.S. and further adjustments to China's currency, the yuan.

To-date, China has resisted investing beyond U.S. Treasuries and several targeted U.S. industries relevant to China's economy. If China broadened its investment scope, all would benefit, Wang said.

For example, investments in the U.S. banking, mortgage and insurance sectors would provide the U.S. with much-needed cash capable to bolster business confidence, and most likely shorten the U.S. economic downturn. In turn, China would benefit from asset diversification and from the restored economic health of the United States. Trade with the U.S. accounts for about 8% of China's GDP.

Also, continued appreciation of the yuan, presently at 7.2065 yuan to the dollar, would lower the U.S. trade deficit by increasing the cost of Chinese goods exported to the U.S. and making U.S. goods more cost-competitive in China, Wang said. Currently, China keeps the yuan in a tight band, preventing it from floating freely, or having the market determine its price.