As China keeps its position as the world leader in economic growth while the US, Europe and Japan continue their downward spiral, China might run into some future problems.  The current system favors the giant state run banks and the firms that drive its growth, which in turn are driven by the savings of the middle class.  However, there might be a problem arising, as in order to continue with their astronomical growth, China needs to form a consumer class that buys more products from the world market.  Figures in fact show however that consumer spending is down to 35% from 45% of the G.D.P in a year, as consumers cannot keep up with the rising prices as their savings have such low interests rates that they cannot keep up with inflation.

The communist party introduced in their latest five-year plan that they planned to increase consumer spending.  However, that can be a double-edged sword as the banks highly depend on the savings of the households.  In addition to the banks, the central bank of China is also dependent on these savings, as it needs the funds in order to make its investments in foreign exchange markets.

The link from the NY Times: