China has long said that its biggest contribution to a world racked by financial turmoil would be to ensure that its own economy grows strongly, implying that a rising Chinese tide will lift all boats. The latest data show that Beijing has delivered on one part of the bargain; its economy, the toast of the world over the past five years, is once again ahead, far ahead, of the pack.
Many investors and companies are confident that the second part of the bargain will follow – that China's recovery will be just the cure for markets still woozy from the financial battering. Such faith is not yet justified.
To be sure, China has already delivered a cortisone injection to some commodities, notably copper, the price of which has risen more than 40 percent this year. Strong stock markets, from Japan to Canada, since March are in part a play on positive sentiment spilling over from the Chinese rally that began in January. China also stands as the one growth market for global auto makers.
But there are plenty of reasons to rein in expectations. China's voracious appetite for commodities in the past few months looks more like strategic stockpiling than true industrial demand. Amid China's upbeat March data, its overall imports actually fell more steeply than in February. And the foreign business community in China is complaining that it is not getting a fair chance at contracts linked to the government's 4 trillion yuan ($585 billion) stimulus package.
There is also the risk that China's strength to date, topping the forecasts of even the most optimistic of analysts, has created an awkward situation where markets are now counting on the country to constantly outperform; merely growing in line with expectations would be a disappointment.