[Hong Kong company registration]At a time when the dividends of globalization, natural resources and demography begin to decline, will China's export-oriented growth model, already groaning under existing economic arrangements, face an ever bigger challenge?

The second dilemma is a cyclical one, characterized by the real economy's narrower profit margins, financing difficulty and reluctance to invest. Meanwhile, the virtual economy is plagued by sloshing liquidity, marked price distortion and heightened speculation.

Although excessive liquidity is but a by-product of pre-bust bubbles and post-crisis bailouts, a great amount of financial and industrial capital has flown, instead of to the real economy, either to the global commodity market, the volatile financial market or emerging markets in search of hedging gains.

Speculation considerably drives up the cost of economic recovery and worsens market climate. China, in particular, faces the paradox of a "cash glut" and a "cash famine," that complicates macro-economic policy-making.

With respect to this situation, the economic conference of the Party's Central Committee that ended last December decided to reduce the tax burden for business and boost fiscal spending on general welfare, so as to rev up corporate investment and household consumption.[Set Up Company Hong Kong]

It was also agreed at the meeting that the government is to raise the efficiency of monetary policy and rein in asset bubbles, so that money will leave the overheated virtual economy in favor of under-funded real sectors.

The third of China's economic dilemmas originates from outside the country.

All national governments, in reacting to their structural imbalances, have adopted stimulus packages to varying degrees of intensity. But compared to others, developed nations of reserve currencies suffer a far smaller impact of the liquidity they pump into their economy than others.

Their abuse of monetary dominance engendered protectionist policies and parochial demands for bigger market shares in emerging economies.

This approach adds to the complexity of the world economy and poses tremendous challenges to manufacturing powerhouses like China.

The most intractable of all consequences is imported inflation, reflected by commodity prices and wild fluctuation in money supply caused by quick entry and departure of flight capital. These forces have vastly undermined China's macro-economic control to keep the yuan stable and generate growth and jobs.

Therefore, we need to realize that if the imbalanced growth pattern collapses globally, all the three dilemmas will complicate and compound each other. This is a scenario we must preempt, preferably through institutional reforms that stimulate market vigor.

[Hong Kong Company Formation]Hollowing-out

At the Party's conference in December the economic leadership vowed to rise to external challenges and overhaul the growth model.

Prevention of systemic and regional financial crises was made an imperative that merits paramount and immediate concern. This decision is based on following considerations.

First, excessive liquidity, resulting from Western desperation to head off a hard landing, can only be absorbed by a real economy revived on the back of generous financial support.

Second, with sound development of the financial system, industrial capital avoids being displaced by speculative capital amid a cyclical downturn. Otherwise, China's economic prowess accumulated over the past 30 years is in for an irreversible industrial hollowing-out.

Third, we need to manage a dynamic equilibrium between financial efficiency and stability, and also between financial innovation and regulation.