Robert Mundell won the Nobel Prize for Economics in 1999 for his work on "optimum currnency areas". The Euro is the practical application of his theory. Yet he's fallen for the old laws of economics don't apply to China trick.

China doesn't have to worry about an overheated economy, said Nobel Prize Laureate Robert Mundell Thursday...The very slight inflation this year will counteract the deflation China had last year and the currency expansion will lead to a growth of import to balance China's export surplus, he said...The fast growing forex reserve is pushed strongly by commercial banks rather than overheated economy, Mundell said. Those banks pour a huge amount of capital into China, predicting that the country will appreciate its currency and, intend to cash in, he added. (my emphasis)

While China runs a "socialist market" economy that does not work at all like capitalism it is still subject to the laws of economics. China's leaders would not be trying to slow things down if they didn't feel they have to. Until Dr. Muddle Mundell has a word to Beijing and tells them they are wrong it looks like Beijing are going to continue to act as if the economy is overheating. Given they are the only knows who have an inkling of the true state of China's economy, who is Dr. Mundell to doubt them?

* _{this is an index of the prices producers have to pay for their goods and services - it is similar to the consumer price index, which is the prices of goods and services you and I buy.}