It is easy to see why Chinese premier Wen Jiabao is calling for a “greater emphasis on growth”. China’s property market is stressed and the country’s main export market, Europe, is contracting. Several economic indicators, including electricity consumption, point to an economic downturn as severe as China experienced after the Lehman bust. Beijing’s mandarins have woken up to an old problem, but not found new answers. A proposed new stimulus plan suggests more money will be wasted on trophy projects, more bad debts will accumulate in the banking system, and China’s economic imbalances will continue to deteriorate.

Nobody is expecting a fiscal stimulus on the scale of the Rmb4tn spending splurge of 2009. Credit Suisse suggests a more modest Rmb1tn-Rmb2tn of new investment may materialise. China’s new programme is likely to include bringing forward existing infrastructure projects, providing more consumer subsidies, and funding the development of strategic industries, such as clean energy. In outline, the policy looks pretty similar to the previous stimulus package, except on a smaller scale. It is too early to judge the legacy of China’s 2009 stimulus. There are, however, indications that capital has been stupendously misallocated.

The rapid expansion of China’s planned 25,000km high-speed rail system has attracted particular attention. Questions have been raised about the quality of materials used in its construction. A fatal accident near Wenzhou last summer, which killed dozens of passengers, appeared to justify safety concerns. Rail experts have also queried the economic justification for such an extensive high-speed network – it is cheaper and more convenient to fly long distances. The rail system has many more trains than are required to meet current and prospective demand, according to Jefferies & Co. a global investment bank. Furthermore, its construction has provided an opportunity for public officials to line their pockets. Last month, the former railway minister, Liu Zhijun, was thrown out of the party after being accused of “severe corruption”. To cap it all, this expensive train set has saddled the railway ministry with debts equivalent to 5 per cent of GDP.