The risk of protectionist pressures is rising. If there was a trade war, over the medium term both would lose.

This is not good; it raises concerns about the sustainability of China's growth.

Most likely there will be tighter policies introduced in the coming months, if not weeks. The questions is: what is the right approach to deal with an increasingly market-orientated policy?

It's still a fast pace and that's partly to do with the difficulty in managing this very large balance of payments surplus because part of it is spilling over into the money supply.

You have an economy that has just turned out to be bigger than everyone thought. It's growing around 10 percent, and you have reserves growing to new record highs every month. That's providing a lot of arguments for China to move a bit quicker on the currency front.

Asia has the makings of a new economic paradigm, where it moves away from the export-led model.