Zhang Jun writes about the premier’s balancing act between conventional credit and overissuance of currency and the government’s response to overheating.

But the latest round of deflation-fighting policies, together with the massive stimulus package that the government launched in the wake of the global economic crisis, has led to oversupply in the housing market and idle capital in the manufacturing sector. Making matters worse, demand for Chinese exports in Europe and the United States has weakened considerably, and is not expected to rebound. All of this has diminished short-term investment opportunities in China, raising fears of a hard landing.