While the dark clouds of recession continue to hang ominously over the world, streaks of sunlight have broken through China's economic climate. The Chinese economy grew at a remarkable 7.9 percent in the second quarter, renewing the government's confidence that the 8-percent yearly target is on track and achievable.

This good news is indicated in the newly released July economic statistics, which show that industrial production, fixed-asset investment and retail sales all maintained strong growth momentum.

But does this mean that China's economy is on the way to a sustained recovery? Perhaps it's too early to tell.

The resilience of the Chinese economy so far this year has been largely propped up by the government's 4-trillion-yuan ($586-billion) stimulus package, which has brought about a government investment spree in all kinds of infrastructure projects. While the economy was being bled dry by a devastating slump in exports—one of the growth engines, which dragged the first-half GDP down by 2.9 percentage points—investment has been able to put a stop to this hemorrhaging. In the first half of the year, investment generated 87.6 percent of the GDP, driving it up by 6.2 percentage points. Of the total fixed-asset investments, those invested by state-owned or state-holding enterprises rose by 41.4 percent.

The government spending spree was also accompanied by a surge in bank lending. New bank loans in the first half, totaling 7.37 trillion yuan ($1.1 trillion), reached a half-year record and even exceeded the total for the whole of 2008. The recent boom in stock and property markets is being backed by the rush of bank loans. Concerns are rising that bubbles must have been created in the two markets, posing a hidden risk for the economy. In addition, inflation may return earlier than expected, despite the current negative growth rates of consumer price and producer price indexes.

Of course, China is not pursuing pure growth in GDP, as maintaining growth, expanding domestic demand and adjusting economic structure have been proposed as the guidelines for this year's economic development.

Resuming high GDP growth seems much easier than the latter two tasks. But only when expanding domestic demand and adjusting economic structure are realized, can the economy achieve fast, sound and sustainable growth.