China's urban skylines are still crowded with cranes building more skyscrapers, more and more BMWs and top-of-the-range SUVs are crowding the streets, factories are now producing over half of all the finished goods in the world, and even the farmers are beginning to feel the benefit of growth.

Is the story of China's burgeoning economy a never-ending one? 2004 was the year of the debate on hard landing versus soft landing, which prompted the government to introduce credit-curbing measures to stymie runaway growth, including the first rate hike in nine years in late October.

China has been the fastest-growing major in the world for many years now; everyone is asking when Chinese growth will have any kind of landing, be it hard or soft. Well, don't expect a downturn in 2005, anyway.

Private sector analysts expect gross domestic product (GDP) growth of 8 or 9 per cent - still very much fast-track growth and in line with the government forecasts.

Next year, everyone will again be watching the Communist leadership to see what it will do about the currency's peg to the dollar, domestic interest rates and consumer prices. Tensions across the Taiwan Strait will also play a role in deciding sentiment.

At a meeting of China's National Development and Reform Commission this month, top policy-makers said they expected a mild slowdown in GDP growth. China has claimed initial success in cooling the economy, but officials have said they still worry about possible rebounds in inflation and fixed-asset investment. Consumer price inflation and investment growth are expected to fall modestly, though officials have voiced concern that producer prices could still be on the rise.

"The macro outlook for the next nine months or so is fairly straightforward and boring: administrative curbs on credit and investment will likely continue through the middle of 2005," said Arthur Kroeber, an economist who edits the influential China Economic Quarterly. "GDP growth will slow from about 9.5 per cent in 2004 to 8.5 per cent next year."

Kroeber predicted that there would be no movement on the currency, and interest rates would rise, at most, only such that the one-year deposit rate matched the one-year inflation rate.

"The only things that could derail this soft-landing scenario are a surge in inflation early next year on the back of higher input prices, or a collapse in demand in the main export market, the United States," said Kroeber.

Flushed with its apparent success in keeping runaway economic growth under control, the Chinese government is fairly confident that it can also limit inflation.

Mr Chen Dongqi, vice-president of the Academy of Macroeconomic Research (part of the State Development and Reform Commission), said that "prudent fiscal and monetary policies" would help to bring the deficit down and ensure more balanced development. China will slow its pace of economic growth by 0.7 to 0.8 percentage points next year. He said this moderation would keep the rise of CPI at around 3 per cent.

Industrial production figures bear out the moderate growth scenario. China's industrial output grew a weaker-than-expected 14.8 per cent in the year to November, in what was read as a clear sign of a slowdown in the economy's breakneck pace of expansion.

Chinese industry has boomed on the back of massive investment in real estate, cars and metals. Foreign investment and purchasing has also been a big factor, as more overseas firms set up shop in China or source products from domestic factories to take advantage of cheap labour and economies of scale.

Energy is going to play a major role next year. China is thirsty for fuel for its dramatic expansion, and it is increasingly reliant on imported raw materials.

"With energy demand rising in step with China's remarkable economic growth, China now must deal with the hard truth that it faces a widening energy deficit," Mr David Li, chairman and chief executive of the Bank of East Asia, told a conference in Beijing this month. He pointed out that China had been a net exporter of oil until 1995, but the country had surpassed Japan to become the world's second largest oil importer in the past two years. The US Energy Department predicts that China's demand for energy will double again by 2020.

China could again raise its interest rates to rein in the red-hot economy; Li said he believed that China would continue to apply administrative measures as necessary to cool specific sectors, although a series of interest rate hikes along the US model is unlikely.

"2005 is expected to be an important year of transition for China's financial markets," said China economist Mr Frank Gong at JP Morgan. He predicts a shift in focus away from the hard or soft landing debate to policy shifts and reform of the financial sector.

Financial markets have quickly digested the negative fallout of October's rate increase, and shifted focus to Chinese yuan revaluation. "The Year of the Rooster could finally be the year of the much-expected foreign exchange regime change in the Chinese yuan," said Mr Gong.

"This will increase the chance of a soft landing for the Chinese economy, shifting the growth engine to being more domestic-driven, rather than powered by exports and investments." Ms Hong Liang at Goldman Sachs in Hong Kong also forecasts that strong domestic demand will take a key place next year, with private consumption playing an increasing role relative to investment.

However, China is at a crucial stage of cycle management, despite slowing activity and money/credit growth. "To keep policy tightening 'on the curve' while avoiding any overkill of economic momentum, we believe the policy mixture needs to be switched rapidly from an administrative approach toward a more market-based approach," she said.

"We believe delays in engineering such a switch could raise the downside risks to China's growth and inflation outlook for 2005 and 2006," she said.

Goldman Sachs is forecasting 9.7 per cent GDP growth this year and 8.1 per cent growth next year. For the CPI, it forecasts 4.5 per cent this year and 4 per cent next year.

"Data since May have confirmed our view that concerns about a hard landing in the short term were overdone: import demand from China remains strong, private consumption is gaining more traction, and the slowdown in investment has been gradual and measured," said Ms Hong.

Mr Andy Xie at Morgan Stanley believes China will see more growth now, but less later. "The preference for a weak dollar from the US, and China's reluctance to raise interest rates will likely prolong the global liquidity and growth boom into the first half of 2005," he said.

Morgan Stanley expects the weak dollar and strong liquidity to sustain investment growth in China above the current trend in the first half of next year.

The investment house has raised its real GDP growth forecast for China in 2005 to 7.8 per cent, from 7 per cent.