China stimulus plan works?

NY Times:

Fueled by a big economic stimulus package and aggressive bank lending, China’s economy grew by 7.9 percent in the second quarter compared with a year ago, the government said Thursday, a surprisingly strong showing during the global economic downturn.

The gross domestic product figures, released Thursday by the National Statistics Bureau in Beijing, suggest that the country’s stimulus policies are working and that the government will most likely achieve the 8 percent full year growth target it set early this year, analysts say.

But China’s growth spurt is also presenting a new set of challenges, including questions about the sustainability of the growth and worries that record bank lending could result in wasteful spending and a large jump in non-performing loans.

Still, analysts say that while most other major economies are contracting and suffering from the worst economic crisis in decades, China appears to have turned a corner.

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I suspect that this type of stimulus may create inflation too. Still it is quite a contrast from Obama's stimulus and raises questions about the slow growth achieved from such a massive appropriation bill.