The French bank has told clients to hedge against the danger of a blow-off spike in Chinese growth over coming months that will push commodity prices much higher, followed by a sudden reversal as China slams on the brakes.

In a report entitled The Dragon which played with fire, the bank’s global team said China had carried out its own version of “quantitative easing”, cranking up credit by 20 trillion (£1.9 trillion) or 50pc of GDP over the past two years. It has waited too long to drain excess stimulus.

Under the bank’s “risk scenario” – a 30pc probability – inflation will hit 10pc by the summer. “This would cause tremendous pain and fuel widespread social discontent,” and risks a “pernicious wage-price spiral”

“Policy makers are already behind the curve. According to our Taylor Rule analysis, the tightening needed is about 250 basis points,” said the report, by Alain Bokobza, Glenn Maguire and Wei Yao.

The Politiburo may be tempted to put off hard decisions until the leadership transition in 2012 is safe. “The skew of risks is very much for an extended period of overheating, and therefore uncontained inflation,” it said.

Under the bank’s “risk scenario” – a 30pc probability – inflation will hit 10pc by the summer. “This would cause tremendous pain and fuel widespread social discontent,” and risks a “pernicious wage-price spiral”.

The French bank he refers to is Societe Generale.  I spent a number of years working for a French bank — BNP-Paribas, not SocGen — and one enduring lesson I took from that experience was that they tended to be particularly astute at discerning developments within countries whose official statistics often left a bit to be desired. They tended to have good unofficial sources or real information and a well honed ability to read between the lines and connect various dots. That’s why I tend to take this report seriously.

Anything can and will happen but China has always seemed to me to be a story which was just a few degrees too good to be true.