Far from the wonder economy some people represent it as, China's economy is a over-heated, smoking mess. So far it's managed to keep chugging along, but problems are building that will eventually cause it to fall apart.

China's leaders are finding that the world's largest command economy no longer responds to their commands.

Growth is hurtling along at the fastest pace in a decade, defying official efforts to curb investment in unneeded factories and real-estate projects. The government's immediate concerns are that overheated growth will saddle China with excess capacity, create more asset bubbles and increase friction with the United States and other trading partners.

"China's unbalanced growth model has now gone to excess and seems in danger of veering out of control," said Stephen Roach, the chief global economist at Morgan Stanley in New York. "The longer China's economic boom runs, the tougher it will be to avoid a more treacherous endgame."

That might include defaults on bank loans, and eventually deflation and a collapse of asset values. Such a hard landing would risk breeding social unrest within China while drying up export markets for neighbors like South Korea and Taiwan.

The problem is that the financial system that has funded China's boom does not make its decisions based on economic analysis, but on what the Communist Party tells it. This can create a lot of activity quickly, but has problems in delivering a return on investment.

In the banking system, measures taken so far to curb lending "are like taking a spoonful of water from an overflowing swimming pool," said Dong Tao, chief Asia economist at Credit Suisse Group in Hong Kong.

Outstanding yuan-denominated loans on June 30 stood at 21.5 trillion yuan, or $2.7 trillion, 15.2 percent higher than a year earlier. New yuan lending in the first half totaled 2.18 trillion yuan, approaching the central bank's full-year target of 2.5 trillion yuan.

China's banks carry more than 1.3 trillion yuan of nonperforming loans, which exceeds the 8 percent carried on their books, according to Moody's Investors Service.

Chinese banks are "backward in terms of their risk management and pricing of loans," said May Yan, vice president at Moody's in Hong Kong. "It's going to take years for these banks to learn how to price risk, and they're going to get burned along the way."

China already has a lot of popular unrest bubbling just under the surface. A serious reversal in their miracle economy would throw millions out of work and destroy the savings of millions more. What happens after that is impossible to predict.