Everyone is talking about how China is unbalanced or unstable: the Chinese are saving too much, not spending enough, or putting too much emphasis on exports. They say there’s a need for greater social services and more consumer spending.

So I wasn’t surprised when I sat down with several hundred western and Chinese businesses people at a recent World Economic Forum meeting in the north-eastern port city of Dalian to hear the Chinese premier address these concerns.

"We need to strike an appropriate balance between maintaining growth, restructuring the economy and managing inflation expectations," Premier Wen Jiabao told a gathering consisting of executives from all the heavy-hitters.

The line-up included the Bank of China, China Mobile, private equity firm Actis, Zurich Financial Services, Goodyear, Kraft, Booz & Co, Lenovo, Merck, Nomura, KPMG, PWC, DLA Piper Asia and International Bank of Azerbaijan, among many others.

Nomura strategist Paul Schulte emailed a paper to me after the WEF forum in which he echoed the refrain: "The Chinese economy is fundamentally unbalanced." He called for accelerated consumption, possibly incentivized through tax breaks.

"China’s consumption as a percentage of gross domestic product (GDP) is significantly lower than in the average emerging market at this phase of development," Paul said. "China’s large savings will need to be diverted towards both consumption and creating a better social and medical welfare system."

I think that all the building blocks are (literally) in place for this to happen. Whenever I visit our offices in Chongqing in western China I am struck by how huge the place is and how few retail outlets there are.

The west is booming, with huge cities springing up, towers climbing high and highways running wide and thick with traffic. Yet in a city like Chongqing, nearly double the size of Chicago, you just don’t see the western retail brands that you see in other places. The opportunity is enormous.

People aren’t spending because they are saving to pay for their healthcare and the basics of sustaining life. But as the government starts to widen its social security safety blanket, they will be free to start consuming.

They will consume mostly Chinese goods initially, which will mean that the percentage of goods that go overseas will decrease, which will be a healthy thing for China. The national balance sheet will be balanced and the economy will rely less on overseas consumers (mainly Americans) for their wealth.

My prediction for the next two to three years is that the financial services sector will boom alongside this rise in consumption. People will move their money into investments, the asset management sector will get a new life, retail banking activity will lift, retailing will take off, insurance businesses will come into play and there will be an increase in wholesale and investment banking and the capital markets.

The flow-on for western firms is that they will play a key role in "repatriating IP" from offshore, Chinese executives and senior leaders from other nationalities who can join in a growth partnership for China.

It’s leadership that will change China. We are already seeing a large number of incoming executives who are able to complement the strong local knowledge and understanding of the domestic market mindset and ways of doing business with some great international business experience and best practice corporate governance.

The Australian head of Treasury recently talked about a "golden age" for the Australian economy at least to 2050, as rapid population growth and Asian demand for resources brought about a sustained surge of global investment.

My feeling is that the golden age is just beginning for all businesses that have spent the time and the effort to invest in the world’s third-largest economy, which on current growth patterns is due to pass Japan to grab second spot later this year [2010].