I wouldn't just concentrate on demand from China for domestic consumption only. As long as the Chinese have their own currency pegged at a fixed exchange rate against the USDollar, labor cost will appear minimal to foreign manufacturers who choose China for their production plants. Therefore, China is currently producing goods not only for its domestic demand but also for international needs. I'm not able to quantify such large numbers, but I suppose that after the 1997 Asian crisis (which mostly hurt the local currencies) international investors would prefer the relative stability of China's exchange-rate regime to take their business to.Last year, China was world champion of Foreign Direct Investment -surpassing the USA for the first time- and numbers for the first 9 months of 2003 show that this will probably be the case again this year. (A very rare case of another country ending above the US in foreign investment).I believe the demand for raw material from China is actual, and that it mirrors the 8.5% annual growth rates that the country experiences. (The number is the official growth rate supplied by the government - many analysts say that even this 8.5% is understated).Cotton, copper, platinum, coil and many other commodities' prices are at their highest level ever. So, the reason for the Baltic Freight Index to be sky high is China's demand to cover global (and not only local!) consumption needs.I think this reason is valid and explainable.Now, wether this situation is sustainable or not is probably another subject. Once we explain the conditions that drove the Baltic Freight Index this high, trying to foresee where it will go to next, is partly speculation and partly the ability to analyse global economics.My personal view is that we are experiencing a bubble formation of some sort, which probably has some way to go before it bursts.I presume you may follow China's monthly import numbers to have a fair picture, but then again once you see these going down, the Baltic Freight Index will already have started heading lower.