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China's Economy Overheats: Q4 Real GDP Rises 10.7% YoY, Rumors Of Interest Rate Hike In Media
Chinese GDP is officially in the redzone: at 10.7% YoY, while Q3 was revised to 9.1%. For all of 2009, Chinese GDP rose at 9.7% (2008 came in at 9.6%): China's mystical printing machine helped the country avoid any aspect of the global recession, and these are not the droids we are looking for. At the same time the country announced a 1.9% CPI increase YoY in December, even as 2009 saw a -0.7% decline in CPI, compared to a 5.9% increase in 2008. Retail sales in 2009 surged at 15.5% nominal and 17.5% real.
The PBoC is busy: the 3 month yield rose to 1.4088% versus 1.3684%.
And the schizophrenia is becoming more acute: the bank has injected CNY28 billion in the market this week, even as rumors of another interest rate hike spread. Stone & McCarthy reports that according to the 21st Century Herald, there are rumors that the CB is planning a 27bps hike for Friday. The same article points out that Chinese banks have already lent out more than CNY1.1 TN in the first two weeks of the year alone, according to the China Securities Journal. Accountable for half of the total loans were the big four banks, which will likely soon follow Lehman's fate: Commercial Bank of China, Bank of China, China Construction Bank and Agircultural Bank of China.
In the OTC market, the CNY moved from 6.8274 to 6.8271. The CSI300 was up 0.1% at last check, while the Hang Seng was down 0.44%.
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China is clearly over-stimulated and probably in a massive bubble. The question is whether the plug will be pulled sooner rather than later. They are certainly talking tough now but who really knows if the action will match the rhetoric/expectations. The interesting thing to consider is that- I believe- there is to be a transfer of power at the end of this year. Obviously the outgoing administration will want the bubble to continue into the next administration while the new administration doesn't want a banking crisis and/or inflation upon taking power. Any insight on this dynamic would be useful.
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I didn't think it worked that way. There are internal divisions, but they remain precisely that--internal to the party.
The message is always the Party united in leading the people, no?
Don't think the incoming technocrats will blame the past technocrats for screw-ups, as it delegitimizes the whole structure.
When they put the best one of them all, Zhu Rongji, out to pasture they didn't dare question his legacy.
Have things changed that much?
great point, jm.
same principle: don't forget who killed MLK.
This thing is like an aged star expanding, too fast, too hot.....
.....explosion, and a gaping black hole.....imminent.
China is a big country, inhabited by many Chinese.
Charles de Gaulle
I think the global construct is more along the lines of NGC 6888, especially if one were to look at it from space. I realize it easy to make such analogies now, but I was in AIG puts when it imploded and have referred to NGC 6888 for 2.5 years.
This quote from cnbc is hilarious:
"Since 1978, China has averaged GDP growth of close to 10 percent a year, but the government had to ramp up spending and shift to an extremely loose monetary policy to put the country on track to meet its 2009 growth target.
With growth now solidly anchored, the People's Bank of China has started to tighten monetary policy. The central bank is pushing up money market rates and last week raised bank reserve requirements for the first time since June 2008.
I'm confident that the U.S. Commerce Department can outdo those numbers.
@deadhead
Lulz. The stories those staffers could probably tell....
China does look like a bubble economy. I can tell you this: if the bubble goes "pop," then the carnage will be worse than Japan's.
Allow me to divvy up money- and credit-driven inflation into these three categories: consumer-price inflation (the regular kind), asset-price inflation (think residential real estate) and capital-goods inflation. The last one is insidious because the inflation prompts an overexpansion of the "real economy." Capital-goods inflation doesn't look all that menacing because factories are being built, productivity gains are ensuing, productivity itself is shooting up, and all of these factors make capital-goods inflation look solid and sustainable.
That's what makes it so dangerous.
China is not a bubble since so many people can see it.
Had the growth numbers been 5%, there would be fears about China growth slowing too much ZOMG!. Can't win. Trade the tape and analysts can stfu.
Everyone EXCEPT the people responsible for regulating it could see the tech bubble and the housing bubble too.
If it looks like a duck, walks like a duck, quacks like a duck.....it's probably a duck.
Regulators demanded banks to slow down lending some days ago so it doesn't look like a duck.
It's not a democracy, we can't just call it 80s japan. It's been like this for 30 years. It may pop tomorrow or it may never pop, it's all up to chinese pm.
> It may pop tomorrow or it may never pop, it's all up to chinese pm.
It's all up to the Chinese PM, until it isn't. Dictators don't have magic powers to abolish gravity or economics.
+1. By now contrarians have left the short china trade, only ZH and Chanos are still there to defend their reputation.
For 3 months the MSM has been calling the pop of the china bubble (just read Bloomberg's headline today on china growth, and when ZH and Denninger talk about the issue in hyper ventilation mode, well, you would lose money trading on their views. just like all of 2009.
The subtext is that this finally puts the Chinese economy ahead of Japan. (stay tuned)
For people in the West, this may appear to be the subtext, but for the Chinese, this is their number one goal. The concept of Japan kowtowing before the Chinese economic majesty is of huge significance and represents a rebalancing of several hundred years of humiliation.
Well there you go. I'll say it again. Aussies better cup themselves for the imminent blow to the jacks crackers. If China catches herpes, Australia catches AIDS.
Your observations are spot on. I just had family on the west coast get out of real estate. Some listened, some didn't. Aussie real estate could be in huge trouble if the Chinese supernova implodes....
If China starts to implode many of its citizens will attempt to evacuate. And if Australia is anything like California the Chinese over here have been buying real estate for decades as a refuge from just such an event. That's one of the things that has kept California real estate so expensive. The point is there will be many "nouvo rich" fugitives looking for a new home.
The Chinese have already begun buying up all price ranges of real estate in Australia so much so that it's made the MSM's very recently (news.com.au in particular) as they're displacing and outbidding the locals who are none too happy.
You got any more info? A chinese crash hammering the AU economy gives my real estate dreams hope, so if this is true to any extent it wouldn't be good.
All areas? Can't imagine the newly rich escapees would be looking for a rural life, but if they're buying enough anywhere it'll affect all prices. Rising tide and all...
Agree Ozzie. There's alot of bricks being shat at the moment at the realisation that China is in the process of blowing itself up.
I think you mean Jatz Crackers
Can someone pls also elaborate why they think A$ is underperforming gold each time we have a risk aversion scare
Will rephrase that Question, why is the A$ not falling as hard as gold when we have a risk aversion scare. One would think if China is tightening, that should send shock waves through the A$ and it would under perform gold, but it isn't?
Australia was the first major economy to raise interest rates since the outbreak of the financial crisis
meanwhile:
Russia diversifies into Canadian dollarshttp://www.ft.com/cms/s/0/22f1bd26-05db-11df-8c97-00144feabdc0.html
They could have told you the growth rate at the beginning of the year. It was always going to be more than 2008. The fact that it was just.1% higher tells you that the real number was far lower. That's how they do statistics over there. Throw out your old stats text book. It is no longer applicable.
He's Done Everything Wrong
by Mort Zuckerman (big time supporter of President Obama)
http://www.thedailybeast.com/blogs-and-stories/2010-01-19/hes-done-every...
With so many numbers flying around and nothing "bad" happening, its makes one grow complacent. The first shit storm was an accident that caught many people by surprise. This next shit storm has been in the works for a while now and has given people a great deal of time to get out of the way if they had an attention span of more than a few days.
China is NOT a bubble!
China just bullsh#ts their GDP numbers harder and more outrageously than any other country.
They are hell-bent on "proving" to the rest of the world that they are a global superpower -- when in reality, they aren't.
Nothing to see here, move along....
china is not a bubble, china is not a bubble, china is not a bubble. Shutting my senses and repeating to myself: china is not a bubble & yeah we can !
Hmmm....
Bubble or not, China is/is becoming the manufacturer for the world. I am not sure where that leaves us, but It will not be good. It seems inevitable that the US workforce is and will be competing against 3rd world labor. The result will be among other things a lower standard of living for the average american.....
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