Frustrated with the know-it-all bullish 'experts' on the Chinese economy lambasting wise boots-on-the-ground deep-thinkers such as Hugh Hendry and Albert Edwards; Marc Faber [8] (who discussed this in detail in the clip we presented here [9]) today set about correcting some of that vacuous chatter on China's dominance (with all its current stuffed inventory [10]). Noting that the Chinese stock market is not exactly pointing to the growth everyone is relying on (and we add since the MAR09 lows it is only fractionally better than Spain), Faber brings up one chart (courtesy of The Bank Credit Analyst) to rule them all. Alongside the mega-bubbles of: Gold in 1970s, the Nikkei in the 80s, and the Nasdaq in the 90s, Iron Ore prices since the start of 2000 have them all beat - and recently (as we noted here [11]) have begun to roll over.
The four biggest bubbles of the last 40 years... with Iron Ore the clear winner...
[12]
and how is China's equity market doing?
[13]
as Faber adds:
All these indicators [which he discusses at length from electricity production to Macau gaming revenues and consumer spending habits to appliance and air-conditioning volumes] do not necessarily suggest that the Chinese economy is collapsing, but they reliably do suggest that the economic slowdown is more pronounced than official Chinese statistics would have you believe. In addition, these indicators do not imply that the Chinese stock market will decline further (but it could). Perhaps the weak performance since 2008 has already discounted much of the slowdown in economic growth.
Charts: The Bank Credit Analyst and Bloomberg