Tuesday, August 04, 2009
From the story Can China Save the World? in the the current issue of Time Magazine come the following alarming China statistics for the day.
The speed and relative success so far of China's stimulus stands in stark contrast with that of the U.S. According to a recent study by the World Bank, Beijing's government spending will generate more than 80% of the country's overall economic growth this year.Is it my imagination or does the estimate of the amount of new lending that has found its way into stocks and real estate just keep going up?
There are certainly signs that some aspects of China's recovery are ephemeral. Part of the reason China's stock market has soared is that Chinese companies have received so much cheap financing that they have dumped proceeds into the equity market for lack of better alternatives. Andrew Barber, Asia strategist at Research Edge, a New Haven, Conn., investment-research firm, estimates that up to 30% of new bank lending this year has wound its way into equities.
Not long ago it was a combined $100 billion or so, but, more recently Time reported the figure at some $170 billion going into stocks alone through the month of May. But, based on the $1.1 trillion in new bank lending this year reported at Bloomberg the other day, the 30 percent estimate above would put that total at closer to $300 billion!