Wikinvest Wire

Alarming China statistics for the day

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.
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.
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?

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!


Anonymous said...

Those official Chinese numbers are amazing - no?

Anthony J. Alfidi said...

China still has a lot to learn. Speedy decisionmaking is one thing, managing its consequences another. After this next bust they may learn to put brakes on.

The changing numbers probably result from poor transparency. Another lesson they must learn.

Full disclosure: Long FXI (with short straddle).

Anonymous said...

A lot to learn? LOL! They have real savings ... even willing to keep funding our overspending little a while longer.

bevo said...

No kidding about those official numbers. Are the same people who fell for Enron's accounting numbers, and Saudi Arabia's oil reserve numbers, now falling for Chinese economics numbers?

Plus, their stock market represents a bubble. Of course, no one is saying it is a bubble.

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