Posts Tagged Chinese Economy

Whether China stocks fall, again, or rise, again, the next quarter or two doesn’t affect the fundamental shift occuring in the global economy. China is entering the drivers seat. Hu’s trip to the United States is well timed and nice words won’t change the inexorable model of Chinese business. A lot of institutional money is cycling out of China at the moment because of fears that rate rises will cause a hard landing for China. Let’s simply stick to our winners: Chinalco, Petrochina, China Construction Bank, ICBC, Brilliance Automotive, Geely and others. These are the new global giants and they aren’t going anywhere.

China everday looks more like the global economic leader. Their model works. Their economic management is simply competent and they keep getting it right. These interest rate hikes may be bad for our Chinese equities this week but it is good news for the long run…a stable soft landing while managing inflation.

A senior Beijing official’s reference to China as the “world’s second-largest economy” has sparked excited speculation that Asia’s new powerhouse may have already reached a long-looming milestone by surpassing Japan.   China’s rapid recent growth has made it increasingly likely that its gross domestic product, in US dollar terms, will be larger this year than Japan’s.   It´s like reaching the finals of a competition.  Guess who gets bumped down next?

China´s manfucturing just expanded for the 13th straight month and it is clear that the China is genuinely leading the world´s economic recovery. They are also learning to buy.  The real story since the worst of the crisis is not China’s recovering exports but China’s strong imports. Germany’s trade with China is showing such strong growth that by spring next year, on current trends, it might exceed that with France. China last year reported a current account surplus of 5.8 per cent of GDP, significantly lower than apparently assumed as the current level by many people in Washington. In 2010, it could be closer to 3 per cent. FT. Imagine that?  China buying more from the world´s largest rich country exporter, Germany, than the Europeans themselves.   CR Capital advisors has been bullish on China for years and we argued that sooner than later, Chinese domestic demand would catch fire.  It is catching fire now.  It seems the dilemna for economic managers will be to control inflation and pop asset bubbles in order to actually preserve asset prices.

www.crinvestmentadvisors.com

China’s export decline is slowing.   Their exports fell the least in nine  months in September and new lending grew by more than economists forecast as the world’s third-largest economy leads the recovery.  September power use also climbed the  most in 16 Months.  China’s electricity consumption rose 10.2 % in September, the most since June last year, as the domestic economy recovered.  Power demand climbed to 322 million megawatt-hours last month, the China Electricity Council said in a statement on its Web site today. It didn’t give power generation figures. China’s manufacturing expanded at the fastest pace in 17 months in September, boosting demand for electricity as plants increased output to meet improving overseas shipments. Power generation in the world’s third-biggest economy gained for a third month to a record of 344.3 million megawatt-hours in August after the nation’s industrial production grew at a faster pace that month, according to official data.

www.crinvestmentadvisors.com

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