China rally or speculative balloon?

China rally or speculative balloon?

As of today, February 27, the Shanghai Composite is up 13.53% in the last month. The beginning of a sustained turnaround or another speculative balloon ready to pop? It's too early to tell, unfortunately. The factors that could be inflating a speculative balloon are...
China GDP growth “perfect”–I hope not dangerously perfect

China GDP growth “perfect”–I hope not dangerously perfect

China’s GDP grew at a 6.8% year over year rate in fourth quarter. That represents a slight improvement on the expected 6.7% growth rate and an absolutely “perfect” continuation of the 6.8% year over year growth recorded in the third quarter. Data this good from China always raises the suspicion of either manipulation of the numbers or intervention by the Beijing government.

China’s increasingly frantic, increasingly dangerous game of financial markets Whac-A-Mole

China faces a depreciating currency, a bond market that has switched from rally to sell off, huge outflows of cash, and what looks like a resurgence of inflation. Fixing one of these problems alone would be a huge challenge to the People’s Bank. The combination leaves the central bank with a situation where fixing one problem may just make the others worse. Increasingly the People’s Bank looks like it is rushing from problem to problem, giving the crisis-of-day a whack and then rushing to figure out what’s likely to pop up next that will deserve a bash with the mallet.

China’s 6.7% GDP growth built on a mountain of new debt

China’s 6.7% GDP growth hinged on another quarter’s worth of debt financing for an economy that’s already eyebrows deep in debt. Money supply climbed at a 13.4% rate in the quarter as the People’s Bank continued to pump cash into China’s economy. New loans by Chinese banks climbed to 1370 billion yuan in March. Aggregate growth in new financing was more than double the rate in the fourth quarter.

Write offs from bad loans at China’s big banks soar by 127% in 2013

Write offs from bad loans at China’s big banks soar by 127% in 2013

China’s five biggest banks increased their write off of bad loans by 127% in 2013 over 2012 levels. And the rising level of write offs along with the puzzlingly low ratio of non-performing loans at these banks has raised suspicions that banks are manipulating write offs to prevent the non-performing loan ratios from rising so quickly that they set off alarms in financial markets.