Posted on 09/16/2011 6:49:25 AM PDT by TigerLikesRooster
China risks hard landing as global woes spread
China's carefully-managed soft landing is turning harder by the day, threatening to deflate the torrid credit bubble of the past three years.
Ambrose Evans-Pritchard
By Ambrose Evans-Pritchard, In Dalian
6:23PM BST 15 Sep 2011
"There is a large potential risk," said Zhu Min, the deputy managing director of the International Monetary Fund and a former Chinese official.
Mr Zhu said China had doubled the loan ratio from below 100pc of GDP before the Lehman crisis to roughly 200pc today.
The danger is that this excess could start to unwind just as the West goes into a sharp downturn, and possibly a double-dip recession.
China and emerging Asia are fundamentally in weaker shape this time, having used up their "fiscal cushions", leaving them with little leeway to cope with a fresh global shock. Their monetary policies are already loose.
"We're at a key moment. They need to make sure their economies don't slow down too fast," he said at the World Economic Forum in Dalian.
China's electricity use – closely watched as the economy's true pulse – was almost flat over the summer. Export orders fell 3.3pc in August, with the PMI index down to a 28-month low. Inventories have jumped.
The M2 money supply has dropped from its normal growth rate of 18pc to 20pc to nearer 12pc over the past three months (annualised). "A hard landing is already in progress," said Diana Choyleva from Lombard Street Research.
Beijing has actively sought to cool overheating, alarmed by inflation above 6pc and price-to-income ratios for property in the rich coastal cities nearing wild extremes of 20. But it does not want the economy to jerk violently from boom to bust.
(Excerpt) Read more at telegraph.co.uk ...
P!
I’m sure they have it under control, central planning has never failed before.
/s
master, whadya think?
china’s not the most transparent business community.
China really has a messed up system, it’s just been overlooked because its been able to grow out of their extreme poverty.
The author of this article wrote a REALLY amazing book about Bill Clinton about 15 years back.
It will scare the cr*p out of you, it’s so good —tons of amazing stuff about Bubba.
Europe crashing, USA to crash...will China be the biggest wreck of all? It’s possible.
I would NOT want to be on Taiwan in 2 years, no way... :(
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