Kynge is calling it now

China expanded total domestic credit by Rmb12tn, or 34 per cent of gross domestic product, in the year to November 2009 — significantly less than the Rmb27.9tn, or 40 per cent of GDP, in the year to February this year, according to Bernstein Research.

But while the 2009 stimulus reinvigorated growth from 6.1 per cent in the first quarter to a full-year GDP growth rate of 9.2 per cent, the flood of credit seen in the year to February has been accompanied by a gentle decline in GDP headline numbers. …

… This basic contradiction underlies others. Beijing says it wants to strip out industrial overcapacity and shut down “zombie” companies but is also flooding the economy with cheap credit. It is committed to opening the capital account but has stepped up curbs on capital outflows. It was content to see stock prices rally last year but intervened heavily when prices slumped. [Link]

 

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