Chinese Slippery Slope of Hope?
January 21, 2010
Chinese authorities seem to be caught between a "Rock and Hard Place," in a cycle of speeding up and slowing down credit expansion. With each deceleration, China's loan-dependent businesses, mostly state-owned and state-controlled, cry out in pain, resulting in another acceleration to make sure they do not grind to a halt.
We will have a clearer picture by the spring to see if Global demand has recovered sufficiently to support China's exporters. We have our doubts and the markets seem to be supporting our case. The Chinese ETF (FXI) has fallen to a new post recovery relative low versus the S&P Global Index in recent days.
The over-believed Chinese case is resembling more and more "A Slippery Slope of Hope."
