China Is Pumped With Cash And Now It's Ready to Crash

From Caing:

China’s foreign exchange reserves soared by US$ 453 billion in 2009, or 10 per cent of 2008 GDP. Bank lending increased 32 per cent to 9.6 trillion yuan. And yet nominal GDP rose only about 5 per cent.

Clearly, the financial side drove China’s GDP growth last year, reflecting a new reality of the post-financial crisis world. But all that money produced relatively little GDP growth because it worked its way into a single sector: property.

Two market beliefs animate this continuing movement. First is the belief that China’s currency will only appreciate. The other is that China’s land prices will drive money flows.

Continue reading at Caing >

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