The Valor Blog.
Investment News and Views, Direct from Our Team.

China Recovery Unsustainable

Another great article from Macroinvestor outlining the recent appearance of a recovery in China.

The HSBC PMI data came out in expansionary for the first time in 13 months.

I must agree with the FT Alphaville’s comments on Nomura’s analysis that it is unlikely that the recovery in China is sustainable. If your problem is building empty offices, apartments, shopping centers and other infrastructure, then it is not sustainable to build more empty offices, apartments, shopping centers to fix the problem.

At some stage, China is going to have to take the bitter pill. The current leadership change appears to have delayed that difficult transition from fixed asset growth to more balanced growth, but the more they delay it, the more difficult it becomes…

Does Xi and his team have what it takes to turn the behemoth around? Do they have the ability to stop corruption from eating the country from the inside out? Or as Hu Jintao described it “kill the party and ruin the country”…