China 2012: No Hard Landing on the Horizon?

By CFA Institute: By CK Lee, CFA

    Let’s wind the clock back to 2008.   The world was thought to be ending. Lehman went bust. Markets were plunging. Everyone was scared that growth was over. It was as though the global economy was grinding to a halt.   But then China’s stock market bottomed. The Chinese Government announced a massive stimulus plan to turn its economy around. And sure enough the Chinese economy took off again.  

By CFA Institute: By Charlie Henneman, CFA

Few would dispute China’s importance to the world economy today; from small villages to large cities, its presence is now felt almost everywhere. The Economist recently went so far as to call China “the indispensable economy,” reporting that more and more multinational companies are realizing an increased share of their revenues from inside Chinese borders.

The underlying trends seen this year have continued, but after strong follow through in Asia, a more subdued tone has been seen in Europe.  The US dollar is generally softer, except against the yen and sterling.  Japanese markets were closed for holiday, but the MSCI Asia-Pacific Index rose almost 0.3%, lifted by more than a 3% rally in China on speculation that there may be a sharp increase in the cap on foreign investors' ability to invest in Chinese equities.

Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.The chart and paragraphs below come from friend, scrumming partner and uber-bear (equities, not bonds), Albert Edwards, global strategist from Société Générale Cross Asset Research.

At the Cambridge House’s Vancouver Resource Investment Conference this week, I am part of a special debate on whether China will boom or bust with bestselling author Gordon G. Chang. The title of Chang’s book, The Coming Collapse of China, states his position quite clearly and I look forward to the intellectual challenge of convincing him otherwise. I’ve found many people are particularly energized about predicting a hard landing for China’s economy, but I believe the country is no sinking ship.