Tuesday, December 31, 2013

China: Slowdown Or Crash?

Basically I look at China this way: between 2000 and 2007 the chinese economy grew and credit expanded at about the same rate as the GDP, slightly higher but not excessively. But after the crisis of 2008, we had essentially a credit driven boom in China and whenever you have excessive credit growth and artificially low interest rates (because inflation in China is much bigger than what the government is publishing) you have symptoms of bubbles developing...clearly in the real estate market where there were some over investments.

There fore, I think a slowdown in China is coming and possibly in some sectors of the economy, a crash.

Related stocks and ETFs: iShares FTSE/Xinhua China 25 Index ETF (NYSE:FXI), PowerShares Gld Drg Haltr USX China ETF (NYSE:PGJ), Morgan Stanley China A Share Fund, Inc. (NYSE:CAF), China Mobile Ltd. ADR (NYSE:CHL), Aluminum Corp. of China Limited ADR (NYSE:ACH), China Life Insurance Company Ltd. ADR (NYSE:LFC)

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

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