Bloomberg.com ran a story 7/29 looking (in some detail) at the possibility that economic growth in China might be lowering to the 3% level.
Yes, 3% GDP growth, year-on-year. A tragedy, I guess, for a communist dictatorship that’s publicly targeting 7%, in a country used to double-digit annual growth rates (China’s economy is thought to have grown at 10% or better for 35 years, I kid you not).
Some key slices:
- As China’s economy has cooled, commodity prices have slid. Iron ore has slumped 17 percent since reaching a 16-month high in February.
- A growth rate in China of 5.9 percent in 2014 would lead metal prices to fall as much as 30 percent, while oil prices may drop as much as 20 percent, according to an estimate by Nomura in a July 23 report.
- In the case of a hard landing, Societe Generale’s investment recommendations are to sell copper call options and buy copper puts
AND – as evidence that this is not pull-it-out-of-your-butt speculation:
Premier Li has signaled he is willing to endure slower growth as he weans the economy off exports and cheap credit, and steers it toward a more market-driven path with a reduced role for government. The central bank engineered a cash crunch last month that sent the overnight interbank lending rate to a record 12.85 percent in an attempt to rein in speculative loans.
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