10 June 2010
With the World Cup upon us, we're all soon to hear a whole lot of war cries. There will be "Allez les bleus!", "EE-tah-lia!", "Viva Espana!" and maybe even some "Rule Brittania" (at least until a penalty shootout).
In China's case, it'll be the old war cry/expression of encouragement: "jia you"! It means "add fuel" though the Chinese government won't be needing to do that for a while.
This economic dragon is breathing financial fire, and there's probably just too much fire in the belly right now. China is up there with Australia amongst countries that have shrugged off the GFC (and probably would do the same even in the unlikely event that Mark II is around the corner), but like everyone else, did so by spending a packet. A very, very big packet.
The Chinese government is now trying to pull back on the large dollops of credit it ladled out to domestic business, while at the same time, there have been worries that the property market is once again getting out of hand.
Yet the latest Chinese economic data out today shows the fire in the belly of the dragon may be cooling - while still being in no danger of going out.
China has posted two straight months of trade surpluses to May - thanks to strong export data that has shrugged off the problems in Europe (which buys 20% of Chinese exports).
Even better, says AMP Capital Chief Economist Shane Oliver, year on year property data shows prices are cooling too - and fits with the anecdotal data he's seen.
Meanwhile, there are reports that China is considering its own version of our Resource Super Profit Tax (RSPT - probably the last time I need to spell out an acronym that's now almost as ubiquitous as "GFC").
Shane Oliver says this will drive up prices of commodities such as coal. On the other hand, if other countries jump on the bandwagon - and the boffins I speak to say that national governments tend to wait for a snowball to build - then it will level the playing field for our miners against foreigners.
A bit like Germany not having Michael Ballack for this weekend's opener, and one more war cry - Aussie Aussie Aussie!
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