The Banking and Strategy Initiative

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China under new leadership, Hoping for stimulus and other overdone themes of the age of ‘oversupply’ | China wins again!

Technically the entire 2011 and most of 2012 continues in a zone of oversupply for most base and industrial metals and as indian and indonesian IIPs and GDP data  just proved, it’s not just China that is suffering for the shutdown of production evinced by unused powerplants across the South East belt in China.  However markets seem to be relying on a rush of Economic surfeit or rather drought in production to factor in new unending stimulus surpluses. There is already reason to believe china has done what it could with monetary moves in the 2012 gold rush, where Central Bank actions were indeed accelerated to repose trust in the coming change of leadership as there is reason to believe that these one too many quick decisions and their direct immediate impact owed a lot to proactive management changes already in place and were in cognizance of the new leadership taking over China thru the polit buro changes ( likely reduced to 7 members) and New President and Premier starting next month.

New policy measures are likely to shift from monetary rate cutting which has engendered at least one month of buoyant credit data and instead of running the risk of reaching a low interest deflationary scenario like its OECD brethren, Big brother would instead depend on its cash coffers to jump the already growing retail sales that continue to case 13% every month and are also due this week.

At stake is China’s depleting staying srength its large warehouses not entirely empty but not stocking up on base metals and other production imports and its depressed inflation after rising inflation just months earleir raised up the stakes for China. the Current anemc rate of inflation and the lack of growing domestic demand is also a discouragement for the Foreign Exchange rates to move corrrectly north as the orld ishes it on the nation. However, the same is at variance ith the amazingly consistent groth in retail sales data at above 13% and the basket of goods or the points of price used in computing the said consumption and the price are definitely in disarray. Meanwhile MCdonalds’ and starbucks reported a very positive trimester in China while policy objections did break down the run of auto majors including Mercedes and BMW

 

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