Over the past couple of months I've blogged about many negative headwinds facing the Chinese economy: bubbles in property prices; plans for the government to throttle back on underwriting local lending; etc. Now here's a huge warning sign that China won't be able to continue its phenomenal export-led growth:
There is no assurance that growth in Chinese domestic consumption is sufficient to replace what China is probably losing in exports, especially given the stated intent of Chinese leaders to put the brakes on inflationary forces like wild lending. I've been long-term bullish on China since 2008, but the country's miraculous bounce back from the credit crisis may be about to expire. I'm going to pare back the China portion of my portfolio (an ETF trading as FXI) when the U.S. markets open tomorrow.
China's trade balance could turn to a deficit in March, commerce minister Chen Deming said on Sunday, adding that adjustments to the yuan's value would not by itself resolve global trade imbalances.
There is no assurance that growth in Chinese domestic consumption is sufficient to replace what China is probably losing in exports, especially given the stated intent of Chinese leaders to put the brakes on inflationary forces like wild lending. I've been long-term bullish on China since 2008, but the country's miraculous bounce back from the credit crisis may be about to expire. I'm going to pare back the China portion of my portfolio (an ETF trading as FXI) when the U.S. markets open tomorrow.
