Why China’s Stock and Property Market keep going up

[chinatells]

(Shenzhen) Several economists in China sat down last week in Shenzhen
to discuss the recent economic development. According to them, China
now is still suffering from deflation instead of inflation (eg., CPI,
PPI, the price of pork meat). They estimate that China might see
inflation in second half 2010, if the current easing policy continues.

Another notable feature in China economy is the strong performance of
property and stock market. The economists feel that the prosperity in
these two markets are mainly due to the quantitative ease from Central
government, particularly their increased loan to state owned
enterprises.

However, as world export outlook is still gloomy, the state owned
enterprises have nowhere to put the capital they receive from the bank
other than stock and property market. From this perspective, the two
markets have a jeoparty of abrupt collapse when the central government
decides to tighten the monetary policy any time.

More available at www.chinatells.com