Gunners Shot

The first two stimuli have not worked in China. Rhodium group puts China’s GDP growth at 2.4-2.8% only. If one had invested in Chinese stocks over a five year period, it would have resulted in a net loss. China’s 10 year bond yields have hit all time lows. The CPI is barely 0.2% as the country is in a deflationary cycle. Consumption is simply not picking up. Chinese hi tech industries are involuting and undercutting each other due to overcapacity. They are also facing severe trade barriers overseas. China’s answer to this is in its 3rd stimulus package which will be unveiled shortly. It might simply not work since Xi Jinping’s political ideology is at odds with international and domestic expectations.