21cbh.com, a branch of the Nanfang Daily Media Group based in Guangdong Province, recently published a commentary on the macroeconomic data for the first half of 2009. Although the government reported a 7.9% increase in the Q2 GDP, the primary force behind the growth is still government investments in fixed assets. Consumer spending is still sliding both domestically and internationally. Trade surpluses kept dropping. While there has been a loss of balance in the domestic private economy, manufacturing and service industries are intensifying.
The commentary is primarily concerned with the bubble of asset prices. Since the 2008Q4, China has had the most accommodative monetary policies to date. In the first half of 2009, new loans reached RMB 7.4 trillion yuan, a large amount of which flowed into the stock and real estate markets instead of fixed assets. Combined with international hot money, the second half of 2009 can be considered the start of the new round of the asset price bubble.
Source: 21cbh.com, July 17, 2009.