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The IMF evaluate the Chinese government's Five Year Plan and property bubble

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In its latest Article IV country report on China, dated June 27 2011, the IMF reported on the potential for a property bubble, on the state of China’s banks and on the policy measures underpinning the 12th Five Year Plan. It also looked at the international implications stemming from China’s efforts to rebalance its economy by de-emphasising exports and raising domestic consumption. (Another strand to this “rebalancing” is a commitment to supporting the relocation of industries to the interior instead of having them clustered at the seaboard metropolises.)

Rebalancing, in the sense of moving from being export driven to having a much higher domestic consumption component, is something that it is far harder to say than it is to do. The Chinese authorities can, of course, decree anything they want, but that doesn’t always mean that their decrees will play out in the way that they expect.

Could there be a China crisis? Has the China's economy really survived the global financial crisis?

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Originally published by QFINANCE

By political commentator Ian Fraser

Last year very few commentators saw a doomsday scanario developing for the Middle Kingdom. These few included some lonely hedge fund managers such as Eclectica's Hugh Hendry and Kynikos's Jim Chanos. The country’s property bubble, troublesome banking sector and credit tide caused the most concern.

The China-bashers were given a pause for thought when second quarter data showed that China's economy grew at 9.5% in the second quarter -- meaning its economic engine has shown unexpected consistency over the past 12 months. However, wrapped up in the figures were warning signs, including that consumer price inflation reached 6.4% for the year to June. And, as The Economist pointed out, despite a state-sponsored slowdown on bank lending, overall credit availability has actually increased thanks to increased use of "social financing", including corporate bonds and some loans repackaged by “trust” companies. The Economist said:

"China seems to be getting less bang for its financial buck. In 2007, Fitch reckons, it took 1.28 yuan of extra financing to produce an additional yuan of GDP. Now it takes 2.38. China’s growth may be remarkably even. But its financial system is having to pump harder to maintain the pace."

It's fair to say scepticisim about China, its post-crisis success and the nature of its economic miracle has been growing in recent weeks.