Last night China began the National Peoples Congress meetings
(NPC) China makes it clear that they are targeting both growth and
inflation and will tinker where they need to but the operative word
[caption id="attachment_59727" align="alignright" width="300"
caption="Shanghai skyline at night"]
On the back of the CBS 60Minutes piece (
see clip of Stephen Roach, former Head of Morgan
Stanley in China, strongly challenging the accuracy of that view
last night on Fast Money
), and the overall destruction in the commodities space, people
were letting part of the tail wag the dog.
China is the dog.
They are not the Great Dane of 2005-2010, but they are no lap
While we are cautious on the direction of the USD going higher
and pressuring commodities and emerging markets with it, we are not
questioning whether China can grow.
The anxiety over near term tightening is off the mark.
They are looking to keep growth in line with 2012, not to slow
Formally here is what they have announced as targets: GDP +7.5%,
CPI target 3.5%, M2 growth 13%. The growth numbers are
inline, the inflation numbers are lower and the deficit is raised.
Premier Wen made it clear that "Nothing is achieved without
What to do now?
If you were selling commodities only on China fears you should
be rethinking this strategy. If you were waiting on China to
announce major overhauls in policy, you are still waiting on the