When bad news turns into good news, we could have reached the point where markets start to stabilize, at least for some time:
Shares in Europe and Asia rose on Tuesday and the dollar gained after data showing China's economy grew last year at its slowest pace in a quarter of a century led investors to anticipate more efforts by Beijing to spur growth.
Global stocks rise as slowing China growth boosts stimulus prospects | Reuters
However, we have to say that we don't really believe in any more stimulus for China, especially monetary stimulus, as this:
- Accelerates the capital outflow, leading to more pressure on the yuan, exactly the biggest issue making markets nervous
- The exhaustion of the debt funded growth model.
What China needs to do is cut some dead wood in the old smokestack heavy industry that is largely state owned. It suffers from large overcapacity and large debts, and this is holding back a smooth transition from an economy led by investment, export and construction, to one led by consumer spending, services, high tech and innovation.
They say they're going to do it, but there are limits to what they can do as it means making many people redundant, tearing up the social contract.
China's top state-owned asset administrator has vowed to clean-up the country's so-called "zombie" industrial companies by 2020, the official Xinhua News Agency has reported. Zhang Yi, Chairman of the State-owned Assets Supervision and Administration Commission (SASAC), told a central and local enterprise work conference convened at the weekend that the agency will "basically" resolve the problem of unproductive "zombie" firms over the next three years.
China to clean-up 'zombie' companies by 2020: Xinhua - Yahoo Finance