China: Unfolding credit bust

[marmar]

May 11, 2010, 1:33 a.m. EDT ·
China analyst sees beginnings of unfolding credit bust

By Chris Oliver, MarketWatch


HONG KONG (MarketWatch) -- China's economy is teetering on the edge of a major slowdown, though it's not a shakeout in the property market that's about to spark the distress, according to a noted China strategist.

David Roche, an economic and political analyst who manages the Hong Kong-based hedge fund Independent Strategy, says the world's third-largest economy is now on the brink, faced with the inevitable reckoning that follows an extended bank-lending binge.

"We've got the beginnings of a credit-bubble collapse in China," said Roche, predicting the economy will likely cool from its stellar double-digit growth rate to a 6% annual expansion as a result.

While that may not sound bad, Roche believes the collateral damage from the cooling will be anything but mild, as the banking sector comes under pressure from cumulative years of bad investment and mispriced capital.

"The economy in China has peaked, unless the economy in the U.S. really gets going and drives exports," Roche said. ........(more)

The complete piece is at: http://www.marketwatch.com/story/china-analyst-sees-unfolding-credit-bust-2010-05-10