Tags: China | Marc Faber | credit | bubble

Marc Faber: China's In 'Colossal Credit Bubble' That's Being 'Gradually Deflated'

By    |   Tuesday, 18 March 2014 04:22 PM

While China is targeting economic growth at 7.5 percent this year, Marc Faber, publisher of the Gloom, Boom & Doom Report, says true growth will be about 4 percent.

China reported that its GDP expanded 7.7 percent in the fourth quarter.

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"We had a colossal credit bubble in China," Faber told Bloomberg TV. "This bubble is now being gradually deflated and will bring about problems in the real estate market and among some major players in commodity markets."

China's economic growth is closely correlated to its exports, he said. There's a "huge discrepancy" between the strong export growth China is reporting and the weaker growth reported by its trading partners, Faber said.

"I think the figures of the trading partners are more reliable."

He said China's stock market gives an accurate reading of the economy. "Chinese stocks have been just about the worst performing stocks since 2006," Faber said.

"Analysts will dismiss that and say everything is perfect, but the stock market doesn't seem to believe everything the government is saying about the Chinese economy."

The Shanghai Composite Index has dropped 7.5 percent in the last year.

The Economist lists several other signs of economic weakness in China. "House prices are slowing, exports are weak, and shadow banking is losing ground to traditional lending," the magazine says.

"Forecasters expected industrial output to grow by 9.5 percent in the first two months of 2014, compared with a year earlier. It grew by only 8.6 percent."

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While China is targeting economic growth at 7.5 percent this year, Marc Faber, publisher of the Gloom, Boom & Doom Report, says true growth will be about 4 percent.
China,Marc Faber,credit,bubble
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2014-22-18
Tuesday, 18 March 2014 04:22 PM
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