I think the best way to look at China is through the investable universe:
Equities are cheap, have done well this year but have struggled for many years and confidence is lowBonds have provided great total returns but at 1.73%, prospects for further capital appreciation are lowReal estate -- the traditional mom & pop investment -- has fallen hardGold is one of the few winners and it's underscored by fresh central bank buyingCommodity futures -- local futures markets, which have been prone to bubbles and bustsForeign securities -- good luck getting through China's capital controlsThere is certainly money stashed in bank accounts that's available but when will it be unleashed? The WSJ today writes about a 'depression' in China in light of falling yields. The government today pledged to spending 4% of GDP compared to 3% previously but that hasn't moved the needle today.
"In reality, businesses are struggling to keep their lights on, people are having severe difficulty in finding jobs, and municipalities are drowning in debt. Even government employees aren’t getting paid," the WSJ writes, noting skepticism about the official 5% growth rates.
The WSJ also highlights who the buyers of Chinese bonds are:
State-owned banks, insurance firms and funds, the very institutions Beijing is counting on to support the economy, are the major purchasers of government bonds. These institutions would rather park their money in the safety of bonds than financing business projects or otherwise putting it to work. “What’s good to invest in these days when demand is so low?” a Chinese banker told me, referring to weak business and consumer spending.Yikes.
This article was written by Adam Button at www.forexlive.com. Read More Details
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