Trust in China's Economic Stability Misplaced

If China's economy stumbles even a tiny bit, the repercussions on world commodity markets could prove extreme. For the last few years, China has provided the biggest boost to global demand for commodities -- including crude oil.

Many analysts have expressed concern about the long-term sustainability of China's current growth model. But well connected investment promoters tend to dismiss such concerns as over-wrought or worse.

Each investor must consider the potential risks and benefits of depending on China's long term economic stability for himself. The current indicators from China are not encouraging.

China’s export-driven model had reached its limits; that its over-reliance on investment was generating bad debt and inflation; and that any delay in the day of reckoning would only heighten the risk of a hard landing. _Patrick Chovanec

The “good” news is that if this conflict [inside China's economy] leads to much slower global growth, as it certainly will, the resulting reduction in commodity prices, including oil, will help absorb some of the changes in the trade imbalances as commodity exporting countries see their exports fall sharply. But I don’t see much other relief. _Michael Pettis

Chinese steel production seen slowing

Chinese home prices decline, retailers declined, and China raises prices on domestic fuels

Things are a bit shaky in China, with rumours of a coup d'etat flying around the Chinese internet. While not likely to be true, just the fact that such rumours can be so easily started and sustained suggests that the sense of stability in the middle kingdom is not all that it should be.

Even a "soft landing" in China's bubble deflation will lead to problems for global exporters