Hard to take the Chinese data at face value, much like the U.S., but the most important data point in my eyes at this point is loan growth. If the Chinese push through loan growth - everything seems to surge; if not, things seem to falter. We saw that last month, when loan growth fell off a cliff and commodities and the Chinese stock market took a break. Now we see they decided enough was enough, and we've seen rebounds in both. It really is as simple as that, and the United States is doing the exact same thing although from a far weaker position since its consumers are cramped with heavy personal debts. Both are pushing through central command inflationary policies driving up asset values - and both are succeeding. Only one country is admitting the issues this is causing, and it sure isn't us.

Via Bloomberg:

Factory output

  • China's factory output climbed 12.3 percent last month from a year earlier, the most since August 2008, the statistics bureau said yesterday.

Retail sales (keep in mind there is a lot of double counting in this number the way the Chinese do it, it is not just the end sale that is counted)

  • Retail sales, rose 15.4 percent, the biggest gain this year after accounting for seasonal distortions.

M2 (this is a measure of money supply and much like in the U.S. it is exploding higher)

  • M2, the broadest measure of money supply, expanded by a record 28.53 percent.

So with all this building and selling of stuff you'd think exports were exploding higher too. Not so much...

  • China's exports fell more than economists estimated in August, weighing on government efforts to spur growth in the world’s third-largest economy.
  • Exports slid 23.4 percent from a year earlier, the customs bureau said on its Web site today. That was the biggest drop in three months and compared with the median estimate in a Bloomberg News survey for a 19 percent decline.

Imports were not great but better than exports - effectively the exact opposite situation as in America; it's like old times are here again.

  • Imports fell 17 percent leaving a trade surplus of $15.7 billion.

So as we look back we see a contracting world trade situation being supported by central bank / stimulus measures where governments are the end all and be all.

  • “Exports won’t truly recover unless China’s main trading partners such as the U.S. and Europe regain growth next year,” said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. Trade “will continue to be a drag on the recovery,” he said.
  • Exports fell for a 10th straight month. The decline in imports was the biggest in three months and more than economists estimated.

To that point - bank loans rebounded in August versus July, and really as speculators of markets this is all that matters. X amount of ABC commodities, or XYZ stock certificates cross referenced with exponential growth in fiat money the world over = higher prices. In other words - we can't lose.

  • Local-currency new loans were 410.4 billion yuan ($60 billion) in August, up from 355.9 billion yuan in July, the central bank reported.

  • The reacceleration in credit growth may deepen concern among some observers at the danger of asset-price inflation. Bank of China Ltd. Vice President Zhu Min warned on Sept. 10 that liquidity may cause “bubbles in commodities, stocks and real estate.”

Don't worry Mr Min. As long as assets / markets go up, it means everything is right in the world. Greenspan taught us this. These things always end well.

It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose.

[Aug 5, 2009: China's Provincial Growth Figures Far Overstated versus National Figures]