tag:blogger.com,1999:blog-4528146969570948529.post5557477521504923961..comments2024-03-21T22:51:03.977-04:00Comments on Models & Agents: Stopping the leakages in ChinaChevellehttp://www.blogger.com/profile/10769905202655777736noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-4528146969570948529.post-77094740554101861392010-02-22T09:27:40.384-05:002010-02-22T09:27:40.384-05:00What's important is not whether China will sho...What's important is not whether China will show "restraint" in lending; its whether it will show more than last year.<br /><br />We are likely to see year-over-year declines in lending in China. Unless the "multiplier" of GDP to new debt increases, this will result in lower demand for imported raw materials and capital goods. Now, this is not, in and of itself, a huge problem as long as other countries pick up the slack and stimulate their economies MORE than in 2009. Except we all know the second derivative of stimulus is negative all over the world. <br /><br />The question is whether China can achieve the same or more growth from what most believe is a decline in lending volumes. One factor is inventories -- will we have restocking or destocking? I think the answer to that one is obvious: with de-stocking the problem for the rest of the world is much bigger than the lending decline would imply.David Pearsonnoreply@blogger.com