Bad Economic Benchmarks in China
A fund manager recently told me he relies on three sets of data to monitor the strength of the Chinese economy:
1. Interbank interest rates.
2. The value of the yuan.
3. The rise or decline of China’s foreign exchange holdings.
However, I would disagree with the use of these three benchmarks because they have significant flaws. Instead, I believe that shadow banking credit flows – particularly the highly liquid and volatile Wealth Management Products – are the best benchmarks.
Now read on...
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