China Pessimism Bubble: Another Setback For The China Crash Callers

(Drivebycuriosity) - Last week brought another setback for the China Crash Callers. Industrial production in China rose 8.8% year over year in May (April 8.7%), retail sales grew 12.5% (April 11.9%) (bloomberg). These numbers signal that China´s economy is solid and maybe is accelerating again.

The fundamental data are again dissenting the notorious China pessimism and the alleged "hard lending". For years the media and China bashers like New York Times correspondent Paul Krugman and Jim Chanos, a hedge fund manager and short seller, have been banging the "China crash drum", even that China´s economic growth rate has been continuously above 7% (driveby).

The China pessimism bubble takes its toll on China´s stock market.  Though the Shanghai Composite Index gained last 2% last week, the gauge is still in the red year-to-date (minus 2%) and is hovering around 40% below its peak of around 3,400 points from summer 2009. If the flow of positive economic data continues the pessimism bubble could burst soon and give way to a rally of the Shanghai stock market.