The Limping Bull 4.1

It is happening! It is starting to make the headlines!

It is happening now but it was long long due. With its double digit growth rate China is a bonanza for foreign investors and international corporations. Every week in the papers there is an article on the "Chinese Miracle" or "China, the powerhouse of the world economy". You cannot but notice the market's bullish outlook despite investment bankers admitting that " there will be some very big setbacks along the way" (Merrill Lynch Investment Managers Australia).

Yes, over the next 15 to 20 years the action will be in China. But what kind of action? There will still be "very big setbacks" like David Hudson puts it. And that's the part that we should keep in mind. This has to be done methodically. (Yes, I am against the blind rush to be part of the action thing). The last thing we want is a Chinese economy built on sand.

Remember the Asian Crisis? ( I often come back to this because it is the only financial crisis I've ever witnessed) What was the problem again? Poor legal system and financial framework (or lack thereof). Government corruption and crony capitalism. China escaped unhurt. This certainly doesn't mean the giant could sustain a crisis emerging within its borders.

It's happening! David Ji, founder and president of Apex was arrested in Shengzen on fraud charges. The scandal involves Communist Party official. Not a nice affair this one.

Ok, that's not good. But see how bad it is: "An audit of 181 Chinese state owned enterprises found that 120 submitted incomplete financial information, while 13 falsified records" (The WeekEnd Australian headline, January 15-16 2005)

? Brr. Now, someone's going to have to deal with this.

Look it seems the Ministry of Finance is working on the problem.