An interesting report on China reveals that 8.0% growth is the minimum GDP growth China needs to achieve in order to keep things there going, and despite the 10.7% print this week, Michael Pettis of Peking University, discusses the fact that without the currency subsidy or the interest rate subsidy, many companies just won't be able to make money.
Reading between the lines, it seems continued rate hikes as policy tightening, which has spooked world markets and commodities prices, would be premature. While China is experiencing asset price inflation, the export sector continues to be deflationary as there is still an enormous amount slack to take up.
