This note looks at concerns that China is a bubble that’s about to burst.

The key points are as follows:

– Concerns that China is a bubble about to burst are unjustified. There is no evidence of generalised over-investment, China’s reliance on exports is overstated and likely to diminish with consumption taking a greater role, it is very hard to argue there is an asset bubble and China’s banks are in a reasonable shape.

– Although further monetary tightening is likely in China, we don’t anticipate a bust any time soon and continue to expect Chinese gross domestic product growth of around 10% this year.

– This is positive for the commodity price outlook.

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