CER editorial staff recently attended a lunch address by CLSA’s China guru and occasional CER columnist Andy Rothman, the person, who remains cheerfully bullish on China. Rothman doesn’t believe  bad local government debt is a challenge, and that the worst risk China faces in the property markets is that it might drive prices down too far by accident. He also thinks inflation is being managed quite well.

Rothman maybe is a bit short on company, especially in the equity and bond markets. The value of US dollar-denominated debt issued by Chinese companies dropped 1.5% in August. In the stock markets, the bears are definitely big convenience-ing in the Hong Kong woods. Prices for put options which hedge against declines in the Hang Seng China Enterprises Index rose to 1.41 times the price of bull options, their widest spread since 2007. This sentiment is based on both macroeconomic anxiety and specific earnings displeasures: Foxconn missed its Q2 estimates, hile Shanda Interactive profits declined 95%!  Mainland stocks hit their lowest levels in over a year on Tuesday, and China International Capital warned investors to brace "for more pain,” causing yet another migration of bears into the woods. On the macroeconomic front, food price inflation – now the primary driver of consumer price inflation – kept inching up last week. Pork prices though hit a record high of US$4.10 per kilogram. Food prices are to Chinese politics as vodka prices are in Russia – both respectively are being essential protections against starvation and reality.