China recently during the quiet holiday season announced that they were tightening exports again on critical materials. Rare earth export quotas for next year will drop again. China claims that they are cutting back because of the weak global economy.
Nevertheless, stealthily China continues to announce infrastructure plans within China and has been stockpiling these critical materials for their own domestic demand. For months, we have been predicting a rebound in China’s economy as iron ore prices began rising. Now we read headlines that China’s exports are very strong even with a rising yuan. Risk assets such as the miners and industrial metals should rally on this news. More smart money from the investment community is realizing that China is far from a hard landing but they may be in the midst of a powerful recovery.
Exports have jumped to a seven month highs despite the debt issues in Europe and the United States. This rebound in China may be the spark in the undervalued miners which have been in a downtrend for close to two years as economists predicted a Chinese hard landing.
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