In China, money flow is tightly controlled and capital markets are relatively underdeveloped, meaning the economy works like squeezing a balloon.
You press it in one place, and it bulges in another. Policy-maker moves to cool one expansion only serve to inflate another.
Now that “gyration of bubbles,” according to Société Générale SA’s chief China economist Wei Yao, has been heating up the commodities market again.
Earlier this month, thermal and coking coal futures hit a record high since their debut in 2013 while zinc soared to the highest since 2011. Steel rebar, nickel, tin, iron ore and rubber futures also climbed to multi-year highs.