The current Chinese economic stance suggests that the resurgent liquidity isn’t filtering through to the economy given the lack of demand for loans. The status is somewhat contradictory to the observed pick-up in the credit growth where the numbers are heading north since mid-2012. The hidden explanation for the increased money supply not reaching the real economy in China is that there is normally a six month lag effect in place. For instance, the first quarter of 2009 stimulus didn’t result in a rebound in economic activity until the third quarter of that year. Given much of the recent stimulus came late last year, we can probably expect a rebound in economic growth from mid-2013 or few month beyond. The other reasons suggesting that a mild recovery might be on the cards is the uptick in the exports to the developed markets, including the US and Euro zone; the strengthening import data, the enhancement of the retail sales in March after disappointing figures in the first two months of 2013; and the subdued inflation prevailing on the shores of the nation in spite of worrying rumors doing the rounds.

On the contrary, the long-term outlook of the nation, taking into account few coming years from now, still exhibits a bleak picture. The reason is that the economy has become ever more dependent on debt-financed investment for its growth- an instrument not popular to drive the economy out of its rubbles.

However, with due respect to the grim side of the coin, considering the expectations for the rebound in the Chinese economy, there will be significant improvements in the investment side in the ensuing days. Amidst forecasted optimistic market outlook, the Chinese stock markets could rise from the current depressed levels. The beaten-down sectors, including the manufacturing industries, could be expected to take the lead on this. More significantly, we could see a renewed hope of a global economic recovery, with China leading the way. But in the long-term, the outlook paints a sorry state-of-affairs for the investor participating in the Chinese-led rebound of enormous proportions. Under such circumstances the magnitude of the Chinese economy could only be interpreted or rigidly forecasted taking into account the weight of market perceptions and sentiments.