China is reporting that its economy grew by 11.9% year over year.

This raises two issues:

• How reliable are these numbers? The PRC tends to encourage lower level bureaucrats to over-report growth, and these numbers tend to filter up the chain.
• If these numbers are anywhere near reality, what is driving it, and will it be like Wile E. Coyote discovering that he is standing in thin air when something more sustainable hits?

Chinese real estate is clearly with a bubble, with some areas experiencing appreciation in excess of 50% (!) over the past year.

One of the things driving this is the fact that the Yuan is under-valued: It makes foreign assets more expensive, which drives up demand for local investments, like real estate.

If their currency appreciates, and it does appear to be in the cards in the not-too-distant future, we could see money flowing to non-Chinese assets, and their bubble burst.

This could be yet another shoe to drop (there are many out there) in the current downturn, even though we currently appear to have found a bottom.