With U.S printing to the tune of US$600b, and China having been printing $ all along to keep their currency low (see below on how it works), inflationary pressure will inevidently cause the stock market and property prices to keep going up. This is what had been happening. And it will continue to, as long as the money printing continues.
What will possibly burst this bubble is a rise in interest rate. Interest rate in U.S and Japan is at all time low. Although China had started to raise a bit, it is still low (refer to the chart).
As such, China's rate hike poses no big concern for the time being, but needs to be watched to see if it will go up further. Source:
http://www.tradingeconomics.com/Economics/Interest-Rate.aspx?Symbol=CNY
China Printing:
- U.S buying China goods (import > exports)
- U.S thus needs to pay renminbi for China goods
- U.S thus needs to buy renminbi to make the payment
- Demand for renminbi will make it more expensive and thus exchange rate will increase
- China thus increase the supply by printing more $ to keep renminbi low.
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