Chinese stocks have enjoyed an unexpected 20 percent rally since hitting a four-year low Dec. 3.
But now’s not the time to jump up and down, says Paul La Monica, assistant managing editor of CNNMoney.
“If China's economy is really reigniting, that's good news for China and the rest of the world,” he writes.
Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.
“Still, there are some concerns that China's comeback may not last long.”
On the plus side, China’s exports rose more than expected in December, and a broad measure of credit jumped 28 percent. Economic growth likely accelerated during the fourth quarter after seven quarters of slowing growth, economists predict.
In a Bloomberg survey, they offered a median forecast of 7.8 percent for the period, up from a three-year low of 7.4 percent in the third quarter.
Several U.S. companies, including Caterpillar, have said they anticipate solid economic improvement in the first half of the year.
But some experts are skeptical.
“China's economy is rebounding and that's what is helping the market there. But it's been led by infrastructure spending. It's government led. The problem is that governments have to pay for this spending. The question is how far can the recovery go," Michelle Gibley, a researcher at the Schwab Center for Financial Research, tells La Monica.
Still, the rally presses on, with Chinese stocks hitting a 7 1/2-month high Tuesday.
"Money that was sitting on the sidelines has now been persuaded that the rally is sustainable," Zhang Weiguang, an equity analyst at Shanghai Securities, tells Reuters.
David Li, head of UBS in China, predicts Chinese stocks will rise 20 percent this year amid the government’s economic stimulus, Bloomberg reports.
Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.
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