Commodity hoarding & US Dollars dumping

In a recent article entitled "The Phantom Commodity Bull Market & the Consequences", Financial Ninja examined the connection between the "new commodity Bull market" & the "China growth story". The increased Chinese demand could not have accounted for the tremendous growth in the importation of certain basic material. It posits that the huge increase in the volume of import can only be due to one reason: the Chinese are hoarding!

Similar tread was posted by Macro Man in an article entitled "The Chinese Syndrome":

"Drilling down beneath the surface, however, we see a picture that is much less unequivocally bullish for commodities. While overall imports have barely started to recover in value terms, many commodity imports have absolutely skyrocketed in volume terms. And at the end of the day, the inputs to China's industrial and investment complex are based on volume, not value.

Macro Man ran a study looking at the import volume of four different industrial commodities, comparing it with the trend of 2003 through mid-2008, a period in which Chinese growth averaged 11%. (Data for coal imports only begins in December 2004.) The results were remarkable."

In a separate article entitled "China, cleverly dumping US Dollars", Financial Ninja explained the rationale behind the Chinese's decision to hoard commodities:

"Well, imagine you had a bunch of money... err... US dollars for example. You've also got a bunch more of these US dollars coming in daily. You don't believe they will hold their value. So you don't really want them. That is quite a problem.

The first trick is to get rid of them... without actually seeming to get rid of them. The second trick is to get rid of them in such as way as to not destroy their value.... yet.

The single best way to do this of course is to use your US dollars to buy hard assets. This looks "normal". It isn't nearly as obvious as "diversifying" your currency reserves. China is doing exactly that."

Sadly, all good things must come to an end, sooner or latter. A key Chinese state planning official has signaled a halt to government buying of copper, aluminium and other high-value metals because prices have risen too high, as reported in the Sydney Morning Herald. Yu Dongming, the head of the metallurgical department of the National Development and Reform Commission was quotes as saying : "We don't anticipate that the country will continue to build its reserves".

Zhang Bin, an economist with the Government's most influential advisers, the Chinese Academy of Social Sciences, warned that Beijing was leaning against Chinese speculative buying of a range of commodities including Australia's most lucrative exports, coal and iron ore.

"The commission is acting to reduce pressure on commodities prices and discourage over-production in heavy industry, including guiding steel production and reducing the building of excess capacity," Dr Zhang told the Herald.

"Too much increase in inventories of commodities is not a good thing because the economy is still not that strong and cannot consume this level of imports of iron ore and coal."

In a post-crisis world where things are not always what's they seem to be-- commodity bull markets driven by Chinese hoarding & equity bull markets driven by ample liquidity-- how does one make a case for the green shots of economic recovery?