An interesting bearish take on China. The lecturer takes on irrational exeuberance in China and discusses some of the more negative aspects that are
glossed over by China bulls. He is not predicting instant doom, but raising reasons to be wary.
Among the points he makes: Stats are massaged; growth in Chinese GDP is driven by top-down commands from the central gov't to local businsses and
leaders to make targets. This leads to suspicious data as cadres scrable to make their numbers. Growth becomes an end in itself, to preserve local
power and social stability. The Chinese model still involves a strong command economy, leading to inefficiency. Growth based on expansion of inputs
rather than output per unit of input leads to leads to diminishing returns. Focus on quantity over quality. Overeducation is aleady a problem (as in
the west, Chinese graduates are increasingly having trouble finding work.) Underutilized infrastructure has long-term costs such as maintanece cost,
etc, and the world has never seen levels of overcapacity such as those emerging in China now. State-owned industries account for 50% of the economy
and are corrupt and opaque. Issues with local versus central authorities. Excessive incentives for local elites to speculate in real estate. Massive
excess credit creation in China now (like in the US a few years ago). Official figures don't include bank lending as well as massive gov't stimulus.
Widespread speculation among individuals -- China is no longer "a nation of savers." High real estate vacency rates, amid ongoing speculation and
building. And more.
I'd agree with a lot of that, along with a housing bubble of their own to deal with. They do have the population and growth though at this point to
back that up I suppose. I still wouldn't invest a dollar there though, others obviously are much more confident than I though.
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