Tuesday 20 January 2015

China - I agree with Krugman


Paul Krugman says that China keeps him up at night, pointing a number of reasons for that:

1) The need to transition from an investment to a consumption economy, and how difficult that will be

2) A shrinking work force - to which I would add its low qualification

3) And poor quality of data


To these, though, I would add just 2 more:

4) Low return on investment in many of Chinese investments, that are poorly linked to an effective economy. Let's just think about the huge amounts that are being spent on real estate projects that are then left empty or on the incredible percentage (30%?) of wind power generators that are not connected to the electric grid.

5) The rigid and extremely uncertain ability of the current Governmental regime to actually manage the transition from a capital extensive economy to an intensive, imaginative one.


Yep. China also keeps me up at night.

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