WSJ Reporter Bob Davis Pessimistic About China’s Economic Prospects

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Bob Davis, The End of the China Miracle?  Debt and corruption are slowing the Asian giant. Wall Street Journal, Nov 21, 2014 (in the Review section that appears every Saturday).
online.wsj.com/articles/the-end-of-chinas-economic-miracle-1416592910

Excerpt in the window of print: After four years in China, a reporter is pessimistic about its future.

Quote:

"my time in Beijing as a Journal reporter covering China’s economy, starting in 2011

"The purge, his admirers told me, would frighten bureaucrats, local politicians and executives of state-owned mega companies—the Holy Trinity of vested interests—into supporting Mr Xi’s changes.

"So why, on leaving China at the end of a nearly four-year assignment, am I pessimistic about the country’s economic future? * * * Western business people and international economists in China warn that the government’s GDP statistics are accurate only as an indication of direction, and the direction of the Chinese economy is plainly downward. The big questions are how far and how fast.

"Most of the Chinese cities I visited are ringed by vast, empty apartment complexes whose outlines are visible at night only by the blinking lights on their top floors. I was particularly aware of this on trips to the so-called third- and fourth-tier cities * * * which Westerners rarely visit but which account for 70% of China’s residential property sales. From my hotel window in the northeastern Chinese city of Yingkou 辽宁省营口市, for example, I could see empty apartment buildings stretching for miles, with just a handful of cars driving by.

"China followed Japan and South Korea in using exports to pull itself out of poverty. But China’s immense scale has now become a limitation. As the world’s largest exporter, how much more growth can it count on from trade with the US and especially Europe? Shift the economy toward innovation? That is the mantra of every advanced economy, but China’s rivals have a big advantage: Their societies encourage free thought and idiosyncratic beliefs.

"Hebei alone produces twice as much crude steel as the US, but China no longer needs so much steel, to say nothing of the emissions that darken the skies over Beijing.

My comment:
(a) "This summer, the International Monetary Fund noted that over the past 50 years, only four countries have experienced as rapid a buildup of debt as China during the past five years. All four—Brazil, Ireland, Spain and Sweden—faced banking crises within three years of their supercharged credit growth."
(b) “Why, I wondered, in an economy with seemingly unlimited potential, did so few choose to become entrepreneurs?”

He, for one, contradicts Associated Press reporter in Taiwan, Mr Ralph Jennings, in this regard.

choi

(1) Bob Davis, MF Warns of Slower China Growth Unless Beijing Speeds Up Reforms. Wall Street Journal, July 31, 2014
online.wsj.com/articles/imf-annual-report-warns-of-slower-china-growth-unless-beijing-speeds-up-economic-reforms-1406768402
(“China's so-called total social financing—the broadest official measure of domestic debt—increased by 73% of GDP over the past five years, the IMF estimates. Looking at 43 countries over the past 50 years, there were only four similar bursts of credit growth—and all four times the booms were followed by banking crises within three years, the IMF said. The IMF didn't identify the other countries”)

Note: This WSJ report does not identify title of the IMF report.

(2) International Monetary Fund (IMF) issued two papers one day in summer 2014, based on the same document. See (b).
(a) IMF Executive Board Concludes 2014 Article IV Consultation with the People’s Republic of China 中华人民共和国2014 年第四条磋商. IMF, July 30, 2014 (Press Release No 14/369)
www.imf.org/external/np/sec/pr/2014/pr14369.htm
(“On July 25, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the People’s Republic of China”)
(b) People’s Republic of China: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for the People’s Republic of China. IMF, July 30, 2014 (Country Report No 14/235)
www.imf.org/external/pubs/cat/longres.aspx?sk=41799.0
(“Risks[:] Credit and ‘shadow banking,’ local government finances, and the corporate sector— particularly real estate—are the key, and interlinked, areas of rising vulnerability. In the near term, the risk of a hard landing is still considered low as the government has the capacity to combat potential shocks. However, without a change in the pattern of growth, the hard-landing risk continues to rise and is assessed to be medium-likely over the medium term”)

* There is no need to read the rest of (1) or (2)--except the “full text” in (b).
* My browser does not have search function. But I know the report in (1) is based on “Fixed Asset Investment and Total Social Financing (In percent of GDP) Sources: CEIC; and IMF staff calculations. 1 Difference between use of gross capital formation” in (2)(b). You will have to