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(1) Jonathan R Laing, Where Will It End? China's credit growth to back lavish construction and infrastructure projects is similar to that of the US and Japan before they faced financial calamities. Barron’s, June 22, 2013 (cover story).
http://online.barrons.com/articl ... cleTabs_article%3D1
Quote:
“SUCH RAPID CREDIT booms tend to come to sorrow because of slipshod analysis and misallocation of resources. * * * gobs of new liquidity tend to spawn asset bubbles, which can dull the appreciation of risk. With prices of, say, houses in the US levitating upward in the years before the bust, investors become emboldened and lenders confident in the strength of the collateral underlying their loans.
“Faith remains undiminished that continued migration from the countryside to the cities will cure all housing oversupply. Besides, apartment purchasing has become the No. 1 investment game in China after the stock market crapped out in 2007, with the Shanghai Index falling nearly 70% since. * * * [Apartment] have become a store of value and an insurance policy against penury in old age. Living in them or even renting them out is deemed to diminish property value should someone ever show up to lease one. So they remain vacant. * * * A collapse in the Chinese real-estate market would require only a slight shift in investor psychology. And once prices start to crumble, the results to the credit system and, ultimately, the general economy promise to be severe and widespread.
“Signs of financial trouble abound even in China's official numbers, which many say are designed to obscure problems. The post-2008 credit surge, for example, seems to be losing its ability to generate actual growth. During the boom period of 2005 up to early 2008, statistics show that one yuan of credit yielded nearly one yuan of GDP growth. But no more. Last year, it took four yuan to generate just a single yuan of increased GDP, according to government-based figures. This collapse in capital efficiency indicates several things to China watchers. Much of the money was being wasted
My comment:
(a) Skip the first five paragraphs and start at paragraph 6: “A number of observers, including some former China bulls, see the country headed for a potentially serious economic downturn, or possibly a Japanese-style purgatory of anemic growth, with all the baleful side effects.”
(i) baleful (adj; ME < OE bealoful < bealu, bale2 + -ful, full): “harmful or threatening harm or evil; ominous; deadly”
http://www.collinsdictionary.com/dictionary/american/baleful
(ii) bale (n): “(old-fashioned, poetic) evil; disaster; harm”
http://www.collinsdictionary.com/dictionary/american/bale
(b) New South China Mall 新华南MALL
http://en.wikipedia.org/wiki/New_South_China_Mall
(in Dongguan; is the largest mall in the world based on gross leasable area, and ranked second in total area to the Dubai Mall; Opening date 2005)
(c) “In fact, a recent working paper by the International Monetary Fund concluded after a cross-country survey that excessive investment on infrastructure and industrial projects, amounting to about 10% of GDP, or about CNY5 trillion, would have ‘little impact on future growth’ or long-term ‘favorable spillover into household income or consumer spending.’"
Lee IH, Syed M and Liu X, China's Path to Consumer-Based Growth Reorienting Investment and Enhancing Efficiency. IMF, March 2013 (working paper WP/13/83).
http://www.imf.org/external/pubs/ft/wp/2013/wp1383.pdf
(i) Both quotations appear in Introduction of the working paper.
(ii) The first quotation (“little impact on future growth”), at page 3, is couched in “if” (thus Barron’s is alarmist in this):
“Assessing which of these views is more appropriate is very important at the current juncture, as China searches for alternative growth engines amid structural changes to its economy and an external landscape transformed by the global crisis. If some investment is excessive, that part will only raise output at the time of implementation, with little impact on future growth. If continued, large deadweight losses will arise that could become increasingly difficult to resolve.
(iii) Quotation 2 is not word-for-word:
“this paper reviews trends in investment at the provincial level in China and finds evidence that some types of investment is becoming excessive, especially in inland regions. [Investment in coastal provinces create bigger bang for the buck than in inland provinces.] Thus, investment should not be indiscriminately directed to urbanization but could be lowered in inland provinces and shifted toward sectors with greater and more lasting beneficial spillovers to household income and domestic consumption.” at 3-4
bang for the buck
http://en.wikipedia.org/wiki/Bang_for_the_buck
(d) “China doesn't have to look too far for a cautionary tale. Japan in the late '80s and early '90s faced a similar slowdown in economic growth. Like China today, it sought to compensate by first unleashing a flood of credit, creating a real-estate bubble, and then engaging in infrastructure spending on the proverbial bridges to nowhere.” |
发表于 6-27-2013 15:44:42
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