China is building us a Performing Arts Centre, at the end of Horton Place
China is building us a Performing Arts Centre. Which is nice. I still think they’re a bid dodge. There are signs that the Chinese economy is bubbly, and investors are already starting to bet against it. James Chanos is a short-seller who made his money betting against Enron, Tyco, home builders and banks. He basically bet billions that they would crash, and they did. Now he’s betting on a coming collapse in China. The one lesson I learned from the global recession is that if looks dodgy, it probably is. The Chinese economy looks dodge.
They’re basically splashing a lot of money around, but their system seems inefficient. Deep corruption for one, I’ve read estimates of 10% waste, though that’s an unreliable metric. Then there’s resource killing pollution, tons of poor people and huge money-losing state industries. Plus their foreign policy involves splashing out a lot of money to build things in other countries, though they often get significantly more back in loans and business.
As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China’s hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like “Dubai times 1,000 — or worse,” he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.
“The Chinese,” he warned in an interview in November with Politico.com, “are in danger of producing huge quantities of goods and products that they will be unable to sell.” (New York Times)
I dunno. That’s just one hedge. Bill Gates and Buffet and all are betting for, and I hope they (and we) will be OK. For me crashes happen to force us to change, though perhaps that’s a quasi-karmic belief. Maybe you can do unprincipled, unstructured growth. But maybe not. I wouldn’t bet on it.