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How overbuilt is China?
LATELY, Tyler Cowen has been pushing an Austrian view of economic activity in China, namely, that government policies are generating far too much investment in certain sectors of the Chinese economy, setting the stage for an eventual collapse as resources are re-allocated back to productive uses. Over the weekend, Mr Cowen developed the argument in a New York Times piece:
Submitted by
tschuma417
11/30/2009
HyperLink play it email it
tschuma417
11/30/2009
tschuma417 is playing it
Short5.97%
Short3.05%
I am playing this headline with (TAO FXI) because China has been building factories and production capacity in virtually every sector of its economy, but it’s not clear that the latest round of investments will be profitable anytime soon. Automobiles, steel, semiconductors, cement, aluminum and real estate all show signs of too much capacity. In Shanghai, the central business district appears to have high vacancy rates, yet building continues.
 
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