posted at 01:00
Author Name: Mike Bird
China Economy Waste Malinvestment Slowdown
REUTERS/David GrayEmpty apartment buildings litter Ordos, one of the "Ghost cities" that have characterised China's wasteful investment. The Chinese economy has wasted $6.8 trillion in investment during the last four years. The report says that amount has been "Ineffective investment". Even in the enormous Chinese economy, that's practically half of the investment between 2009 and 2013, the period covered by the investigation. The economic effect of the bridge depends on a lot: where is it from? Where does it lead to? If it's a useful investment, it could keep boosting spending by making consumers' journey to a city less arduous, and allowing them to go to the shops more often. According to the FT, the authors are blaming the investment on low interest rates and other forms of government stimulus, suggesting that there's been a sort of malinvestment. That's not all: the problem is exacerbated by graft and corruption among the country's autocratic elite, which skims off the investment whether it's wasteful or not. If the report's authors are correct about the causes, don't expect to see an improvement in the quality of China's investment any time soon.

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