According to my colleague Serge Salat from Paris, as much as 40% of Chinese GDP growth is driven by investments in new buildings and associated infrastructure. However, there are now 80 million empty apartments. This bubble is going to burst, no doubt. But from a resource use perspective, this means up to 40% of Chinese growth that is, in turn, a major driver of global growth, is based on sinking money into cement. For the past 20 years over 50% of all cement use was in China. China used more cement in the three years 2011-2013 than the USA used in the whole of the c.20th. Cement demand in China is dropping, according to the largest cement company HolcimLaFarge. Mix all this together, add so political salt, and you get a looming crisis. Is anyone aware of the oncoming brick wall that Chinese growth is inevitably going to hit relatively soon?
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The vast majority of people, including economists, still do not understand the basic principles of compound growth – and its limits. Al Bartlett was spot on.
The vast majority of people, including economists, still do not understand the basic principles of compound growth – and its limits. Al Bartlett was spot on.
Dear Mark:
Two questions.
1. Isn’t the general common wisdom among economist that slow growth 3.5 to 4% is unsustainable?
2. Don’t you find it interesting that business did the same thing here. Sitting on large capital reserves – and spending on commercial properties at a pace that continues to outstrip needs? One’s a problem of central planning; the other is investment redlining when it comes to using traditional 2 economy models to assess one’s ROI. How would you fix the latter, here?
Stu
Dear Mark:
Two questions.
1. Isn’t the general common wisdom among economist that slow growth 3.5 to 4% is unsustainable?
2. Don’t you find it interesting that business did the same thing here. Sitting on large capital reserves – and spending on commercial properties at a pace that continues to outstrip needs? One’s a problem of central planning; the other is investment redlining when it comes to using traditional 2 economy models to assess one’s ROI. How would you fix the latter, here?
Stu
Fascinating and scary…..if China sneezes the rest of us get a cold. But China has defied predictions of doom for 30 years. Is this really cruch-time for the men in dark suits?
Dear John:
You should be scared. The Chinese have clearly disaggregated economic development from political liberty. Fortunately, the people are not allowed to waste their time on social media. There’s no hint of increased ‘openness’.
As for their economics – without praising markets – one can say, without fear of much contradiction, that it’s difficult to centrally plan for an economy of 1.5 billion. And while most people dream of benign dictators, the result is often less than optimal.
They would seem to be looking inward – at a terrifyingly toxic environment -and doing just enough saber rattling to be a distraction.
For all the bitching and moaning about neoliberalism, well-regulated cross border markets are desirable. I will emphasize well-regulated. But it’s a fantasy world to think eliminating so called ‘free trade’ would be economic boon to anyone’s spirits. Let’s say we refused to buy cheap textiles from China or Bangladesh – or just made them more expensive. What would be the optimal response? Build automated plants.
I’d say everyone is sneezing … And extremely anxious. What we see as a result is a politics of fear.
Stu
Fascinating and scary…..if China sneezes the rest of us get a cold. But China has defied predictions of doom for 30 years. Is this really cruch-time for the men in dark suits?
Dear John:
You should be scared. The Chinese have clearly disaggregated economic development from political liberty. Fortunately, the people are not allowed to waste their time on social media. There’s no hint of increased ‘openness’.
As for their economics – without praising markets – one can say, without fear of much contradiction, that it’s difficult to centrally plan for an economy of 1.5 billion. And while most people dream of benign dictators, the result is often less than optimal.
They would seem to be looking inward – at a terrifyingly toxic environment -and doing just enough saber rattling to be a distraction.
For all the bitching and moaning about neoliberalism, well-regulated cross border markets are desirable. I will emphasize well-regulated. But it’s a fantasy world to think eliminating so called ‘free trade’ would be economic boon to anyone’s spirits. Let’s say we refused to buy cheap textiles from China or Bangladesh – or just made them more expensive. What would be the optimal response? Build automated plants.
I’d say everyone is sneezing … And extremely anxious. What we see as a result is a politics of fear.
Stu