Interesting discussion re china, to pre face my coments I am in...

Interesting discussion re china, to pre face my co
ments I am in the camp of "too good to be true", so look away now if you're an anabashed bull!

I think there are a few interesting stats which stare at me in the face as crazy.

1) approx 60% of GDP is fixed asset investment ie building stuff. This is almost double any previous peak ie Dubai, japan, Korea. We all know where they finished up

2) recent report by petro china indicated there approx 65 million residences that did not use any power last qtr ie they were empty. This is not to mention low occupancy rates on commercial property. Yet they still go on building at amazing rates.

3) they may have a lot of people but that's some serious over capacity. If u have a look at their demographics but they are about to enter a severe ageing process. I think I read the population between the ages of 25 and 35 will be half what it is now in 10 years assuming no immig.

4) credit growth year on year of 40% for the last 2 years. Again nearly unprecedented, and with inflation starting to rear it's ugly head and with all these empty properties earning no income would assume some scary exposures at the banks.

All in all would look like a level of overcapacity not seen in history, can they really build any faster than what they have been over the last decade? Would appear they are building for the sake of building to meet growth forecasts, would seem to have ponzi characteristics to me. Hard to predict when this gravy train will end, but smells like it may be derailed soon