{"id":9981,"date":"2014-06-08T20:59:09","date_gmt":"2014-06-09T00:59:09","guid":{"rendered":"http:\/\/goldstocksforex.com\/?p=9981"},"modified":"2021-12-01T05:48:05","modified_gmt":"2021-12-01T05:48:05","slug":"chinas-investment-driven-growth-miracle","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2014\/06\/08\/chinas-investment-driven-growth-miracle\/","title":{"rendered":"China’s Investment-Driven Growth \u201cMiracle\u201d"},"content":{"rendered":"

Worth Wray quotes Michael Pettis from his 2013 book, Avoiding the Fall: China\u2019s Economic Restructuring<\/em>, about the future path of China’s debt-laden economy:<\/p>\n

Every country that has followed a consumption-repressing, investment-driven growth model like China\u2019s has ended with an unsustainable debt burden caused by wasted debt-financed investment. This has always led to either a debt crisis or a lost decade of very low growth.<\/p><\/blockquote>\n

We couldn’t agree more. China is no different to Japan or Brazil. Investment-driven growth is only sustainable where investment earns a higher return than the long-term cost of servicing the debt. With diminishing returns on additional investment, returns dwindle and a debt\/investment imbalance develops. <\/p>\n

Keynesian thinking goes even further, however, suggesting that a fiscal deficit can be used to fund expenditure that does not earn a return, whether public fountains or school libraries. But that is short-term thinking, as Keynes indirectly acknowledged with his response “in the long run we are all dead.” In the long run, as with Japan, the government ends up with a huge pile of public debt and no income from investment assets with which to service the interest, let alone repay the principal.<\/p>\n

The effect of a Chinese slow-down is likely to be similar to that of Japan in the early 1990s — just on a larger scale.<\/p>\n

Read more at John Mauldin’s Thoughts from the Frontline<\/em>: Can Central Planners Revive China\u2019s Economic Miracle?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Worth Wray quotes Michael Pettis from his 2013 book, Avoiding the Fall: China\u2019s Economic Restructuring, about the future path of China’s debt-laden economy: Every country that has followed a consumption-repressing, investment-driven growth model like China\u2019s has ended with an unsustainable debt burden caused by wasted debt-financed investment. This has always led to either a debt … <\/p>\n

Continue reading “China’s Investment-Driven Growth \u201cMiracle\u201d”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[41,45,17],"tags":[663,1885,1934],"class_list":["post-9981","post","type-post","status-publish","format-standard","hentry","category-china-hk","category-debt-levels","category-japan-korea","tag-china","tag-investment-growth-model","tag-japan"],"yoast_head":"\nChina's Investment-Driven Growth \u201cMiracle\u201d - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"China's Investment-Driven Growth \u201cMiracle\u201d - the patient investor\" \/>\n<meta property=\"og:description\" content=\"Worth Wray quotes Michael Pettis from his 2013 book, Avoiding the Fall: China\u2019s Economic Restructuring, about the future path of China’s debt-laden economy: Every country that has followed a consumption-repressing, investment-driven growth model like China\u2019s has ended with an unsustainable debt burden caused by wasted debt-financed investment. 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He explains the Chinese growth model, why it no longer works, and the hard choices ahead. China's Growth Model China's growth\u2026","rel":"","context":"In "China & HK"","block_context":{"text":"China & HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"China Non-Financial Credit\/GDP","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":3882,"url":"https:\/\/thepatientinvestor.com\/index.php\/2012\/03\/19\/economonitor-economonitor-all-feasts-must-come-to-an-end-chinas-debt-investment-fuelled-growth-part-1\/","url_meta":{"origin":9981,"position":1},"title":"EconoMonitor \u00bb All Feasts Must Come to an End: China\u2019s Debt & Investment Fuelled Growth","author":"Colin Twiggs","date":"March 19, 2012","format":false,"excerpt":"Satyajit Das: New lending by Chinese banks in 2009 and 2010 was around 40% of GDP. New bank loans in 2009 and 2010 totalled around $1.1-1.4 trillion, an increase from $740 billion in 2008. Total outstanding loans in the economy have jumped by nearly 50 per cent over the past\u2026","rel":"","context":"In "China & HK"","block_context":{"text":"China & HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":42439,"url":"https:\/\/thepatientinvestor.com\/index.php\/2023\/06\/17\/china-recovery-falters\/","url_meta":{"origin":9981,"position":2},"title":"China recovery falters","author":"Colin Twiggs","date":"June 17, 2023","format":false,"excerpt":"China's exports plunged 7.5% year-on-year in May.... https:\/\/youtu.be\/sjegqSfcdWE Westpac tell a similar story: Reversing our perspective and moving a month forward in time to May, China\u2019s trade surplus narrowed to US$65.8bn as exports weakened and imports rose. 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Central planning has for so long hit growth targets via stimulus that its economy is now a debt-saturated laggard that spends so much repaying interest on unproductive assets that it can\u2019t grow. 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Total debt to GDP in China was around 250% at the\u2026","rel":"","context":"In "Stock Markets"","block_context":{"text":"Stock Markets","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/stock-markets\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/9981","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=9981"}],"version-history":[{"count":2,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/9981\/revisions"}],"predecessor-version":[{"id":29473,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/9981\/revisions\/29473"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=9981"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=9981"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=9981"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}