Very interesting piece. I was unaware that China’s capital ratios are so low, however I still don’t think this undermines the case for an internal rebalancing of China’s economy to boost demand, which I know you talk about a lot yourself (https://stephenroach.substack.com/p/the-cacophony-of-a-hundred-flowers). For me this simply adds further credibility to my other main criticism of China; namely, that Chinese industry appears to be highly inefficient, and instead simply relies on being able to draw in the savings of over a billion people in order to prop itself up. Not only is China attempting to force its development on other countries through overly aggressive export promotion, but it isn’t even doing it well; for all its perpetual underconsumption, it still can’t manage to sustain viable levels of capital or stimulate efficient forms through competition. The net impact is that everyone loses - other economies have their own industries hollowed out, whilst Chinese citizens themselves fail to reap any of the benefits.
Western hawks have been waiting for collapse of China which never happen.
Very interesting piece. I was unaware that China’s capital ratios are so low, however I still don’t think this undermines the case for an internal rebalancing of China’s economy to boost demand, which I know you talk about a lot yourself (https://stephenroach.substack.com/p/the-cacophony-of-a-hundred-flowers). For me this simply adds further credibility to my other main criticism of China; namely, that Chinese industry appears to be highly inefficient, and instead simply relies on being able to draw in the savings of over a billion people in order to prop itself up. Not only is China attempting to force its development on other countries through overly aggressive export promotion, but it isn’t even doing it well; for all its perpetual underconsumption, it still can’t manage to sustain viable levels of capital or stimulate efficient forms through competition. The net impact is that everyone loses - other economies have their own industries hollowed out, whilst Chinese citizens themselves fail to reap any of the benefits.