Hello Elmat, I am not an economist. I skipped most of my college economics classes.
Even so, thus warned, I state that I believe China’s growth rate is now strongly dependent on (a) relocation of factories to China, (b) shifting of purchase orders to China, (c) domestic infrastructure spending underpinned by FDI and domestic bond issuance.
If so, I can understand and in fact expect the statistical artifact of declining indicated returns on seemingly ever increasing investments.
Factories take time to rev up but must be first built. Increase the factory relocation count, down goes the overall aggregate return until the factories are put to good use.
Infrastructure take even longer to pay out, in fact much longer, to earn a return anywhere near the returns of factory investments, if ever, but the infrastructure is a pre-condition to factory relocation and continued competitive health of already relocated factories.
I think folks may be confusing rate of return of a data center to rate of return for a highway connecting a new airport to a new town.
I may be wrong, and even if so, darn the torpedoes and full speed ahead on growth, since the global liquidity must be tapped while the tapping is still good, allowing the transformation of paper into concrete, pixels into machines, and ideas into reality.
Relax, sit back, chill out, for it is just another necessary bubble :0)
Chugs, Jay |
