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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (8073)	2/13/2004 7:16:43 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Red lights flashing for China's economy Last week, the State Council ordered a halt in investments in three key industries: steel, cement and electrolytic aluminum. A few days later, the People's Daily ran an editorial lamenting the negative growth in farmers' incomes for the past few years in stark contrast to the high-speed increase in domestic output. Separately, these two developments don't warrant headlines, but taken together, they set off alarm bells about the health of China's economy, especially when examined in connection with their relationship to the GDP structure. For the first 11 months of 2003, China's industrial investments saw an average increase of 43.8 percent above 2002's level. Such sectors as raw materials (metals, chemicals) registered a whopping 82.8 percent jump in investment. For the first quarter of 2003, investment in the steel sector rose by 153.7 percent over the previous three months. It all looks dizzying, but the problem with this is that it brings about long-term ill effects. By nature, government is synonymous with inefficiency and waste. These industries are building themselves into overcapacity with no corresponding increase in consumption for their products. For example, the production capacity for aluminum will outstrip the predicted needs by 3 million tons, or 30 percent, in 2005. Belatedly, the GDP-obsessed government in Beijing has realized that high consumption and waste of resources and energy cannot continue. atimes.com ==================================================== I think Russ's crack-up boom is about ready to end rate hike or not! Mish