China's investment boom worries (BBC)

[eppur_se_muova]

Chinese investment surged even higher in the first five months of this year, suggesting the government is failing to cool its rampant economy.

China said spending on fixed assets like buildings and machinery rose 30.3% in the first five months of 2006, compared to the previous year.

The government wants to cut investment by asking banks to curb their lending.

It is worried that too much investment will create industrial overcapacity, threatening profits and employment.

"The risks to the economy are from the investment boom turning to bust and what the government wants to do is make sure it's a steady process," said Julian Jessop, chief international economist at Capital Economics.
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more; http://news.bbc.co.uk/2/hi/business/5082092.stm

[Tom Jefferson]

1. China is a large country. I doubt they are in danger of creating

"industrial overcapacity."

[w4rma]

2. I tend to agree. The true reasons are probably more tied to some

folks wanting to cement their power over others.

[Warren Stupidity]

3. all your capital assets are belong to us

Boo f'ing hoo. I guess this whole capitalism thing was not supposed to be a game of equals.

[oscar111]

4. whats the percent, state vs. private production units?

i havent been able to get anyone to bring me up to date on whether china is LW or RW. Everyone seems confused on this matter. I know very little of china.

Maybe this will give me some clue.

[Warren Stupidity]

5. I don't have any data.

My understanding is that China is essentially a capitalist economic system and a totalitarian state: i.e. it is a modern fascist system.

[oscar111]

6. thanks warren . Anyone else have a comment to add?

thanks

[Tempest]

7. Warren is right

Just look at all of the U.S. and other foreign companies that are allowed to do business in China.

Also look at Lenovo, the Chinese computer company partially owned by the state.

[Tempest]

8. What else is China going to do?

With all the tens of billions the U.S. keeps sending to them?

[melm00se]

9. i would be concerned

I doubt their economy has the depth and strength it needs to weather the inevitable bumps and then this whole "capitalist" thing is new to the Chinese they may very well miss the warning signs and allow their economy to overgrow or come to a screeching halt.

All economies are now very interdependent and with China in the top 5, if China stumbles, the repercussions could wack (highly technical term that) some of the strongest economies, regardless of their relative strengths or perceived weaknesses