Amazing insights on China:
There are three possible sources of investment: one, the property sector, which is contracting and there’s nothing the government can do about that. Two, infrastructure investment, which is a bigger problem than the property sector. The central government would like to rein it in because they recognize that it’s the source of much of the bad investment and debt at the local government level. Three, and this was their magic trick to solve all problems, was to pour investment into the manufacturing sector. The problem with that is, if you are a small country, you can do that and nobody will notice. But when you’re the second largest economy, 17% of world GDP, and you already account for 31% of global manufacturing, you can’t do that unless the rest of the world is willing to accommodate the increase in your share of global production.
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