Prising China
Most Major Chinese Mining and Energy Investments Fail
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  • Jacksonian_Libertarian

    “The Chinese economy is quickly becoming the world’s largest (in fact, by some metrics, it is set to outpace the U.S. within 10 years), and its manufacturing sector has been the main engine of growth.”

    I remember similar things being said about Japan. It too was making large numbers of unwise investments, over paying for buildings and golf courses, and these were private companies not state owned monopolies. Tokyo became more valuable than the entire continental US, and everyone feared America’s time was over. We all know how that turned out, Japan has now spent 25 years in a deflationary depression, and all talk of them becoming the largest economy stopped long ago.

    It was foreign businesses that built brand new state of the art factories in China to take advantage of the cheap labor, it was called outsourcing. These factories which are now aging, built products for export. Now things have changed, Chinese labor isn’t the cheapest anymore, factories are old and inefficient, and better less risky places to invest and build are now closer to the consumer. The US, arguably the least risky place to invest in the world, is experiencing a glut of cheap energy due to fracking, that is likely to last for a long time. At the same time America has a mature infrastructure with roads, railroads, telecommunications, pipelines, as well as an educated workforce, who’s wages have stagnated for 40 years making them cheap all things considered.

    So, I think the prediction of the Chinese economy becoming the world’s largest in ten years is a huge guess with little historical evidence to support it. I think it more likely China’s belligerence will start a war with all its Pacific Neighbors, who sit on all of China’s shipping routes, and who will cut off and irreversibly destroy China’s trade. China already imports more of their energy than anyone else, when this gets cut off, their economy will grind to a halt, like the battle of the bulge writ large. War in this age is all about logistics and China has no logistics outside of its own borders, to add insult to injury they also have second and third rate military equipment designed by the extinct Soviet Union and not battle tested as the American and western built equipment supplied to their Pacific Neighbors.

    • Dracovert

      Excellent analysis. Every time there is a new or unexpected trend, little minds expect the trend to continue forever. No trend continues forever, it continues until it reaches an unsustainable point, at which time it ceases. I recall in the late 1980s, Japan was growing like crazy. There were serious projections that Japan would grow and overtake the USA, the world, the galaxy, the universe!

      China has much more severe social, demographic, environmental, and economic problems than Japan ever had, and China has one of the most corrupt psychopathic dictatorships ever.

      China will self terminate.

  • lukelea

    Reminds me of a lot of Japanese investments in the West before The Fall.

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