Ordos would definitely seem to be at least one data point of evidence for misallocation of resources on a only-in-China scale!
The figures from the report can be obtained here, and the figures referenced above are as follows.
On the other hand, one might argue that global institutions like the World Bank would be particularly bad at spotting bubbles, although being an outsider to the country in question has got to help.
Personally, I haven't formed a clear position yet.
3 comments:
As someone said not so long ago on TOD:
"What strikes me always is that major events (especially in the last 10 years) seemed unthinkable to most “experts” just a few weeks before they happened. On the other hand, there is ALWAYS a cumuli of facts and circumstantial evidence that point straight to these very events... " Complexity in all it's glory. ;-)
I guess the trick is to find the data that can tell us what the truth is. Anecdotes are fine, and only give us clues as to where to look.
The WB claims that property price increases are modest, and they cite a good history of 6-10% annual increases to support this (which itself is beyond 'modest' IMO). Yet this figure is averaged over the entire country - I would be far more interested in seeing separate graphs for Shanghai, Guangzhou, and a few other cities.
The second piece that I am interested in are the banks and how many 'non-performing' loans they are carrying on their books. This information is not likely to be publicly available however.
Yet lending rules are certainly different there as well - for example, the amount of money someone needs to put down as a down payment is going to be highly predictive of the chances of that loan going into default in the event of a downturn.
It is probably true that they hadn't gotten around to emulating the worst practices of over leveraging and the securitization of debt.
Here's an interesting article that is relevant to this discussion.
http://www.foreignpolicy.com/articles/2009/09/03/how_china_cooks_its_books
Post a Comment