[quote=Eugene]
[quote]I wouldn’t define China as a bubble, per se, but, rather, another Soviet Union. There was justifiable fear when the Soviets put Sputnik up in 1957, but it was the US that put a man on the moon 12 years later after Kennedy’s call to action.[/quote]
That is a poor analogy. Chinese growth is driven by private enterprise that is only lightly constrained by the communist government. There was essentially no private enterprise in the Soviet Union (except briefly during the 20’s and then just before the collapse in the late 80’s). They found a system that keeps corrupt officials and incompetent bureaucrats out of private entrepreneurs’ way as much as possible. Why do you think everyone goes to China to build new factories, and not, say, to Cambodia or Indonesia, even though Cambodian and Indonesian workers are clearly cheaper than Chinese?[/quote]
“Only lightly constrained by the communist government”? Really? How much business do you do in the Middle Kingdom and of what type?
While I don’t do business there, the majority of my clients (oil/gas and Heavy Industrial) do and report back a quite different picture than you do. There is little to no protection of foreign IP, the Chinese government asserts primacy in all deals and is heavily involved, especially given that most of the Heavy Industry in China is either state run or state sponsored, and the local quality control is execrable.
No, I don’t think “lightly constrained” really captures the reality on the ground there. I had occasion to see a custom made bolt and anchor system that was made for a chemical processing plant in China. The reason for the bolt and anchoring system? The plant had been built by local Chinese contractors (circa mid-1990s) and the foundation was already splitting. Not cracking, mind you, but splitting. The concrete pour was sub-par, the rebar schedule was incorrect and the rebar was of exceptionally poor quality beyond that; the list went on and on. All of the work had been supervised and approved by a set of communist officials, none of whom had engineering or construction experience.
The plant, however, was hailed by these self-same officials as proof of China’s nascent, but fast growing capability in heavy industry. Yup, they’re a powerhouse, alright.
