“Put simply, every year since 2005, more than 50% of China’s GDP has consisted of construction-related spending. The law of diminishing marginal returns says this simply cannot continue.
It represents a misallocation of the household sector’s hard-earned savings on a colossal scale, and I believe it will end badly. Not a day goes by that there aren’t riots and protests somewhere in China (including cyberspace) as the downtrodden man in the street reaches his froggy boiling point. ”
But it is a different animal, buyers are actually not going to default in drove. Instead, it will be builders, local governments in default and forces bank runs. GDP growth in China depends on 50% investment, but hot money is going to leave its border while its internal money is also being transferred outside because the leadership change next year makes many government officers and businessmen nervous.
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