by Dan Amoss, Daily Reckoning.com.au:
The Chinese model of economic growth is flawed. It has wasted resources on an unprecedented scale. Empty cities, excess industrial capacity and sour construction loans litter the country. New lending yields less and less incremental growth. And the very worst construction projects aren’t producing enough cash to service debts.
The Chinese economy, like most others, rests on a shaky foundation of credit. The country has completed the largest building boom in history — a boom that depended on unsustainable growth in the supply of money and credit.
It’s important to understand that there are effectively two governmental factions in China: one that’s interested in power, control and stability and one that’s interested in getting rich no matter the consequences.
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