Michael Pettis
Michael Pettis

@michaelxpettis

4 Tweets Jan 07, 2023
1/4
"Global miners see China as a source of stability for future iron ore demand due to increased infrastructure investment this year and the country’s ongoing urbanization drive."
caixinglobal.com
2/4
They see the problems this year as mostly temporary interruptions before China reverts to its old model, with many more years ahead of Chinese urbanization and infrastructure spending.
3/4
This wishful thinking has it almost exactly backwards. China invests 40-45% of its GDP, with roughly 60% of this having gone into property and infrastructure. No other country in history has had such high investment levels for so long.
4/4
In the short term China may try to keep these levels up as the economy struggles to adjust to a new model, but Beijing knows it must bring infrastructure and property investment levels sharply down. Over the long term China simply cannot maintain even current levels.

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