The Valor Blog.
Investment News and Views, Direct from Our Team.

Call me a skeptic…

In 2008, I traveled to the Beijing Olympics. The Olympics are supposed to be a showcase event for a nation. The Beijing games were empty. There was no food available to buy and the transport was a disaster.

In Australia, the games were shown to be a giant success. For those on the ground, it was obvious that this was not the case.

For many of the events we went to, the crowd were compacted into one quarter of the stadium and the cameras were focused so that the other three quarters of the empty stadium did not make the news. This was at events which were supposedly sold out!

So when I see videos like this one, I am just thinking that the propaganda machine is is full swing again.

Whilst many are great believers of the Chinese economic miracle, having been to China dozens of times, I am far more skeptical about the true growth of the economy. In the 15 years I have been travelling there, there has been truly impressive advances in many areas, but unfortunately the more recent growth in the last 5 years appears to be very uneconomical with countless empty apartments, offices, roads and railways.

This “building for the sake of building” growth is unsustainable at its current rate and either the government acknowledges this and attempts a gentle slowdown now (which is unlikely to be gentle) or they risk a forced much greater slowdown in a few years which could be far more painful.