Beijing worries that supply is outpacing demand

Not all investment contributes to growth - and in an economy where super-charged capital spending has been a driving force of economic expansion over several decades, there is always a risk that a country that invests over forty per cent of GDP on capital goods can eventually suffer an investment-led slump. Japan learned to her cost the dangers of being over-capitalised. Is China recognising the same symptoms in time? This article from the Times makes for fascinating reading.

“Beijing is eager to keep GDP growth above the level of 8 per cent supposedly required to maintain social stability and job creation. But there are fears that huge imbalances between production capacity and actual demand could lead to price wars, corporate failures and severe setbacks for the country’s stellar expansion trajectory.”

Read Beijing moves to halt growth as supply starts to outstrip demand