A couple of interesting perspectives on China


We spend 26 days in China during August-September 2010.  Just enough to make us feel like experts without really becoming experts.  This trip accounts for my pictures of the Shanghai “Pudong” Financial District in the blog header.  We saw such tremendous growth and energy in Shanghai, Beijing, Xian, Chengdu, Wu Han and other cities we visited.

The growth of the Shanghai Financial district is phenomenal!  Apparently 20 years ago that bank of the river was still farm country, dark at night.  But look at the bright lights in the header picture now!  The second tallest building in the world (101 stories) is there.

Two articles I recently read I still reflect on.  The first, 17 Facts About China That Will Blow Your Mind, shows both the rapid growth and incipient problems China may face.  But the second by investor Vitaliy N. Katsenelson of ContrarianEdge is even more thought-provoking.  He argues, in slides starting here, that China’s enormous growth rates haven’t been built on anything real, but rather has been forced by a command economy that he feels is about ready to collapse, as the leaders have taken to creating cities and malls with no residents and to making bad stimulus investments based more on bribes than on sound cash-flow investments.  And now he argues that the Chinese bubble is about to burst.  If so, the consequences will not stay in China.

Normally contrarian investors do no better in the long run than regular ones (they all loose), but his arguments about China as a “mother of all grey swans” provides food for thought.  In the meantime there is lots of development and motion in the Chinese economy and daily life, as seen in the photo below of the massive traffic — and traffic jams — in Beijing.