Last night I read the new and excellent Michael Pettis book Avoiding the Fall: China’s Economic Restructuring. It is the single best treatment I know for understanding the dilemmas of the current Chinese economy and the need for restructuring. My favorite bits are those comparing the current Chinese economy to the Brazilian growth of the 1960s and 70s, also investment-driven, and lasting longer than most people thought possible, and culminating in the crack-up of the 1980s, which turned out to be a lost decade for Brazil.
By the way, China’s economy continues to defy the China skeptics (a group which includes me):
China’s economy expanded 7.8 per cent in the third quarter from the same period a year earlier, marking an acceleration from the second quarter when it grew by 7.5 per cent.
The rebound in the world’s second-largest economy was largely the result of government efforts to shore up growth with looser monetary policy and a “mini-stimulus” of investment in infrastructure such as rail and subway systems.
The full FT article is here. As Pettis stresses, such developments are likely to intensify the eventual “discontinuity,” but of course the China skeptics have not yet been proven right…