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Article: What China Can Learn From 1929.(Global Investor)
- Article from:
- Newsweek International
- Article date:
- December 22, 2008
- Author:
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China, especially, does not seem to understand that the fundamental problem has been Chinese overcapacity.
Everyone knows the story. For a decade a rising superpower has drawn huge investments in new manufacturing plants, which draw millions of migrants from the countryside. The resulting productivity boom makes this nation the factory of the world, producing far more goods than it can consume. Its trade surplus rises toward an astonishing 0.5 percent of world GDP. Foreign-currency reserves surge, making it the largest holder of reserves in history, which it uses to fund the trade deficits of its export customers. Then suddenly, a global banking crisis interrupts ...