From Naked Capitalism:
No large country in modern times has made a smooth transition from being investment driven to being consumption driven. China’s investments as a percent of GDP are at an unheard of level and are increasingly going to unproductive commercial real estate investments. It would be better if I were proven wrong, but the Japanese case says there are rough times ahead for China. However, when that occurs is very much open to question.
In this post, Escobar also depicts China as making a smooth transition to being consumption driven. However, he includes services data, which is not the definition most analysts and observers focus on. Note that that would almost certainly include financial services industry and real estate services, both of which would benefit from property, commodities, and stock market speculation.
Escobar stresses China’s focus on working with other developing countries. This too was a Japanese strategy, to act as a convoy leader for Southeast Asia. While the other countries were willing to take Japanese investment (for instance, setting up plants to allow for lower-cost manufacturing), they were not as subservient in other respects as Japanese leadership had assumed. One big issue is the way China’s geopolitical aims conflict with its economic goals is its aggressive stance regarding sovereignity in the South China Sea. Chinas’s belligerent stance has alarmed its neighbors to the point of achieving the difficult task of making the US look like the better hegemon. China’s focus is admittedly wider ranging than Japan’s circa 1988, but that also implies other types of impediments. For instance, Chinese investors have made a push to acquire agricultural assets in Africa. This has not gone as easily as they had hoped, and quite a few investors have changed strategies or decided to abandon their projects.
http://www.nakedcapitalism.com/2015/02/pepe-escobar-new-silk-roads-chinese-vision-brave-new-trade-world.html
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