I agree w/ FK that there may be some defunct chinese projects out there. Misallocation and price distortions.
But size matters in the sense that the chinese government can deploy enough resources to salvage banks.
And size matters also in the sense that China being huge and populous, there is a chance that basically any investment in infrastructure pays off (i am exaggerating a bit, but you get the point).
I wonder why, psychologically speaking, FK insists on the claim that size does not matter.
I agree with FK that a significant drop of marginal return on investment is bad news enough, independently of a banking crisis.
ReplyDeleteI do not agree that investments projects have "at least some return" only because China is a big country. Look what happened in Brazil on the second half on 70's on PND II.
Market oriented decisions create big bubbles, but government oriented decisions can create even bigger ones.
Por falar em tamanho importa, existe alguma relação entre tamanho da população e pib per capita ?
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