Is China The Biggest Malinvestment Case Of All Time? ....This phenomenon is dangerously present in modern markets - and particularly in China, where the miracle of +8% growth has been artificially sustained at all costs, stretching to greater and greater heights of danger. For more on the subject of Austrian economics prophecies, false trends, and stimulus-driven booms and busts, see the following pieces: The Von Mises Prophecy Inflationary Boom-Bust Cycle Redux Soros on False Trends Keynesian Psychology With Austrian Tails Which brings us back to China. We are beginning to wonder if China is perhaps the biggest, grandest, most absolutely stunning case of malinvestment in the history of mankind. Thanks to central bank stimulus, the West certainly has its own malinvestment problems. But at least a quasi-free market acts as a brake. In China, the authoritarian structure in which the commanding heights are run from Beijing makes for capital misallocation (malinvestment) on a scale of the Great Wall. For example: China bulls have long feted the country's top down authoritarian structure as being able to "get things done." And this is very true. If you want, say, a highway or a dam built in China, then boy howdy, it will get done, regardless of whether five thousand or five hundred thousand people need to be forcibly displaced from their homes. What this means is that Beijing can approve mass infrastructure projects at the snap of a finger. What it also means is that, within the context of a rigid and opaque governing system, China has greater ability to do economic damage to itself (through epic malinvestment) than perhaps any Western democracy that has ever existed. Quite frankly, we are mystified how staunch free market advocates (ahem, Jim Rogers, cough cough) can talk fire and brimstone regarding Western Central banks on one hand, and yet speak of China glowingly on the other hand... more http://seekingalpha.com/article/877121-is-china-the-biggest-malinvestment-case-of-all-time
let's say there has been some kind easily accessible investment vehicle since the beginning of time. 0 -1000 AD China vs 12 countries of Western Europe buy China, I win. 1000-1500 AD China vs 12 countries of Western Europe buy China, I win. 1500-1600 AD China vs 12 countries of Western Europe buy China, I win. 1600-1700 AD China vs 12 countries of Western Europe buy China, I win. 1700-1820 AD China vs 12 countries of Western Europe buy China, still winning 1820-1870 AD China vs 12 countries of Western Europe buy China, lose just by a little bit 1870-1950 China vs USA buy China, lose a lot 1950-1973 China vs USA buy China, lose alot but gap narrowing 1973-2003 China vs USA buy China....gap narrows even more...back to historical norm? http://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_(PPP)
Kondratiev long wave predicted a 200 year economic power shift to the East beginning around 2000. It used to be said, "Go West young man!" Now it's "Go East young man!"
That's a big make believe there... the only thing close to "easily accessible investment" would be to be either the emperor of europe or the emperor of china... and note - the former doesn't really exist and in both cases, no dynasty lasted the whole period. So, this is really not much of case you are making.