读“中国应该投更多资”有感（近期远东经济评论〕

“China Should Also Invest More” published by the most recent Far East Economic Review, is written by Ms. Hong Liang, a senior China economist at Goldman. This is a must-read article about China’s macro-economy. Some equity investors can also enjoy some valuable insights on China’s corporate earnings.

My key takeaways are as follows:中国华尔街博客空间+H-H-P9a(v3C

1. The author concurs that the global imbalance shall be viewed as a problem that the world is investing too little and, hence, more investment is needed in the surplus nations.
2. China is no exception to this suggestion---China should invest more as well.
3. The article really places its focus on WHERE China can invest in. Simply put, China should normalize the urbanization process, which could lead to substantial investment in infrastructure and housing related projects. By investing more heavily in this process, the release of the pent-up demand from this urbanization process shall self-sustain the investment demand.
4. Meanwhile, the author seems to promote that a real currency appreciation of RMB shall rotate the demand away from the export sector. At the end of the day, China will invest less and less into the US Treasuries. (WOWJ)
5. In addition to the above key themes, the author suspects that China’s domestic investment-to-GDP ratio is above 40%.
6. The China’s headline investment growth, in author’s view, is probably being over-estimated, while the GDP has been under-estimated due to significant understatement of consumption.
7. To satisfy both equity investors and economists’ favors, the author also examines the investment return by painting a very rosy picture for China’s corporate profitability in recent years. For equity investor’s tip, the author pointed out that rising commodity prices present a negative and potential shock to China’s corporate profitability.

Overall speaking, the article seems to analyze China’s economy from economic development points of views. I notice that the author uses the words “capital deepening”, “urbanization”, “industrialization”, etc and her prescrīption for China is really to get involved with a real structural change …….

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