The Danger of Overcapacity

“No Soul to Damn: No Body to Kick”: An Unscandalized Inquiry into the Problem of Corporate Punishment

While the US frittered away much of the stimulus on throwing money at banks, the Chinese actually created much more capacity.  Business Week used to do a good job of understanding real issues.  Here the new Bloomberg magazine notes that the extra capacity poses a risk to the West because China will now have to export more, creating a different sort of imbalance.

Roberts, Dexter. 2009. “China’s ‘Made in China’ Problem: The Downside to Beijing’s Huge Stimulus is a Glut of Factories and Output That May Spur Trade Frictions.” Business Week (21 December): pp. 20-21.

http://www.businessweek.com/magazine/content/09_51/b4160020918482.htm?chan=magazine+channel_new+business

“While Beijing’s $586 billion stimulus package has helped the mainland navigate the global financial crisis, there’s a downside. Fixed asset investment — money spent on factories, highways, and other big-ticket projects — soared 40% in the first half and accounted for nearly all of the country’s growth.”

3 comments so far

  1. Todd on

    Hilarious.

    How dare those Chinese act like good little bourgeois! The cads!

  2. mark hansen on

    isn’t over capacity endemic to capitalism?

  3. lk on

    Did you see article in The NY Times about BusinessWeek?

    At Bloomberg, Modest Strategy to Rule the World
    By STEPHANIE CLIFFORD and JULIE CRESWELL
    Published: November 14, 2009

    This year alone, Bloomberg, deploying the cash spouting from its data business, has recruited refugees from The Wall Street Journal and Fortune and opened bureaus in places like Ecuador and Abu Dhabi. Its editorial staff (which includes radio, TV and Web site workers) now numbers 2,200, compared with 1,250 journalists at The Times and 1,900 at Dow Jones (a figure that includes the newswires and the Journal staff).


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