Walker, an Austrian economist evaluates China's economy. "He puts cement companies and real-estate developers in the category that
will appear somewhat resilient before a deeper downturn takes hold,
with the temporary reprieve supported by earlier pre-sales of housing
projects.
Ultimately, however, many companies is those industries will collapse and eventually undergo consolidation, Walker said.
“Property-led growth and infrastructure-led growth is just about finished,” he said.
Walker, who adheres to the controversial Austrian school of economics, said that what’s unfolding is part of the normal business cycle, in which activity contracts and investments have to be written off.
He believes that China’s low interest rates have helped stoke mal-investment on a scale never seen before, and that another government stimulus package appears unlikely, given a glut of overbuilding, including transportation projects such as airports...
So when interest rates are low, they encourage borrowing because money is so cheap and investors don't care as much about their risk. If investment is bad and the business bombs, companies will consolidate their capital and resources to stay alive.
Ultimately, however, many companies is those industries will collapse and eventually undergo consolidation, Walker said.
“Property-led growth and infrastructure-led growth is just about finished,” he said.
Walker, who adheres to the controversial Austrian school of economics, said that what’s unfolding is part of the normal business cycle, in which activity contracts and investments have to be written off.
He believes that China’s low interest rates have helped stoke mal-investment on a scale never seen before, and that another government stimulus package appears unlikely, given a glut of overbuilding, including transportation projects such as airports...
So when interest rates are low, they encourage borrowing because money is so cheap and investors don't care as much about their risk. If investment is bad and the business bombs, companies will consolidate their capital and resources to stay alive.
