'The fundamentals for the mainland's stable, relatively fast economic growth in the medium to long term haven't changed.'
Ma Jiantang, commissioner
National Bureau of Statistics
My colleague Tom Holland made mention of it in the Monitor column yesterday but I think it needs emphasis. For every bang of economic growth it generates, the mainland needs ever more buck of investment effort and the latest figures suggest things are getting worse.
This is a phenomenon that two American economics professors, Alwyn Young and Paul Krugman, pointed out in Singapore some years back (to much Singapore government protest). Total factor productivity they called it. Less bang for the buck works better for me and, yes, Singapore still suffers from it too.
The first chart tells the story. The top line in the red says that total fixed-asset investment in the mainland ran last year at 73.6 per cent of gross domestic product. This is a ridiculous figure and mostly because this has been made a ridiculous statistic. Local authorities have become ever more inventive in what they call investment. At this rate the capital investment component of GDP will exceed GDP itself in six years. Fundamentals, Mr Ma?
The blue line shows you that the more conservatively stated fixed-capital formation is only a sliver away from 50 per cent of GDP. There is still an element of what we might call 'subjective appraisal' here although it is at least closer to how other countries define capital investment.
But it remains very high by the standard of other countries. For the rest of developing Asia, the ratio is 30 per cent at most, for developed countries perhaps 20 per cent. In Britain it is 15 per cent.