China at some points has had investment rates of in excess of 40% of GDP. there is no investment strategy under which this is the profitable thing to do. China is using physical capital as a loss leader in order to grow cities that will produce network effects will in turn foster the human capital that really makes a country rich. In this way China has become like Amazon’s Jeff Bezos, a Destroyer-of-Worlds. You can’t win a physical capital accumulation battle against someone whose plan is to overinvest and lose money on the physical capital.

this is not the whole story, but an interesting way to think about china regardless.

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