America's prophet of fiscal doom, Nouriel Roubini, is warning that China now faces a "meaningful probability" of a hard economic landing. Roubini came to prominence by warning of the US housing bubble and a global fiscal meltdown.
China's problem? Excessive infrastructure investment that now represents 50% of the People's Republic's GDP:
"There is a meaningful probability of a hard landing in China after 2013, " he told a financial conference in Singapore.
Roubini said investment was already 50 percent of gross domestic product. Sixty years of data had shown that over- investment led to hard landings, he said, citing the Soviet Union in the 1960s and 70s, and East Asia before the 1997 financial crisis.
"I was recently in Shanghai and I took their high-speed train to Hangzhou," he said, referring to the new Maglev line that has cut traveling time between the two cities to less than an hour from four hours previously.
"The brand new high-speed train is half-empty and the brand new station is three-quarters empty. Parallel to that train line, there is a also a new highway that looked three-quarters empty. Next to the train station is also the new local airport of Shanghai and you can fly to Hangzhou, " he said.
"There is no rationale for a country at that level of economic development to have not just duplication but triplication of those infrastructure projects. "