State-capitalist China cannot build cities to escape a debt problem

It’s simply erroneous to think that China can build city after city (via debt) to escape a debt-backed investment binge:

But in a report this week, Michael Pettis, finance professor at Peking University’s Guanghua School of Management, points out that such thinking rests on a fallacy. Leave aside recurring reports of newly built Chinese cities ghostlier than some Californian sub-divisions. The point Mr. Pettis makes is that cities don’t create growth; rather, cities expand as a result of, and help accelerate, economic growth.

Via China’s City Limits – MoneyBeat @ WSJ.

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