1/5 This very good FT article on China's inability stop expanding its already-excess reliance on manufacturing makes what I think are two especially important points. via @ft

2/5 First, that the surge in manufacturing investment in the past 3-4 years had nothing to do with Chinese or global manufacturing needs but was instead driven by the need to externalize the cost of China's property-sector collapse. As property investment plunged, this was...

3/5 matched almost RMB for RMB by an increase in manufacturing investment which, in turn, led to a surge in China's trade surpluses. The decline in China's domestic demand, in other words, was made up for by acquiring a greater share of foreign demand.

4/5 Second, the reason for all this unproductive investment is that "local government officials, desperate to meet their GDP growth targets following a deep property slowdown, are driving manufacturing investment into favoured industries."

5/5 As long as China posts excessively high GDP growth targets, it will be impossible for it to reduce increasingly non-productive investment and slow the resulting rapid rise in debt. But I don't think Beijing is yet willing to give up its GDP growth targets.