The World Bank's China Delusions: Earnings by China Firms Have Fueled the Nation's Growth

摘要

The World Bank has suggested that substantial earnings by China firms, not debt, have fueled the nation's growth. But that assumption could be wrong. This paper examined the same data from the National Bureau of Statistics. It Reported profits in China often include government subsides and are released before payment of income taxes, a rate of about 30 percent in the nation. Another problem for China's manufacturers-they pay increasingly high prices for raw materials, but face a market where prices for finished goods remain flat. As a result, China firms struggle, surviving only with loans. Chinese firms will continue to suffer from low profitability and low return on investment until China transitions away from this growth model of capacity expansion before domestic demand. An overheated economy combined with increased debt could mean a bleak financial outlook for manyChinese firms.