vrijdag 16 april 2010

The Economist: Too Bullish

It's soo easy to distort information!
I realized that after reading this Economist article on the potential Chinese Real-estate bubble.

I found it especially disturbing after comparing it to data by Andy Xie (taken over by Time here) that showed the exact opposite: House Price / income ratio in Shanghai is 20, the highest ratio in the US is 8.2 (Honolulu).
That's like paying 1 million Eur for an average house or appartment if you have an income of 50K Eur!!!

I used to value the Economist a lot, exactly because their data tends to be soo relevant and insightful! But gradually I start to think that they write too Bullish, too pro-free-trade and anti-regulation without any nuance. To a certain extend, I'm of course pro free market and anti-regulation as well, but they go to far! For a newspaper with their reach it's troubling!

Also, it's time to stop making average statements on China, it's simply too huge and diverse to capture in a country-wide average (the same goes for India by the way). The Nine Nations of China framework suggested by Patrick Chovanec, professor at Tsinghua University's School of Economics and Management in Beijing, is quite helpful to grasp the Chinese diversity a bit better. You find it here, with later blogposts on each of the 9 nations separately.