As those who follow China's hard landing economic deceleration closely are no doubt aware, Beijing has an excess capacity problem. Recall the following from a report released last month by Daiwa's Institute of Research:
The sense of surplus in China’s supply capacity has been indicated previously. This produces the risk of a large-scale capital stock adjustment occurring in the future. Chart 6 shows long-term change in China’s capital coefficient (= real capital stock / real GDP). This chart indicates that China’s policies for handling the aftermath of the financial crisis of 2008 led to the carrying out of large-scale capital investment, and we see that in recent years, the capital coefficient has been on the rise. Recently, the coefficient has moved further upwards on the chart, diverging markedly from the trend of the past twenty years. It appears that the sense of overcapacity is increasing.
Fortunately, China is adept at coming up with creative ways to "correct" the issue as we saw in Tianjin when a massive (and tragic) explosion at a chemical warehouse vaporized thousands of brand new cars parked near the blast site.
Now, Beijing is apparently working on innovative ways to get rid of unwanted building materials as evidenced by the following video which purports to show a "gravel boat" on a Chinese river...
