The real number of China’s GDP growth will remain a mystery. There are some other official numbers, however, which make it very clear that China’s model of generating growth through investment has run its course.
After the financial crisis in 2008, China ramped up spending on infrastructure and productive capacity to maintain GDP growth higher than 10 percent. To this day, fixed asset investment—private and public—makes up almost 50 percent of total GDP, or $5 trillion dollars.
This basically means digging up a whole lot of earth and putting in nice, shiny things like bullet trains. What do you need to dig up earth? Right, excavators, tons of them.
In the heydays of investment spending, the country bought almost 50,000 excavators in a single month. Since January 2014, however, this trend is officially over. Excavator sales volumes are down 38 percent for the period spanning January to November 2015, compared to the same period in 2014, according to research by Goldman Sachs.
