China’s Massive White Elephant – 1.4 Billion Tons Of Steel Capacity
by David Stockman
David Stockman’s Contra Corner
Stated differently, even at the peak of recent financial bubbles in London, NYC, Miami or Houston they did not build such monuments to sheer economic waste and capital destruction. But just consider the case of China’s mammoth steel industry.
Annual production grew from about 70 million tons in the early 1990s to 825 million tons in 2014. Beyond that 12X gain, it is the capacity build-out behind the chart below which tells the full story.
To wit, Beijing’s tsunami of cheap credit enabled China’s state-owned steel companies to build new capacity at an even more fevered pace than the breakneck growth of annual production. Consequently, annual crude steel capacity now stands at nearly 1.4 billion tons, and nearly all of that capacity—-about 65% of the world total—— was built in the last ten years.