With no need to pay dividends (state firms do not have to make any transfers to central government) and little shareholder pressure to ensure that their investment is cost-effective, Chinese firms went on a capital-spending binge, concentrated in industries such as aluminium, steel, car production and cement.
The corporate world is ending a five-year binge on capitalspending, which has left it with a much higher ratio of fixed costs than when we started this recovery in 1991.