A very well written article by a financial columnist of South China Morning Post, Mr Jake Van Der Kamp, explaining the mechanics of a ponzi scheme economy of China.
Using example of steel production as representative of all manufacturing industries, the article explained this way :
“Why is so much steel needed?
Simple. It is needed to build more steel mills so as to build more shipyards, ports, railways and bridges so that more ships can be built to carry more iron ore to more ports and thence along more rails and bridges to more steel mills so as to build more shipyards, ports, railways …
What we have here, in short, is a giant Ponzi scheme. In a Ponzi scheme you pay out the winnings of the first entrants with what others later pay into it.
As long as it keeps growing everything is fine. When it stops growing it collapses.
In this case you justify production with demand based purely on more production. As long as you keep pushing production up everything looks fine. At its peak in 2014 China turned out 30 times more cement than the United States, and the latest production figures are only a smidgen less than 2014’s.
Command systems may be good at deciding where to direct economic effort in wartime but they are hopeless in peacetime at deciding when to stop and do something else.
They just keep going down the same old track and then what you get is economic cancer, uncontrollable growth.”
You can read more in the following link.