John Lee's confusion of short versus long terms

Comments on John Lee “Haunted by China's ghost cities”, 29/03/2011, http://www.businessspectator.com.au/bs.nsf/Article/China-property-Australian-economy-pd20110325-FA9SR?OpenDocument&src=rot

It seems that John Lee may have either inadvertently and unknowingly, or intentionally and wilfully confused two important issues that have quite different implications, that is, the shorter term and longer or long term of Chinese housing market and urbanisation.

He mentioned that “a small but increasing number of notable investors such as Jim Chanos and Garry Shilling are shorting China”. To me those investors are more likely to look at the short term but very unlikely to look at the longer term, especially when the purpose of those investors is “shorting”. The fact is that some financial investors can change their position from long to short or vice versa very quickly.

It remains a fact that there is still a very large proportion of Chinese, far exceeding that in any of the industrialised countries now, living in rural areas and as Chinese industrialisation proceeds further they will become part of the urban resident cohort – that is, part of further urbanisation. That longer term urbanisation trend in China is unlikely to be disrupted by shorter term housing market corrections.

And dare I say that the big miners are looking at the longer term trends as opposed to shorter term fluctuation in the markets for their investments in mines and mining production.

By confusing those two very different issues unfortunately, John Lee is confused himself and is confusing others at the same time.

I would predict that it is extremely unlikely that any big miners will employ him to assist in their decision making.

However, there is a limit to industrialisation and urbanisation in any country including China. Besides, once industrialisation and urbanisation is complete or near complete, the demand for commodities may well fall, sometimes significantly. That obviously needs to take into account in any long term mining investments and metal production and supply.

PS: it appears that John Lee likes to paint China negatively in almost everything, that is probably a form of serious bias. And that is likely to result in mistakes in his analysis and conclusions in most of the times.