China over capacity: a capitalist dilemma

In the days of the command economy, China’s politicians could tell factory owners when to invest, and when not to. Times have changed. Beijing’s orders to stop building new factories in sectors plagued by overcapacity are going unheeded. The answer may be to give overzealous managers a stronger taste of market forces. Last year, investment contributed twice as much as consumption to China’s GDP growth. Some of the expansion looks excessive, even if a stimulus-driven consumption boost is current...