When There is No Significant Capacity Outside China

I'm posting this snippet from Andy Xie seperately, even though it comes from the last post the point is significant enough to stand on its own.

Even though China is battling by SARS at this time, the most sustainable investment ideas appear to be related to its rise in the global economy. China is effectively re-pricing the investment cost for more and more industries. I believe book value in China is perhaps safer than anywhere else.The reluctance to write off book value outside China is the reason that China’s export sector can sustain its profitability, in my view. As prices are artificially supported by higher depreciation costs, China’s exports enjoy high growth and profitability at the same time. This process ends for an industry when there is no significant capacity outside China.
Source: Morgan Stanley Global Economic Forum
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