Chinese Construction Not Adding to GDP???

A significant amount of this blog has been spent investigating China. That is because Chinese consumption was the most significant driver to the 5-year bull market (and the most bullish component to the bullish IEA World Energy Outlook that was released yesterday). For example, before the Olympics, it was said that the Chinese government was hording heating oil (and thereby contributing significantly to the price rally of over $1.00/gallon). There have been news reports of how China is bringing 1 coal-fired power plant online each day for 8 months. All bullish considerations for commodities...all demonstrations of the emerging power of the Chinese Dragon. Now consider these comments from James Chanos, a hedge fund manager, which can be found in video form on CNBC -

"I don't think things are that stable. I think it's worse, and I think it's going to get worse. Depending on your estimate, 35 to 50 percent of China's GDP is construction, and that's a very important thing to remember, and if we are still building things that we don't need in China, like factories, are you really adding wealth to the country? Like any capital project has a rate of return associated with it, and in China, I'm afraid, a lot of projects, as well as in south Asia and the Middle East, do not have economic returns associated with them, yet, during their construction, they contribute to growth.

"Remember our telecom boom, when people were building out things, left, right and center? Then the building stopped. It was the Wile E. Coyote moment. All of a sudden, we looked down, and there was no there there."

I saw Field of Dreams....I thought the mantra was "If you build it, they will come"?