Who Killed the Chinese Economy? | A Discussion with Adam S. Posen, Zongyuan Zoe Liu, Michael Pettis
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- čas přidán 14. 11. 2023
- Everyone can agree: Chinese economic growth is slowing. After Chinese President Xi Jinping lifted the country’s strict COVID-19 restrictions in December 2022, many expected the Chinese economy to surge, but after a brief post-COVID bounce, it appears to be losing some of its vitality. What are the causes of this stagnation? That is a question of intense debate, and China’s ability to recover and the future of U.S. policy largely depend on how it is answered.
Foreign Affairs Executive Editor Justin Vogt and the Peterson Institute’s Adam S. Posen, along with Zongyuan Zoe Liu and Michael Pettis, discuss the causes of China’s economic stagnation and what it may mean for American strategy.
This joint event from Foreign Affairs and the Peterson Institute for International Economics originally aired on November 14, 2023.
Additional Resources
"The End of China’s Economic Miracle" by Adam S. Posen
www.foreignaffairs.com/china/...
Response to Posen’s article by Zongyuan Zoe Liu
www.foreignaffairs.com/respon...
Response to Posen’s article by Michael Pettis
www.foreignaffairs.com/respon...
Posen Replies
www.foreignaffairs.com/respon...
"Will the Chinese Economy Surpass the U.S. Economy?" Foreign Affairs Asks the Experts
www.foreignaffairs.com/ask-th...
If I had to give reason why I stopped watching mainstream news and analysis in video form it would be that *it stopped being like this.* These are accomplished people having an intelligent conversation without having their most recent book as a background prop, or making an effort to "build their brand" through manufactured disagreement. Thank you!
Mainstream media did not only become dumber, you became probably much smarter in the last decades. Just look back, you'll see with what kind of broad brush even those we considered experts where painting back in the days without anybody calling them out. The world just changed a lot. The interested don't need to rely on mainstream media and get high quality information from beyond it. At the same time mainstream media does not need to cater this clientele anymore, they are gone anyhow, and focuses on easy to digest infotainment.
The most frustrating thing for me studying economics as a hobby is how everyone seems to know what should be done but it almost never gets done because of politics and the need politicians have to keep most people happy in order to be reelected or stay in power at the expense of the medium to long term. That is why politicians LOVE Keynes: "In the future, we are all dead". He should complete the phrase and add: "therefore, leave the bill to our kids". And the Chinese could add: "Which kids ?"
in 2013, Li Ka-shing’s Cheung Kong Holdings began slowly restructuring its holdings in the Mainland. It sold off real estate, retail chains, and other assets, shifting its investments to Europe. This sent shock waves through China’s business community. Wang Shi 王石, president of Vanke (one of China’s largest real estate developers), wrote on Weibo that ‘The very shrewd Mr. Li Ka-shing is selling properties in Beijing and Shanghai. This is a signal.
Zoe Lie asserted a growing incentive mismatch between the Party and the Chinese people. Exploration of this line of inquiry requires at least an hour in a new video devoted top the subject.
The Party and the people are united against Western imperialism and arrogance. No amount of propaganda will convince the people that the desperate western ruling class has Chinese people’s interests at heart.
Pettis and Posen together is a master class. Well moderated, thank you.
one thing to note: money is a nonlinear entity. the mathematics of a nonlinear entity can behave in strange ways. The property held by state entities were not part of the monetary system until they we leased to property developers. To a degree, this could have been done a in sustainable manner. Common sense was that residences should have been built for people that would actually live in them rather the collectible investments. But instead, everybody was greedy and went overboard until it became a game and suspended any reality. This fed on itself until at some point people started to regain their senses. I believe this was the reason the government instituted financial measures. Unfortunately, it was long past the point this would have been effective, and instead it popped the bubble.
It did not help that they believed their own hype, became arrogant, and pushed out foreigners who actually added value to their economy.
Zoe's Jackson Pollock metaphor was brilliant !
19:58 "average Chinese household." Most of these are ignoring that China's a 2 or 3 speed economy. There isn't really many people at or around the average. The coasts are far richer than average while the inland areas far poorer.
isn't this true for most countries? rural areas are often poorer
It’s still working far better than most other countries.
Wow, what a great discussion. I hope to read the article threads soon. Thanks. I'm getting an education.
Could they see the debacle from one child policy? China could produce everything except babies. Those are investments too.
Isn’t it a matter of priorities? Xi isn’t interested in the priorities of the Deng cadre and legacy. In fact he thinks that modernisation, free enterprise, market oriented reforms, have all gone too far. He is about power … consolidating his personal power, consolidating the CCP’s power, projecting China’s international power abroad. So yes the economic woes are Xi’s fault, but they are not a mistake, the economy is just friendly fire. It’s what HE wants. Let’s see how long the people of China will want the same.
The problem with this panel is they all agree with each other, they differ on when and why not if. They may be all great and valuable just not enough challenge to the core to bring out more.
You need someone doubting the first thing coming out, is Chinese economy really dead. If it was killed it must have been dead, but is it? Otherwise you don't need to listen after 5mins when they all finish their statement.
Posen said fiscal policy will not work because people will not spend money for psychological reasons resulting from the Covid 19 36 month lock down. Pettis said fiscal and monetary adjustments will improve the economy. So, they disagreed on the probability of success of fiscal stimulation policy targeted on increasing household consumption.
….The FACT that 3 of the greatest economists ( who have made the study of the Chinese economy their life work ) all DO agree is significant in itself ( Pettis, in fact, accurately PREDICTED this very downfall of the Chinese economy years ago-which, in itself, gives greater gravitas to his arguments)……
The question isn’t “whether” the Chinese economy is imploding - but, by how much….
Superb discussion. The current calculus has not easily measurable factors.
I will say I enjoy Liu’s wit. “I think Long COVID was one of the most creative descriptions of the situation” (Translation: “You’re wrong but bless your chutzpah.”). She seems to have a bit less panel experience but I think she really hits her key arguments in a very convincing way.
Not mentioned was the lack of household wealth and therefore confidence lost to down payments invested into incomplete homes - even if you're OK your friend might be hurting badly.
Great Discussion!
The Chinese economy will continue to develop. Surely the speed will not be as fast as it used to be, considering it is reaching the mature stage and also the west sanctions. The West seems to be too eager to see the fall of China. That's the wishful thinking on the one side.
People are so afraid to talk about their own problems. They are happy to focus on talking down one actually doing well.
Provincial and Federal government should take over the failed real estate projects as legal cooperatives wherein percentages of ownership of the project is bought. Recapitalizing the projects through community cooperative structures would allow project completion and habitation rather than empty buildings. In this way, provincial and federal governments could subsidize the projects completion thereby adding value and increasing housing stock. People who want to live in the projects would contribute capital and labor, if necessary, to see the completion and maintenance of the projects. Of course, each project would require individual analysis and management because every real estate project is different.
This is superb💡📺one of the best, if not THE BEST, in the Foreign Affairs CZcams series 👏
This was a really great conversation. I enjoyed the live challenging of ideas.
Brilliant discussion! Thank you!
interesting conversation. Thank you.
the hyperfinancialization of the chinese economy spelled its doom much like what was experienced by the broader western economies of the last ~20 years. when chinese people stopped buying homes to live in them but instead use them as investment vehicles it was pretty much over
Listening to this discussion kind of makes me feel I had encountered a different US culture. My cooperation with US engineers was a “discuss the issues not the persons”. In this discussion seems to be focusing on the people, which is not a true productive discussion.
The problem with most investment driven using borrowed money growth strategy, it works great at first, when countries can easily find high productivity gain investments. Then it tends to peter out as the low hanging fruit investments are taken care of. Eventually, most countries try to continue that strategy, but those countries start investing in things with no payback strategy, like Ghost Cities and empty Train Routes in China.
Great talk that placed it in perspective. Thanks!
Strange that a country that has killed its economy has emerged as the largest car exporter and the world leader in EV cars.
US and China economy are closely linked, if China is not doing good so will the US too.
Don't be arrogant and wish others to fall and that you will rise up.
We are all together in this global economy, all are linked.
Why wish for others to fall when we can wish all to rise together ?
Mr Pettis' structuralist diagnosis of China's domestic economic challenges has the advantage of using a limited number of terms while situating China within the Global economy.
The question of which sector pays as China's economy transitions from investment to consumption is slowly being resolved to be the central gov, China's least indebted sector. With its investment, designed to make profligate provinces accountable; broaden access to and quality of healthcare for an aging population; and invest in semiconductors and other technologies of the future.
Ms Lui has rightly highlighted the individual's agency. And there is no text book for governing 1.4bn people, shrinking to 700mn by century's end. The west's two major blocks, the US and EU, suffer from significant political strains at about 300-400mn people.
Given China's wealth disparity 200 yrs ago the achievements since are remarkable. While the west likes to credit China's success to the west's market driven system one can also acknowledge the industry and inventiveness of the Chinese people, and a governing system that moved beyond Stalinism, and ignored the 1980's "big bang" prescriptions of many economists.
Why should China look to a market system which decries the production of public goods as wasteful, enables an oligopoly to accumulate wealth, and leads corporates to influence the legislative process.
Mr Posen argument conveniently ignores the counterexample the impact of lockdowns on local businesses in western countries.
His argument benefits the conventional US China narrative by simultaneously accepting its premise and tweaking its margins by offering advice that the west should "suck" Chinese wealth from its source, but that argument ignores Chinese capital controls.
And explicitly contests the flow of causation as being from a slowing "market" economy to the enablement of centralized control which was necessary to pursue an economic rebalancing by lowering exports and raising household consumption as percentages of GDP.
When Alibaba founder Jack Ma was "detained" I thought, with my limited knowledge about China, that something fundamentally had changed. From what I am hearing in this discussion is that it was just a reinforcement of what already was. It was a message to the Chinese people of who was still very much in charge. If someone as powerful and visible as Ma could be controlled so could you.
Growth model shift is essential. It happened from 1979 to 1985 in South Korea. The government had had the absolute power over how much money a bank lend to what company. But during the second oil shock and the harsh policies of the Reagan administration, the government gave up its power and let the market and the private sector take the lead. The president became very unpopular especially because of the VAT he had introduced in 1977. He got assasinated. The model shift is really difficult.
I've been following M.P for years now and it's nice to hear principled opposing stances in such a format and voiced very informatively.
So the Chinese economy has had a really really good run of growth for 40 or so odd years. That was the main event as it was unprecedented in history. Even if they were to slow it wouldn't be a big deal. Looking at the US and European economies slowing even more drastically, we should be doing a similar discussion on those economies.
You are missing the point, they are part of the larger US effort to demonize China and deter western investment into China, so the US can maintain sole global hegemony, hence the 24/7 China collapse theory for the last 50 years while China straight goes from the one of the poorest countries on earth into the largest economy by PPP, "obviously nothing there valuable even if its the fastest industrialization process and economic growth in human history", they would never speak of western (white) countries with similar kind of hyperbolic lens, you will never catch those "China expert" talk about the negative growth in the Eurozone.
This was excellent and informative. . Intelligent discussions rather than ideological claims are so rare.. Economics has long been poisoned by ideologies, which are essentially frameworks for fraud.
With respect to this panel, China's economy wasn't under-invested back in the 1970s/1980s. If anything, the western powers and the US anticipated the Chinese communist government to collapse. It didn't.
China reached its peak workforce in 2012 of around 800 million, so in order to achieve a soft landing it needed to slow its debt (investment) driven GDP growth around 2005 and shift to a a consumption driven model. Unfortunately, the Communist model is opposed to personal consumption preferring to keep money and decision making in the hands of the party and government. So communism alone meant China was destined to fail and is the root of the problem.
Xi has made things much worse by refusing to slow the investment model and unsustainable GDP growth. He is also a communist who opposes transfer of wealth to the common people thus preventing consumption led growth. Then he irrationally takes a wolf warrior approach to international relations threating his top trade partners while threating to annex (ex. Taiwan) or even forcibly annexing territory belonging to neighboring countries (ex. The Philippines).
Add in that urbanization was always going to lead to a peak workforce prior to 2030 but the one child policy accelerated the timetable to 2012. And now China has already lost 50 million workers from its peak.
Since the demographics are baked in that China's workforce will fall to around 400 million by 2050 it can only stabilize by abandoning the communist model and spread wealth among the people to switch to a consumption led economy.
If 5.2% GDP growth in 2023 with near-zero inflation is "killed the Chinese economy," then what do you call 2.4% GDP growth with 3.4% inflation in the US?
"Who killed the Chinese Economy", reminds me of the question at the end of the century,
"Who killed the Japanese Economy"
please more Michael
What everyone leaves out is the impact of the accelerating tech.
The US has already created "suction" as the interest rate hikes have in my opinion not only been designed to combat inflation, but also to call back the greenback from abroad, particularly China. While it is not the FEDs responsibility or obligation to consider that side effect, I remain convinced that the independence of the FED has its limitations.
I think most of the economists don’t understand China, there are SOE and POE in China, but that P in POE is not stand for Prive
What is China’s real GDP?
Is a free press needed for economic growth?
What % of Chinese companies are government owned?
Should China continue to build high speed rail?
You should asked the panelists if Chinese GDP will increase or decrease in 2023?
Michael seems to have a nice explanation in the financial shift.
I think the Chinese economy is transforming into more high tech focus industries. It is no longer making shoes, socks and toys. That is why there is a transitional pain. But judging from how successful they are with 7nm chip manufacturing (which implies the whole ecosystem of chip making), the Huawei Mate Pro 60 (which implies a whole ecosystem in OS, manufacturing and branding that compete head-to-head with Apple), and the EV cars manufacturing EXPLISION, as well as the return of major Ecommerce players, I would say Chinese economy is doing great.
When people say Chinese economy is dying, do they actually understand that the 5% GDP growth in 2023 in China, is equivalent to the 11% growth in 2012 in China? Or do they just simply miss this, and proceed to talk nonsense about Chinese economy?
Liu's Four Ds: Debt, Decoupling, Demand, Demographics. Nice. Add Dollar? Did higher rates kill the BRI?
In the end, it seems that China's problems are caused by a combination of all the reasons proposed as well as both recent and past policies. But, the recent strong autocratic policies have undermined domestic and international trust in a continued stable China.
I have been wondering if the fact that mainland China moved on Hong Kong so early didn't also contribute to the Chinese economic difficulties, and then the government going after corporations that have been growing they're balance sheets in the past 15 years, to the point that the liquid assets in China are declining to a point that China can't keep up with their competitors in the global economy, and now with the population issues they are facing mean that regrowth would be shackled by overspending during years that they should have been preparing for the downturn. Thank you Zoe, Michael, Adam and Justin for sharing your work, Peace
I had very high expectation when I saw the panel constitudents.
Wow, I still got blown away. Your are just, one word, awesome!
China incurring excessive debt in the drive to maintain high growth? What about the US spending itself into a currency devaluation by its insane military expendtures that has required the printing of so much additional Dollars at the cost of backbreaking yields? By some projections, the US will be spending more on debt service than defense as a result of incurring expenses on non-productive military investments. If China is afflicted by economic COVID, the US is in the grip of a deadly economic PNEUMONIA.
How important is the depletion of the countryside of its children to the cities on the GDP growth issue? It would seem that economic growth comes from 2 main things (assuming consumption and exports). The first is more workers, and the latter is training of these workers to be more efficient. With one-child policy, doesn’t china have a self limiting resource of people, which will inevitably reduce the size of the growth of GDP, and eventually the size of the GDP itself? Are not they at the point already where they have few children to import into the cities, and so high rates of GDP growth are no longer possible?
i feel that one very effective solution could be for china to allow huge migration from countreis who have surplus population
PC Morgan, HSBC reported 2023 China growth 5.2%>
Pettis is. Eyond compare, Posen merely has his ideological Peteraon Institute Lubertarian flair except China despite contravention all things Libertarian and free markets. At least when I considered his perspective 12 to 15 years ago.
The comments on here are very complimentary because they like to hear that the Chinese economy is collapsing. What they don’t seem to grasp is that this discussion is largely speculative and speculation is not fact. The week before last, four major car companies moved to China, one of them being Nissan. China has many challenges not all of them economic. To keep 1.4 billion people fed is quite a challenge. In America with only 350 million people there are 70 million without health care, 80 million people without any money, thousands living on the streets and crumbling infrastructure. America benefited enormously from the Second World War, China did not. America has stolen wealth from all over the world. China has not. Another thing these academics havnt taken into account is that China might have answers to what they say are faults. After all it is a planned economy not a free for all like the capitalist system. It is always being pointed out that communism failed in Russia, but never any mitigating circumstances given. After the revolution the armies of 14 countries move in to overthrow it and sanctions placed on it, which have been there more or less ever since. Then they had the war where 28 million people mostly men lost their lives, this caused massive social and economic problems. None of these things have been experienced by the west. Russia applied to join the EU it was rejected on human rights grounds while the European Union turned a blind eye to others joining. Cuba a communist country with virtually no income of its own has been sanctioned for seventy years, manages to provide free healthcare and education while America the world’s gangster can’t. I rest my case
With respect to manufacturing: if the joint venture partners are leaving China and setting up manufacturing in other countries (Vietnam, India, Mexico) and China tries or maintains growing their manufacturing sector, who is going to buy all the stuff; and more importantly, at what (lower) price? Now, after the supply disruptions have been overcome, prices of consumer goods will (must) come down everywhere.
It makes me wonder since the US have so many great economist. I hope they can figure a US economy because right now we’re in deep shit.
The gross incompetence of the Chinese Government has caused these chronic problems to fester in China. Economic inequality, inflation, stagnant real wages for the last forty years, costly healthcare, expensive education system, student loan debt totaling $1.7 trillion with an average balance of $38,000, racial inequality, mass incarceration, the militarization of police, deteriorating infrastructure, housing affordability, homelessness, the opioid epidemic, and gun violence.
The US is very concerned about how China's collapse will affect the world.
What about sentiment? How important is that in economics and consumer habits whether it be an American in Utah, a Filipino in Manila, or a Norwegian? We are bewildered by the rapid advancement of China and are seemingly not ready for the shock of its demise. The economics argument (s) make sense, especially the structural and cyclical aspect pulling China down - which has been added to by China's attitude to the world (i.e. its sense of racial and cultural superiority), its aggression in South Asia, COVID and how China handled a pandemic that killed millions worldwide. and the fact that they got lazy - more and more of their products (say via Walmart or Amazon) have declined in quality - and we have all the cheap / large LED TVs that we need. No - we shouldn't be shocked at how fast China is declining.
How to entice Chinese consumers to spend domestically? Consumption can be stimulated by a well designed government directed, sector focused “helicopter coupon drop”. For every RMB spent in the right sectors, say home improvement, the state will match say 4 RMB, up to say X RMB per individual. Once the economic engine is kicked started thusly in the right domestic sectors, hopefully it will run by itself.
What are the domestic sectors to be promoted thusly by the government? Health care for one. Given an aging population, it should be a good long term bet for the long neglected sector. Also promote businesses and government projects catering to improving the daily needs and life of mid to lower income households on micro and local levels, as opposed to over investment in big business that disproportionately benefit export or only the top 1 to 10 income percentile. This requires a different approach and focus than what’s been practiced in the past and in the West. But the basic economic principles involved are the same.
The title is provocative, no body killed Chinese economy and nobody can kill Chinese economy. The Chinese economy is facing temporary transition from being based on exports, real estate and labor intensive manufacturing to more consumption, especially more internal consumption, higher technology, less real estate and exports to different markets (belt and road). This transition started largely before the covid, but covid made this transition more difficult. I trust the Chinese economy will recover to reasonable growth after the transition.
Very well stated. Most people are ignorant and don't understand this.
They actually talked about your exact point in the video, if you chose to watch it... Then gave some solid counterpoints. I suggest you actually watch the video.
….EXCEPT : There is no Chinese “consumption”; “higher” technology isn’t going to happen without advanced chips; and loan defaults from the Belt & Road are bankrupting China…..Sorry. As Western firms flee - taking their tech with them - China will continue to flounder ( and you can thank the CCP - and its heavy-handedness & lack of vision - for most of it )….
To be clear, Japan is still the number 3 economy and that is with their terrible adjustments which have taken 3 decades. It’s still not over. So China may drop to the number 3 economy, or it may stay at number 2. That’s not the point. The three panelists have omitted the real issue for China. It is as follows;
After WWII the USA developed Japan to keep it out of the Russian sphere of influence. The point is, Japan became the inexpensive manufacturing hub of the world. Everything was ‘Made in Japan’ when I grew up. When Japan became too expensive, business moved to S. Korea, then to Taiwan, then to HK and now on to China. But now that it is cheaper to manufacture in a host of other countries, such as Vietnam, India, Mexico, Bangladesh and others, business is leaving China for those cheaper countries. It doesn’t matter that many of those businesses leaving are owned by Chinese, what matters is that, other countries will take up the mantle of being the World’s shop floor. So the repercussions for China are immense JUST FROM THIS FACTOR ALONE. Add to that the demographic time bomb of population aging PLUS, decreasing at the same time… there is no ‘consumption’ model available for the Chinese economy. Finally, on top of all of that, Xi is threatening to turn the world’s busiest waterways into a war zone that no Costco container ship would ever venture through. Add to that, the unsustainable debt model of building empty cities, belt and road projects all going bankrupt and China is flirting with disaster. But that’s just history continuing as it should. Nobody should be upset about it. Mistakes are made at many levels and China needs to live with the consequences. That’s simple to understand.
Great conversation. But I always have a feeling that the biggest flaw of this kind of discussion about China is that these academics assume the Chinese leaders make decisions in a rational and calculated way. Well if we look at Mao it was not like that at all; and now Xi as a devoted Maoist….
Seems to me the economists agree that the Covid 19 lockdowns were a very big mistake primarily due to the loss of confidence in the central government.
Nobody?
19:23 didn't clipping the wings of the high-tech entrepreneurs in the name of restoring the party to primacy, thus suddenly calling into question society's assumption that if you just work hard to get rich the sky's the limit, fit the description of recentralization slowing the economy? Did the crackdown on HK cause any slowdown, such as causing expats to pack up for SG? Did increased saber-rattling take the wind out of the sails of TW saber-rattling?
Interesting title " Who killed Chinese Economy" when it is growing at 5.2 percent, compare this to the GNP growth of say G7..
Why can’t people look at the benefit of the whole experience of Covid with the lack of the comparable loss of life as the real issue ? Is the comparative resumption of business growth the real measure of value of life rather than celebration of the saving of the thousands of lives ?China is often criticised as been materialistic, but when it takes time to celebrate preservation of life, it is also criticised. China might need a pause to review and have a clearer vision where China wants to go .
Both Adam and Zoe all made good points. But I am fully with Michael: the fundamental problem of China economy has been a structural one, which can be illustrated as “China Growth Model “. This model started and enhanced during Jiang Zezinho/Zhu Rongji time; continued and malpractice-exploded during Jingtao/Wen Jiabao time; and worsen and collapsed during Xi time.
Sorry this should be posted in 1923 or 1948. I am travelling from 2023.
If one has to make sense of the known policies of decision makers in the People's Republic of China, we have to take seriously the hypothesis that China imagines itself to be the forthcoming economic and military Super Power, the best well placed challenger to USA and the principal rule maker for a New World Order different from the West dominated World Order that prevails today. So China's Nationalism and National Policies has to be in the context of its global vision and ambitions. Xi Jin Ping articulates this vision the best and so he is the Chair Man of the CCP. The real point to understand us that the Red Experts of China also understand the limitations within which this strategy is being articulated. So BRI, an increasing budget for external and internal security, an oveercentealized leadership but no real steps to challenge the present Global Order, no War even against Taiwan. Nothing has changed since the days, when Lin Biao talked about a Third World Agrarian Revolution being the Prarie Fire that will burn down Evil Global Captalism. China's bark is worse than its bite.
Dr. Shri Prakash
If Chinese households are flush with cash, is it true that the share of household debt to GDP in China higher than in the US? That doesn't add up.
Killed means dead. Is Chinese Economy dead?
Buddha has a wise saying.... Nature is all around us, Flow with nature, not challenge it. One must do onto others, before others do onto you.
It was me. Sorry.
No Tim Curry 😢
It's interesting that no mention of "checks and balances" is mentioned. There is an allusion to the different sectors of China's structure and the "unequal distribution of household income", but the mass amount of corruption is not addressed. Surely that, too, must have contributed to China's economic downfall.
In fact it is the core of the problem!!
The Chaebols of South Korea are no system to emulate. An example of the defects of Democracy and having a corporation control the government. India is headed in the same direction.
I would argue that in the case of Brazil in the 70s, the problem was not overborrowing for projects that didn't pan out. Brazil has a huge infrastructure deficit in basically all areas and the investments that were made still pay off decades later. It was the US inflation which ultimately let Paul Volker to hike interest rates to 15% in the early 80s and the subsequent explosion in debt denominated in dollars that you cannot monetize (as most countries do). In addition, you end up with a global recession (1973-1975) that hurt commodities exporters and their currencies. So many countries ended up with similar situations: a bulging debt in foreign currency + reduction in net value of exports + devaluing currency + hyperinflation. Easy to understand why Brazil, for example, thereafter never built up a debt denominated in foreign currency instead preferring to build up a huge (considering its average interest rates) internal debt.
Excellent dialog! ⭐️⭐️⭐️⭐️⭐️
Zoe provides context, Posen provides poses of the obvious, Pettis the deep long number/places name dropper that really has no clue as to the causal relationship and context (forget logic)
It was Peter Zeihan
About half of the China population is still poor. Shouldn't the government focus on pulling those people up to the same level as the half who have risen above poverty? That would help, wouldn't it?
every economy (including US's) is slowing down and surfuring when US is gaming the interest rate to harvest wealths world-wide ... look at the EU, South American ... The economy / market talk sounds more and more like a religion ... do you know that the religion had retired in Chinese political system several thousants years ago
After listening to this, my conclusion is that the Chinese economy could be saved, but it won’t be, because the actions required to do so would end up removing the CCP from power.
More certainty makes people save less and spend more; the other part of the equation is investment for what? Chinese companies have learned to compete on price and sometimes even product features but not yet on customer value and Brand Equity, which dictate long term viability.
This discussions was surprisingly valuable. I expected it to be a group of paid shills, but it was not one bit.
Justin has great listening body language 😊
I think there are two major issues that are driving the current economic problems for China, but they both come from the same source, Chairman Xi. First, China has benefitted hugely since becoming part of of the world order created by the west after WWII, but Xi's vision of a China centric world order has led him to an aggressive and belligerent foreign policy that has caused his most important trade partners to pull back from their mutual relationships. Without US and European markets for Chinese goods, the export heavy economy will necessarily be hit hard. And second, I believe Xi's personal paranoia is also a huge problem for China. While he has consolidated his personal power to unprecedented levels, there are political opponents who are working behind the scenes to undermine him. This has resulted in his distrust of virtually everyone and every institution not directly under his thumb. Hence his crackdown on foreign businesses which has driven them to the exits. These two factors have resulted in damaging China's relationships with the most critical markets for their products and the drying up of foreign investment in Chinese business. Xi has been a disaster for China.
But moves still matter. Opportunities are made by the moves as problems are too.
After a brief post-COVID bounce, it appears to be losing some of its VITALITY . What are the causes of this STAGNATION ? So do i take it that loosing Some of it's vitality is
STAGNATION. Really . We are all pretty much "Donald Ducked" and in a state of terminal catastrophic economic collapse then. I look forward to a similar discussion and analysis of the US and European Economies .
The question should be, who is killing the global trades ?n why the populace is getting less resources .Corrupt n incapable leaders of all countries, n the winners take all policies are killing the populace.
The wolf diplomat - Zi.
That is a different between dictatorship vs. democracy. One man signed off what to be….and that will be. The resulted as shown.
Economic investigator Frank G Melbourne Australia is still watching this very informative content cheers Frank 😅
Chinese economy had been collapsed for 20 times in the last 30 years according to these expertise. China's GDP growth will be above 5%in 2023, with 0%inflation, it will collapsed again in the next 15days vs US*s🎉
China has tried to build a property owning middleclass as this drives internal consumption and the move away from exports to balance the economy and they have tried to do this on a vast scale, it has stuttered due to bad loans, bad quality builds and poor quality jobs built on under cutting the rest of the world. Lack of confidence due to personal debt and the loan money has melted away as the desire of the CCP to build a society that trusts them and has disposable wealth has also melted.
Adam Posen is totally wrong.
Michael Pettis is completely correct in his assessment.
I thought Pettis economic logic was harder to follow. To increase household consumption the CCP should provide a greater social safety net in terms of housing and healthcare and not have seemingly arbitrary lockdowns instead of vaccination when it came to COVID 19 - lockdowns increased the savings rate and decreased the consumption rate because citizens felt government acted arbitrarily.
Great discussion and rekindled my faith in actual scholarship. Pundits today are all beginning to sound like Peter Zeihan.
Funny guys are talking funny stuff---
USA economy is increasing strong about 1.9% ----meanwhile living cost 30% rise