MIKE GREEN: Mike Green. I’m here for Real Vision in Los Angeles, and
I’m sitting down with Chris Balding, who most people that watch Real Vision probably have
heard something about you either on Twitter or in the news, but you and I came into contact
over Twitter. Your background is as an economics professor
who was based in China, and started talking very openly about it. First, how did you end up in China? CHRISTOPHER BALDING: The first time I ended
up in China was one of the greatest stories. My wife had a job here in LA doing homes for
rock stars. She had a very bad job she wanted to get out
of and so I actually pretended to be her sending out her resume. She got a US-based headhunter that offered
her a job on Wednesday, and she had to be in Beijing to start Monday morning. I still remember the conversation telling
her, “Honey, I might have found you a job. It’s in Beijing.” That conversation did not go super well the
first time, but we ended up going to China for 9 years and had a great time. MIKE GREEN: When you went over, initially,
you went over as a bit of a China file? CHRISTOPHER BALDING: Actually, no. I actually went over really knowing even then,
after a couple of months in China, knowing very, very little about China. As a junior professor, I was focused on knowing
the very standard, turn out journal articles and academic books and things like that. That’s really what I did for the first, probably
almost 5 years of my career there at PKU. MIKE GREEN: What started the change at Peking
University? What led you to start speaking out and writing
about some of the concerns that you had in terms of– whether it was China accounting
issues, or whether it was China’s behavior on a national account basis? What was the trigger? CHRISTOPHER BALDING: The first couple years,
I would say really 3 to 5 years that I was there, I really felt like I knew so little,
that I was just really learning and asking questions and everything like that. I remember– and I don’t mean to pick on this
guy, but I remember Joe Biden coming to China and writing an article in The Washington Post
or New York Times about how China was the future and the US needed to emulate them. At that point, having lived there for– I
forget the exact timeline, 4 to 5 years, I was like, well, this is what’s being written
in the US press and this just isn’t matching what you’re seeing on the ground– whether
it was inflation data, or whether it was all the underlying problems that weren’t being
addressed. That was really the first time I started just
blogging. At that point, I think it was just my mom
and a couple of her friends that were reading what I wrote. MIKE GREEN: Your mom obviously liked it, you
kept writing. Did you encounter blowback in China immediately,
or did that build over time? CHRISTOPHER BALDING: Honestly, without any
hesitation, I can say I never had the school really push back on anything I wrote about
China. I’m sure that people at my school got phone
calls about what I wrote. I can honestly say I never got any pushback. The only time that I know of that I got pushback
about things that I wrote about China was really involving China only tangentially and
that was when there was a case where there was a gentleman in Singapore that hung himself
and here was some question as to whether or not it was potentially Chinese military that
might have been involved in his death, we still don’t really know to this day. He had told friends that he was being pressured
to work for Chinese military in high grade microelectronics work. I had written about Singapore, and I knew
some of the cast of characters that he was involved with, and they were Chinese military
industrial companies that their armor, their weaponry is really involved in really almost
any hotspot in the world. I mentioned them in passing about with this
Singaporean death. Other than that, honestly, nothing I wrote
in China did I get any real official or unofficial request to take anything down. MIKE GREEN: When you ultimately decided to
leave China– so you worked at Peking University until late 2017, early 2018, and then you
came back here briefly, what was the decision process in terms of the decision to leave
Peking University? CHRISTOPHER BALDING: The decision went like
this. In this late summer of 2017, I had started
a petition about Cambridge University Press censoring some of their articles on China
and I had created petition for foreign universities and academics to just reevaluate their relationship
with China. I was scheduled to start teaching in November
2017 and the way it worked at our school was they would open up the registration system
for students to register for classes about a week to 10 days beforehand. I had been in touch with the school in the
spring, summer, and early fall about my class. When they opened up the registration system,
I started getting emails from students. I was going to take your class, Professor
Balding, but it’s not listed. I emailed the school, and they said, oh, well,
we’ll check into that. Mind you, this was roughly a week to two weeks
after Chairman Xi was reelected for life, and the next day after emailing the school,
the school informed me that I was no longer teaching in all of 2017-’18 and my contract
would not be renewed at the end of the year. I suspect, I don’t know that that was, for
lack of a better term, a decision that was taken outside of the school to terminate my
contract. The school and I had had, like any normal
working relationship, there’ve been issues over the years, I don’t think there was anything
there that had been significantly outside of ordinary or anything that was unresolvable. MIKE GREEN: To the extent that you and I have
talked over the years about some of these dynamics, one of the sources for a lot of
your information on a lot of the questions that you delved into were your students. You had it sounded like you had a very good
relationship with most of your students and were well respected certainly as a teacher. When I looked up your reviews at Peking University–
I’m joking, I didn’t look it up, but it did feel like this is a fairly sudden acceleration
in terms of your relationship with China more broadly. CHRISTOPHER BALDING: Yeah. I think one of the things that even for me,
I think it was very informative. You really begin to feel China change in 2012. When I first arrived in 2006 and 2009, in
relative terms, China seems– looking back now, almost open in freewheeling. Things really began to change in 2012 when
Xi was there and I think those changes really began to accelerate in, let’s say, 2014-’15. I remember just some of the incidents, I had
a journalist call me up some time, I want to say it was 2016 or so, saying, hey, I need
a pro-China commentary on this specific issue. This was something that would have been pro-party,
pro-Beijing, this wasn’t looking for an activist position and I called up a couple of colleagues
saying, hey, there’s this journalist, would you mind doing this? The couple of colleagues that I called up
said, no, I’m not going to comment. You can’t comment in China today. Don’t ask me again. It was very interesting to me that there was
such even– and this was a couple years, this was probably two years before I left– of
how much the environment in China had changed that people didn’t even want to say pro-party
things publicly. MIKE GREEN: Well, one of the things that you
and I have discussed somewhat ad nauseum is the dynamic that began to emerge with Xi’s
ascension, I would phrase it as, in particular, there seems to be an obsession with the decline
of the Soviet Union and the advent of Perestroika and the opening up that occurred in the Soviet
Union prior to its dissolution roughly 1990. From what I understand and from what we’ve
talked about, that seems to be a very key focus in terms of the CCP and in particular,
Xi. Is that consistent with how you think about
it? CHRISTOPHER BALDING: Absolutely. I think that is probably one of the biggest
things that is missed in everything that’s being discussed about China is Xi is almost,
in my estimation, singularly focused on not just the collapse of China, but the accompanying
numerology that is there right now. One of the ones is– and I might be wrong
on the name of the plan, but I believe leave it was the Soviet Union was on its 13th 5-year
plan, and China is in the middle or near the end of its 13th 5-year plan right now, and
the Soviet Union did not see a 14th . Xi is singularly focused on not just having a 14th,
but on making sure that he does not replicate what he sees as the errors of the Soviet Union
that led to its demise, specifically, opening and liberalization. MIKE GREEN: That’s consistent with the discussion
we’ve also had, which is my contention is that this is also very true that Xi is very
focused on this dynamic of 13th to 14th plan, the mistakes of 1989. The way I look at it is that if you were working
assiduously to avoid the mistakes of 1989, you’re almost guaranteed to repeat the mistakes
of 1936-’37, which was when Stalin was made Emperor for life or appointed for life as
both head of the party and head of the Politburo. The equivalent cultural reformation that accompany
the time period in which the Soviet Union withdrew from the West and ’36-’37 ultimately
culminating in the Ribbentrop, do you see it similarly, or do you think there’s a different
dynamic at work here? CHRISTOPHER BALDING: No, I think you’re seeing
a very similar dynamic play out. One of the things is the people I continue
to talk to in China is you hear things about how much sentiment there is to retake Taiwan. You hear about, well, Hong Kong should be
grateful to China. You hear all of these types of things. Well, we’re just turning Xingjian into China. We have to do this. There’s this cultural imperative to make China
great again, for lack of a better term. I think there’s a very similar dynamic. I don’t think, when we talk about the US or
other countries working with China, I think there’s a very static understanding of how
China views itself domestically and how China views itself in reasserting itself and taking
its place as an equal or looking down upon the United States. Part of that is this like almost cultural
cleansing that they seem to be going through right now to elevate China again. MIKE GREEN: Yeah. Unfortunately, I see these dynamics playing
out very, very similarly. One of the alternate takes, so I would argue
two primary narratives. Three. One is China’s the future. This is the Joe Biden articulation, which
is difficult to square with many of the facts on the ground, but certainly remains, I would
argue, the consensus view. The second one is that no, China is not the
future, but it’s going to manage it similarly to Japan, that it’s going to have a step down
in growth, that it’s going to age and therefore have deflationary pressures, and probably
an appreciation of the yuan as they seek financial power and global power in terms of the financial
sphere as compared to the manufacturing or outright growth. Then the third one is the China collapse model. What do you think about that middle one, the
idea that China can gracefully go the route of Japan? CHRISTOPHER BALDING: I was talking to someone
a couple years ago in Beijing, and I was talking about the debt pressures that China was facing. I was unconvinced that Beijing even understood
the severity of debt problems. I asked this person I said, do you think they
understand the severity? He said, absolutely, they understand the severity,
but you’re looking at it as if there’s a problem there to be reformed. I was like, what do you mean, of course, they
have to reform? He said, no, no, their goal is to just become
Japan, not Thailand. I think internally, in the bureaucrats’ minds,
debt is not a problem as long as they can essentially always stay one step ahead of
a plate that might fall off. However, that is becoming even the Japan model,
more and more difficult. Not to say that they’re going to become Thailand,
but the greater the debt pressures become both on domestic debt and on foreign debt,
you have to elevate it one step above Japan if you’re going to make sure that you don’t
become Thailand and what that requires is almost going the DPRK model of financial repression. I think more and more, that is what you are
seeing is that level of financial repression. Just as an example, we’re seeing a lot of
evidence that there are essentially price mandates on real estate prices. Just this week, we’re seeing– just over the
past couple weeks, we’re seeing evidence of financial repression with regards to pork
sales and subsidies, and you need identity cards to purchase pork. I think what you’re seeing is for- – they’re
realizing it and it’s going to be more and more difficult for them to even become Japan
and if they do that, to make sure they don’t become Thailand, they have to become more
financially and socially oppressive at every step of the escalation. MIKE GREEN: Well, it’s also interesting, because
I think there’s a bit of a misunderstanding of what Japan is. Japan became rich, flirted with the idea of
do we want to become a global superpower? Do we want to challenge the United States? They somewhat rationally looked at it and
said, no, and therefore chose a path that allowed them to benefit from the assets that
they had accumulated abroad, somewhat of the cost of domestic production. They seated share but gained income. That seems to have changed under Abe, and
so there’s this debate about whether Japan still looks like Japan under that context,
I would argue, Japan is one of the countries that has the most exposure to China in terms
of the value of the Japanese yen that seems underappreciated on the street. That does seem like a really difficult path
for a country that is fundamentally quite poor. China has $3 trillion in reserves, but that’s
$2,000 per person. It’s just not that much money. If they’re looking at that type of difficulty,
where they think it’s really hard to become Japan, do you think they go the DPRK or North
Korean route? CHRISTOPHER BALDING: I think if you just look
at the evidence right now of where Xi is taking them socially and financially, I think you
have to believe that yes, that is the direction they’re going. If you just take one example, I think there’s
pretty strong evidence that over the past, say, year or so, they’re working very, very
hard to lower their import bill. Specifically, one example of this would be–
a lot of their import bill comes from two primary areas– imports for processing and
imports for natural resources that they use as inputs. One of the areas where they seem to be working
very hard to lower their import bill is in iron ore. How they’re doing that is they’re essentially
shifting to domestically produced iron ore that is let’s say anywhere from 10% to 20%
premium, but at this point, at least, they don’t have to expend FX reserves. I was talking to someone, they actually ran
the calculations, well, if China has enough cobalt reserves, turn out batteries, what
is the payoff period for them to essentially go all electric with batteries and lower their
import bill through lower oil purchases? They said within five years, it’s not crazy
to think that that is on their to do list to essentially shift away from international
transactions in oil, because we see that happening right now with iron ore. If they can essentially say, we’re going to
cut our natural resource import bill significantly, it’s not crazy to think that they are essentially
going to that model in the international trade. We see that happening already in the social
realm of how much they continue to tighten up and control speech on financial matters. I stay abreast of Chinese language, IB research,
and even a lot of the IB research has censorship mandates about they can and can’t say. That DPRK model is clearly something that
they’re at least trending towards, even if they don’t go quite that extreme. MIKE GREEN: It’s interesting, because this
is the thing that you would expect to see and it can have two outputs. Over the course of 18 months, if you decide
that you’re going to deemphasize imported iron ore, seaborne, primarily, and emphasize
domestic production, the immediate reaction from most purchasing managers is I’m going
to buy as much seaborne ferrous with higher iron or content, the 62% plus stuff as fast
as I possibly can so I get ahead of these purchasing restrictions. It shows up as a positive impulse into the
global iron ore markets. We saw this, we saw the prices rise, and now
they’ve been falling as this import substitution takes hold. The other thing that’s interesting about that
type of behavior is it ends up increasing pollution, destroying productivity, because
you can’t run the higher technology, steel foundries, with lower iron ore content, lower
purity domestic sources. They’ve depleted their highest iron ore content,
ores, and now they’re using lower and lower which leads to tremendous amounts of slag
build up, et cetera in their product, they just can’t do it. Paradoxically, they’re going to end up in
a less productive, weaker position through this choice, but it is a choice for autarky
basically, they want to reduce that import bill. CHRISTOPHER BALDING: Yes. I think that seems to be the direction that
they’re very clearly moving. I think fundamentally, the backup issue is
that they’re quite worried about their foreign exchange position because even as reserves
have essentially stagnated for a couple of years, money has continued to grow relatively
significantly, such that if there’s any problem, that is going to put a real dent in their
FX position, especially with all the foreign denominated debt they have coming down. MIKE GREEN: Well, when you say money has been
growing, what you’re really referring to is the broader credit system, not the actual
currency in circulation, per se? CHRISTOPHER BALDING: Yeah. The currency in circulation has been growing
in the low mid-single digits and credit has been continuing to grow, let’s say at 11%
to 13% range over that time. MIKE GREEN: 13% seems right. When you think about where there’s an endgame
here, what can cause a reckoning in China? CHRISTOPHER BALDING: The way that I always
think about a reckoning is people always talk about– well, they can keep printing money
and this type of stuff. I think of it less as a direct credit type
of event. What I mean by that is, they can always print
more money, and they can always close themselves off more. When you talk about what is going to do that,
you’re typically looking for– and I hate this term, but some type of Black Swan event,
types of things that we’re not expecting. When you think about China, the types of scenarios
that you would say, okay, what would be an unexpected type of event? The types of things that you would not expect
is people say, well, real estate is heavily overvalued, and that’s an accurate assessment. But generally speaking, the loan to value
ratios on those accompanying loans, unless you’ve bought within the past 2 to 3 years,
are such that it’s not going to cause a banking crisis. Any significant fall in real estate, however,
may prompt people to take to the streets, but it’s not going to cause a banking crisis. People have such faith in real estate that
they just expect it to go up by double digits every year, no questions asked. When I lived in Shenzhen, the apartment I
lived in would have sold for probably $2.5 million. It was roughly 1500, 1400 square feet and
the average wage of the person who lived there and worked for the electrical company as the
developer was probably capped out at $20,000 to $30,000 in official terms, so you can do
the math from there at what is that roughly 100 times down. That is an astounding– that’s an absurd ratio. One of the things we’ve seen is cities and
provinces that have been instituting essentially price floors, where they won’t let transactions
take place if it’s beneath a certain price threshold. That gets to the really the societal fear,
even if there’s not a significant financial risk for most of the broader economy is that
they don’t want prices to fall, because that’s going to create, for lack of a better term,
a real societal risk. There’s people that track where riots or conflicts
take place in China and one of the more common reasons that riots or conflicts take place
in China is a developer will sell 50% or 75% of a development and then they’ll lower the
prices for the remaining 25% of units or something like that. The people who’ve already bought come out
and riot asking for the same price cut. Those are the types of things that keep Chinese
technocrats and Chinese politicians up at night is if they ever have to announce broad
based falls in asset prices, like real estate. MIKE GREEN: When you think about something
like that you think about that type of environment in which that’s a risk and levels are 100
times income, the United States put it in contrast in an urban environment, you’re typically
going to see 8 to 10 times with much lower levels of homeownership. It tends to reflect a wealthy individual in
New York City or Los Angeles being able to afford a home when many people can’t and therefore
live 50 miles away and commute in. When you talk about a place like Shenzhen
in those types of multiples, what’s enabling that? What’s allowing that to be serviced at this
point? How do people actually afford to do this? CHRISTOPHER BALDING: What you will typically
see is that basically, families or extended families, et cetera will basically pool their
money to purchase an apartment. I had a student that he and his fiancé were
pooling their money, and then their parents, each parents on each side were pulling their
money. This all went into purchasing an apartment
for this new family. This actually generally matches household
wealth data that we see because even though in China, there’s this fabled myth that household
have a 40% savings rate, the implied rates are actually much lower. Actually Chinese household savings rates,
they have household liquid financial wealth numbers that are much more in line with Mexico,
Brazil, Russia, which have significantly lower household financial wealth numbers, and have
also seen lower rates of return over time. Either China is saving much less, or the rates
of return that they’re seeing on financial assets is much lower, you simply can’t reconcile
this 40% savings rate number with the rates of return that they’ve claimed unless that
number, unless those financial assets are being consumed in household savings. MIKE GREEN: Well, this is one of the things
that I think people struggle with, and the difference between household accounting and
national accounting. In a household accounting basis, you and I
think of our savings as the dollars that we don’t spend, that we put into the bank or
into another investment account. In a national accounting system, it’s really
a solution set for how much money has been spent on investment, in particular, capital
investment, but other forms as well. By definition, in national accounting terms,
savings equals investment, and therefore, the Chinese are saving a lot because investment
is give or take 40% of GDP. Is that a fair characterization? CHRISTOPHER BALDING: Yes, I think that’s a
fair characterization. Yes. MIKE GREEN: If I were to look at the actual
cash flow dynamics of an individual Chinese household, what would you guess the actual
savings rate is? CHRISTOPHER BALDING: I think, if we can take
like a little bit of a range, I would say that the number is probably somewhere between
about 15% and 25% of income. You really can’t justify based upon other
implied data that it’s any number really above 25% and it’s difficult to argue that it’s,
let’s say in the high single digits or low teens. To take a range, I’d say 15% to 25%. MIKE GREEN: When we stop, and we think about,
again, their system of national accounting and the way we account for it here in the
United States, we don’t include in our savings numbers things like social security or Medicare,
which is money that is theoretically being taxed and set aside for future consumption,
i.e. savings. It’s invested in the form of government bonds
that are purchased by a government entity. These are actually very similar levels. If I take the US 6%, and I add roughly the
15% Social Security and Medicare burden combined between households and corporate sector, they’re
basically like us. CHRISTOPHER BALDING: Very, very similar, yes. Because one of the things is, is that in China,
even though they have a technical guarantee of medical care, that really provides for
very little. There’s a lot of pre-emptive savings, where
a lot of that savings is essentially set aside for cancer or other medical care, things like
that, other transitory shocks being out of work. One of the one of the reasons why those household
financial asset levels are much more in line with your Mexico’s and your Brazil’s, is because
there’s a lot of consumption of that preemptive savings for medical care, Social Security,
et cetera, et cetera. MIKE GREEN: When we think about– so there’s
more vulnerability at the household level and as you’re saying, where we’ve seen incidences
of effectively writedowns, developments, that’s been a cause for demonstrations and an attempt
to get the developer to refund the difference or to rescind the price decreases. CHRISTOPHER BALDING: Yes, that’s correct. MIKE GREEN: How had the state responded to
those types of events? CHRISTOPHER BALDING: In most cases, they urged
the developers to try and negotiate and there’s typically some type of arrangement where everybody
gets a 10% discount or something like that. There’s also cases where they call in the
riot squad and clear it and everybody that had a contract is forced to buy and they just
delay those sales of those additional units for another couple of years when people are
already locked in or something like that. However, generally speaking, it just goes
on a case by case basis as long as the problem goes away. MIKE GREEN: When we think about some of the
developments that are currently in play, so the African swine fever has resulted in pork
shortages, we’re seeing this in wholesale price, pig prices beginning to surge in China
in advance of the Chinese New Year and I guess, the traditional time for making pork soup,
which is turning into an issue. How do they think about the capacity of the
population to rise up similar to what we’ve seen in Hong Kong, or the increased resistance
we’re seeing from Taiwan? Is it more will come to an accommodation,
or is it more, we’re going to bring out the water cannons or the actual cannons? CHRISTOPHER BALDING: This is just speculation
on my part, nothing more, but they are very smart in Beijing. One of the things you have to keep in the
back of your mind as a possibility is that they know that the economy has been stressed
for a couple of years, since 2015. They know that there are significant stresses
in the economy, and so one of the things that you have to consider is that they have been
building up this surveillance capacity. They’ve been building up this censorship capacity
for preparing for exactly these types of scenarios. So whether it’s pork, whether it’s real estate
development, whether it’s making sure that news about Hong Kong is sold in the way that
Beijing wants to be sold, you have to consider that they’ve been preparing for exactly these
types of scenarios, so that they can keep any types of dissent from getting out of hand. And if it does, they can respond in almost
real time to a gathering of people in this part of town, a riot in this part of town,
complaints about the price of pork in this WeChat group so that they’re ready for all
those types of scenarios. MIKE GREEN: This is a theme that I’ve expressed
as well. The deal since Deng Xiaoping has been don’t
protest don’t complain, we’ll make you rich, the natural conclusion from that is if you
conclude, you can no longer make people rich, you need to install the surveillance systems
that prevent them from protesting. It feels like that’s what much of the development
that you’re referring to has been focused on. It’s a realization that things are going to
be less good going forward and so you need to be prepared with crowd surveillance and
instantaneous response. CHRISTOPHER BALDING: Yes. I think, even for us, living in China, we
always knew that we were going to be monitored and expected that and we never posted pictures
of Tiananmen Square on WeChat, for instance, but I think even in the last year we were
there, my wife comes home sometime in the spring of 2018 and there was this intersection
where she would take my son, and she’d get on the bus– and my son liked getting on the
bus. She comes home one day, and she’s like, oh,
my gosh, this bus stop, which is not even in a major intersection. She’s like, they put up a massive bank of
security cameras so that it basically just on one corner, everything on the intersection
from 10 different angles would be covered, and of course, it had facial recognition and
could zoom in on different people. Just even within the past, let’s say two years,
the level that they have gone to, I think by any standards, even by Chinese standards,
is quite surprising. MIKE GREEN: When you think about the local
reaction, your wife, obviously, as a foreigner is attuned to this, the local reaction from
your students, from others that you were in contact with, how did they think about this
rise in surveillance, or is it it’s just something they can’t escape? CHRISTOPHER BALDING: It’s something that they
can’t escape but I will say I think there are people– I think there’s a good number
of people in China that are worried about this, because I think they’ve always known
that they lived in an authoritarian state but it also is not lost on anyone that they
are just barely ahead of the DPRK in being able to access information. I was talking to someone that I would consider
in China, a relative political and financial elite and this was in the spring of 2018,
I was at a conference. This was somebody that was in the system. They weren’t a party member. I was talking to them, and they said there’s
a lot of worry about the direction that China is heading and they went to one of the elite
schools in China, and they said at a recent reunion, this dominated the conversation about
people being worried. If you go to an elite school in China, you
are part of the system to some degree. You may not be a party member, you may not
be an elite civil servant or vice minister, but you’re in the system to some degree. You’re vested in the system. To hear people talking like that definitely
gives me some hope that there is some valid concern and I’ll give you one more story. About 18 months ago, I forget the exact timeframe,
a senior Chinese tech official made a joke on WeChat that the CEO of WeChat could read
all of his text messages. It prompted quite the outpouring of concern
all throughout China, it’s like a damn released all throughout China about people talking
about being concerned that basically anybody at WeChat can read their messages at any time,
and the government being able to read what they say. This is definitely something that’s bubbling
under the surface of people having this concern about privacy, whether it’s on WeChat, whether
it’s out in public, and so I wouldn’t call it let’s say, I wouldn’t call it a hot button
issue. It’s definitely bubbling beneath the surface
that people are very aware of. MIKE GREEN: It’s one thing to be bubbling
and aware of. Is there a prospect of it boiling over? Is there a realistic prospect of anything
challenging the direction that it seems to be going? CHRISTOPHER BALDING: I don’t think in reality
that that is possible yet. We haven’t had one of those events within
China that we know of. We haven’t had one of those events. The way that I think helps me think about
it is there’s definitely enough bubbling discontent about Xi and the CCP that you will hear people
talk very privately and quietly with phones stowed very far away but it’s still not anything
that people will say with any degree of public statements. The word that I would use to think about it
is, there’s a lot of very fragile support for what’s happening in China, so that as
long as there isn’t a significant downturn, as long as there isn’t that event that makes
Xi look weak, for lack of a better term, there’s going to continue to be support for Xi and
the CCP. If there is, for instance, a 25% drop in real
estate prices, if there is a significant downturn in the economy, something like that, that
could change very rapidly. However, I would not expect that to happen
anytime soon. MIKE GREEN: A historical example I believe
we’ve talked about is the German stock market under the Nazi regime, which was viewed as
a point of national pride. It was perceived as bad. Some other administrations might think this
as well, if the stock market went down, and so a rule was put in place between 1933–
I think it was actually ’34 that it was put in place– in the end of World War II in which
transaction could only occur at an all-time high price. The German stock market only went up in a
similar fashion. What you’re describing is something identical,
where they’re basically saying, the only transaction that can ever happen is one at a higher price,
and so we’ll see falling transaction numbers. But prices remain elevated, and nobody has
a cause to believe that their property is worth any less. Does that feel accurate? Is that what you think is happening? Because we are seeing transaction volumes
fall fairly sharply, even as prices remain elevated. CHRISTOPHER BALDING: Yeah. If you take the example of real estate, and
I haven’t looked at this in about six months, but there were cities that were at, by my
calculations, 100-year turnover rates, and their prices were still going up. MIKE GREEN: Just to be clear, when you say
100-year turnover rates, that’s a measure of turnover relative to the stock of housing? CHRISTOPHER BALDING: Yes. Basically, if you had 100 units of housing
and you started with unit one and went down the line, and then started back at the beginning,
it would take 100 years to psych to it before you got back to the first housing unit. In like 2007, I think that number was like
at six years in the United States. You had very high turnover rates. 100-year turnover rates is just absurdly high. The lowest number that I found in China, I
think, was at roughly a 30-year turnover rate, which is still quite high. This gives you an idea that there’s just not
the transaction volume even though prices continue to go up. MIKE GREEN: That’s one of the things that
happens under our command economy. In a market economy prices, higher prices
signal higher activity. They encourage new supply, they encourage
people to take their existing properties and sell them. In a command economy, perversely, you end
up with a bimodal outcome, where prices are set at an unsustainably high level, demand
is much, much lower, and therefore there’s very little clearing between the two effectively,
activity stops. Is there anything that could force liquidation? CHRISTOPHER BALDING: That’s part of what they
appear to be stopping and they seem to be trying to address in a couple of ways. For instance, one of the things is, is that
even though the Chinese household supposedly saves almost 45% of their income, they’re
now one of the most indebted households in the world. They’re more indebted than US households. It presents a real paradox, how does a household
save 45% of their income and simultaneously become one of the most indebted households
in the world? That’s a real puzzle. One of those things, it’s very difficult to
believe that both of those things are true and accurate. On the flip side, we’ve seen a real clamp
down on transactions that don’t meet city or provincial levels for price for instance. One of the other things on that command economy
is you’re now looking at a housing market in China where 25% of apartments sit empty
and the one sector in China that is continuing to grow at double digits is real estate and
steel inputs to build those apartments. It seems quite paradoxical that they’re continuing
to channel credit to a sector of the economy which is at 25% unused and is essentially
deadweight at this point because of population they’re never going to fill. MIKE GREEN: Well, it seems paradoxical until
you break it down and say, wait a second, the sale of land to developers and the building
of those properties is the only way you get credit. It’s also the only way you generate financing
for local governments. This is the 19th century variant of the United
States where the funding for local municipalities came from the sale of public lands. CHRISTOPHER BALDING: If you look at whether
it’s households or corporations, virtually all of their security in loan documents is
related to physical assets, primarily either land or real estate. If you have that, even if the value, even
if nobody lives there, you can very easily go and get a loan on that unused apartment. I know a couple people that found themselves
in situations where they would go rent an apartment, and then at some point, they would
be living in that apartment and they would come back, and then there’d be police tape
across the door. They’d go to the landlord and say, oh, well,
I have to roll over my loans. Come to find out, what would happen is they
would have an apartment free and clear and they would go to a bank and they would get
a loan on that apartment. They would take that loan, go purchase a second
apartment, either free and clear, or maybe with a 10%, 25% loan on that apartment. They would then go to a separate bank and
get a loan on that apartment. They would until they had 10– MIKE GREEN:
Effectively laddering their positions. CHRISTOPHER BALDING: Yes, until they had 10
apartments on essentially one underlying asset. That is essentially what you frequently see,
because people are very, very– financial institutions in China, very happy to lend
out on a specified physical asset. MIKE GREEN: Ultimately, there’s another variant
of this, which is multiple rehypothecation. We tend to think of China as this extraordinarily
organized and disciplined bureaucracy but as I understand it, there’s no Uniform Commercial
Code, there’s no centralized database of who owes money to whom, that assets are multiply
encumbered. This is stuff we’ve talked about in the past,
do you think that still continues to hold? CHRISTOPHER BALDING: I’ve heard multiple stories,
so it’s very, very difficult to pin down what exactly is happening with regards to purely
financial credit. What I mean by that is, if this is one reason
why people use different banks. I can tell you, there’s even been court cases
in China, where there’s been actual recognized financial bank fraud as a source of conflict. For instance, there was a case in Shenzhen
where there was going to be a purchase of a real estate asset, the price that was listed
to the bank was different than the actual transaction price, and there was going to
be a kickback. There becomes this dispute, and it goes to
the courts. Even though the courts recognize that there
was actual bank fraud that took place, nobody was actually prosecuted for the actual bank
fraud, because there’s such paucity of documentation between the bank and the listing that gets
recorded at the city. These are the types of problems that– that’s
why you go into title and you sign all these different documentation, signed the loan documents,
you signed the title documents, et cetera. Everybody, there’s transparency in that transaction
and it doesn’t happen that way in China. MIKE GREEN: Well, that’s one of the things
that I think people tend to forget is that the systems that have grown up around credit
accommodation in the western regime or the developed market regime, things like title
insurance. Those, by and large, don’t exist in China. It feels very much if I’m digging into my
financial history, or economic history, like a 19th century variant of the United States
where wildcat banks have no method of communicating with other banks in terms of a property that
they’ve lent money out against. As a result, credit claims multiply relative
to the underlying assets, which again, in a system of national accounting, until everyone
writes it off, shows up as positive savings. CHRISTOPHER BALDING: Yes, absolutely. I can tell you a story of a bank that they
were on third position in a company that they felt quite strongly was going to go under,
and so if they being in third position, they were behind two very large banks, they were
going to face significant problems recovering any assets, and they were going to wipe it
out. They actually went to their client and said,
let’s put together a deal where we can essentially buy out two banks ahead of us, we can spin
this off into a private equity type of entity where it also goes off of our books and so
they actually got one of the two banks ahead of them to essentially participate in this
“private equity offering”. Both banks ended up with the loan being officially
taken off of their books, where their clients participated in the private equity offering
so they listed it as a financial asset, and the loans went off of their books. Technically, it’s no longer in the financial
system and both of these banks come out looking cleaner. The purpose of that is, is that the banks
now are able to boost their overall balance sheet even though they essentially are still
backing these products and loans. MIKE GREEN: This is a mortgage, what you’re
describing here is just a contingent liability. It’s the exact same underlying dynamic of
structured products in the United States where a large portion of it was sold off, a fraction
of the asset was retained but there was a contingent liability associated with fraud
or anything else. This is the same underlying dynamic, it’s
a thing to quote, Disney, it’s a tale as old as time. When you face challenges, speaking, either
to Western investors, or to global investors who might have a different view of China,
don’t see it with the more rose colored view of China is the future, it represents a pool
of 1.4 billion possible consumers. What’s the reaction to your message? CHRISTOPHER BALDING: The people that have
been there for any significant amount of time, they know all these stories. I’ve never met anyone that hasn’t been there
for a few years and doesn’t know all of these stories. I think in the West, you come to the United
States, you come to Europe, and people have some idea that some of this is happening but
then you relay some of these stories, and their eyes just get wide like this. I have this friend in China, and he had this
great line. He’s like, the problem with China is you tell
people stories here, and they’re so wild and crazy that they don’t believe you. People just don’t believe you at first until
you’ve come over and you’ve experienced some of what happens in China and you’re like,
wow, these things are actually are actually true. I think especially for financial investors,
this is why the largest flows that you’re seeing right now, are the passive mandate
money, because the active investors I think are a lot more, generally speaking, reticent
now, having seen some of the problems. There’s a lot less activity in the active
mandates to really dive in, because there’s so much concern about the unknown unknowns. MIKE GREEN: Well, we’re definitely seeing
this on the corporate side. Foreign direct investment into China in terms
of primary has collapsed. We are definitely seeing dynamics associated
with things like MSCI rebalancings that is pulling institutional money in. They’re looking to match an MSCI all country
exUS passive benchmark, which requires them to put money into fixed income, it requires
them to put money into equity. This is purely mechanical, it’s contained
in the 401ks of Americans, it’s contained in the pension plans and endowments of America
and the rest of the world for that matter. With no real analysis of the underlying other
than it’s big, it’s a market and therefore, we should have some exposure to it feels like
that’s the only source of capital that’s going in at this point. CHRISTOPHER BALDING: Yes. I think what is so amazing to me is– especially
on like the fixed income side, there’s so little understanding of China that people
aren’t even looking up the IPO prospectus is and going through them and looking at the
bond offering document. Some of the things you’ve heard international
investors take out with regards to provincial bond offerings and things like that are just
astounding to me, knowing where some of these places are and hearing some of the things
that they’re going to be doing with this money. To this day, it never ceases to astound me
that you have people putting in this sum of money into some of these places, they couldn’t
even find out a map. MIKE GREEN: They’re doing it for a very simple
reason. They don’t know they’re doing it. What I’m saying is the marginal investor is
somebody in a target date fund that has exposure to a Vanguard, or BlackRock or capital that
are just plowing money into an international bond index or into an international equity
index with no real knowledge, it just comes out of their paycheck. Ultimately, the fiduciary responsibility is
offset by, well, we’re just market, we’re calculating everything. As long as somebody else presumed somebody
else is doing the work in setting the price, it seems rational until you realize the scale
of these flows that are unmanaged. Let’s wrap up and talk very quickly about
what you think is going to happen with the trade negotiations. CHRISTOPHER BALDING: My expectation is I would
be very surprised if there was any type of deal before the election. MIKE GREEN: Is that driven from the US in
the intransigence of Donald Trump, or is that driven by China in your view? CHRISTOPHER BALDING: My primary complaint
about a lot of the analysis that looks at the trade war, that starts in the United States
is not that we shouldn’t look at Donald Trump and all that comes with that. I think there’s too many people that are not
looking at, okay, who is my counterparty? If I’m in a negotiation, there’s two people
or two sides in a negotiation so I need to look at, okay, who is my counterparty? I think there’s, there’s a lot of people that
are not looking at what is the Chinese side. Let’s just look briefly at the Chinese side,
I think it’s pretty clear for many reasons that China is really not going to make any
changes to their economic model of any materiality or significance. If we look at just how they recentralized
the economy, really over the past, let’s say 5 years– 3 to 5 years. That’s the entire focus. I also think, fundamentally, Chairman Xi can’t
make any significance. Let’s ignore the political side, it would
be politically fraught for him to make any significant concessions. But economically and financially, the Chinese
economy is such right now that any significant changes to that model could create very significant
financial risks and I think they know that. Whether it’s the banks, whether it’s the heavy
industry that they’re subsidizing, that they’re keeping afloat these other aspects, I think
there’s an enormous financial risk to Beijing to making any significant financial changes. I don’t think you can expect Beijing to make
any financial economic concessions. If we zoom back out now and look at, well,
how does that change how Trump is going to be negotiating? If you’re going in a negotiation and you can
look at the other side and say, I don’t expect them to make any concessions really, or any
changes to what that I would be asking– and the other thing is just politically, Beijing
has said, look, we’re great again. You’re going to have to deal with that. That puts the Trump administration in no matter
really, what they ask, is it’s probably going to be no. Everyone talks about how Trump is going to
cave or he wants agricultural purchases. I’m not even sure at this point, China is
willing to make those very low level basic concessions. Because if it was, it would seem that maybe
they’ve agreed to it, maybe they haven’t, but they certainly haven’t followed through
on those pledges that they’re going to do that. Regardless of what we have with the Trump
administration, I think it’s pretty clear that China is unwilling to make any changes
to their economic model of any significance. MIKE GREEN: I lean towards there’s probably
a component of detente, and if there’s going to be, it’s going to be in the agricultural
purchases area. I think China signaled something with the
tariffs in particular, on pork at this point in time. It’s the equivalent of Briar rabbit saying,
please don’t throw me into the Briar Patch. We’re going to prevent you from importing
pork to China when the majority of people are looking at it like well, wait, the African
swine fever is destroying the Chinese pork herd, the swine herd, and so they should be
doing the exact opposite. It feels to me that it’s a very transparent
move to say, this is something that’s really important to us to protect, and we’re willing
to take that much pain, when the reality is, is that the imports that are coming in are
from companies like Smithfield, which is a Chinese company anyway. They can very easily refund the tariff back
to the corporate entity if they choose to do so. This is going to be a fascinating time. I agree with you with the under explored part
and I think it’s in part because people are so– the media in particular is so negative
Trump, that they’re very focused on the CPI impact, who bears the cost of the US tariffs? They’re spending very little time thinking
about the implications of these tariffs in the context of can China even accommodate
any former tariff? It feels to me like China is very close to–
the technical term is broke and any meaningful change would just accelerate that process. The easy answer is, let’s say no, and push
it off on the United States and say they’re the bad guys. CHRISTOPHER BALDING: I think there’s two broader
themes here which seemed to be happening. The Trump administration seems to be saying,
I’m going to get material significant change from China and if I don’t get that, I’m willing
to essentially decouple and essentially move that manufacturing to other parts of the world. In fact, what you’ve seen is that US imports
from the world are essentially growing pretty much on trends, a little bit lower this year
than the boom year we had last year, where there was maybe some frontrunning of imports,
but they’re growing pretty much on trend. What this seems to indicate is that those
imports that would be coming from China are slowly being dispersed to other parts of the
world. That seems to be one of the gambits that Trump
is making is, if I can’t get significant change, I’m at least going to cause the pain so that
it has to go to other parts of the world. China, on the other hand, I think what we’re
seeing which I think is an enormously underreported area, is that people say global trade is slowing
down because of the trade war. No, that’s really what’s happening. You’re seeing imports into China across the
board, regardless almost of product, regardless of geography, imports into China are falling
quite significantly. What they seem to be doing is exactly what
we talked about earlier, they seem to be saying we need to, first of all, lower our import
bill in total and we seem to be essentially becoming more focused on self-determination,
whether it’s iron ore or whether it’s chips and we’re going to do that. You’re seeing this entire trade slowing with
all of Chinese trade partners, not just the United States. That seems to be marking a major shift in
not just the trade war, but the global economy, where China, in some cases, was responsible
for 50% or 75% of global growth in trade in some of these areas and that’s essentially
been cut off. MIKE GREEN: Yeah, I see it very, very similarly
and we’re just to highlight that if that was actually happening, paradoxically, it would
be seen as a rising manufacturing surplus for China. It could be potentially perceived as China
is winning, but the reality is, is that happens, it’s just the same description as a contract
manufacturer has positive cash flow once their business starts to die off, because they no
longer buy any inventory, they run off their working capital, they convert that into positive
cash, and that seems like a real win. It also goes to this idea that China is going
to dump its Treasuries. Going back to the 1936-’37 model, the Soviet
Union held on to US Treasuries and any foreign reserves that it could get very fiercely because
they had no prospect of generating them through efficient trade dynamics. That was made easier because of the Soviet
Union’s raw commodity exposure. It’s much harder for a manufacturing entity
like China. As we look forward to the next year, you’re
going to be heading back over to Vietnam, where you’ve been teaching for a while, we’re
going to get you back to the States so we can check on this in 6 months to a year. I’d love to have you back on. CHRISTOPHER BALDING: Yes, absolutely. I can tell you, in places like Vietnam, they
are actually actively cheering on the trade war. It’s actually putting them in some industries
bumping up against capacity constraints, they still have port space, but some other things
are being built out as fast as possible. Yes, I’ll absolutely be coming back in the
next 6 months to a year. MIKE GREEN: All right, fantastic. Can we get you back on then? CHRISTOPHER BALDING: Absolutely. MIKE GREEN: Thank you very much, Chris. I appreciate it.

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100 thoughts on “Can You Trust Chinese Economic Data? (w/ Chris Balding and Mike Green)”

  1. We are covering China all week on our premium service, and we will be posting some of the best China videos from our archives here to give a taste of the great content you're missing on realvision.com. Get RV Premium for the incredible price of $1 for 3 Months here: https://rvtv.io/2oh9RXW

  2. one of the best videos put out by this usually outdated channel. It makes absolutely no difference at all if China buys a some commodities. The elephant in the room is IP theft. Stop ignoring it. The bad news is that China will never allow verification of anything for any reason. Weak man of China is long dead and demands are laughed at. The only way to solve the problem long term is to eliminate China as a manufacturer of any goods coming into the west. If you import from a communist country you are enriching the enemy of free people.

  3. You can't trust any government's data in any countries, especially official data from the West. They all paint a rosier picture of their economy and talk down the economies of their competitors like China for instance, in order to get the sheeple's votes whilst secretly rounding them all into the slaughterhouse. Eventually, no one on Earth will be safe when the global economic tsunami come to cleanse the whole world of monetary enslavement.

  4. Is this important? China's actually GDP is higher than stastics. A lot of business activities are not counted, such as small e-comm on wechat, private rental property income, small street side farmers market etc.

  5. "B" is not possible.
    China is on the fast track to collapse and internal revolt. Food riots are what follows the collapse in debt repayment.
    And China is too large to go the way of the DPRK. Generals and Provinces will break apart.
    This is certain, guys.

  6. China does not fit to the western ideal of social equity. It is autocratic and oligarchic, however it is not a model for your western versions of nationalism and far right conservatism which hope to ill-define European social contract ideals which were the basis for most western liberal democracies today. Every western state is essentially built upon socialist principles, because imperialist autocracies (eke monarchies) were marginalised. Even Trumps protectionism is a socialist principle which defies the conservative principle of laissez faire.
    Therefore, the question for this and many comments here is about why conservatives are finding it necessary to defy the reality in analysing China (as this video is doing well) in order to ad bias to a very confusing modern conservative picture in the wake of the debt crash in the open market system that conservatism installed in the 80's and 90's which short sold the basis of western industrial prowess.
    I would suggest that it is because they have nowhere to turn to ideologically today except defamation of well established successes in social contract state management. Sadly, it is so short -term to be nationally and culturally destructive to the verge of treason.

  7. Congratulations Chris & Mike; that was such a useful interview that I was compelled to sit and watch through most of it twice. Thank you and keep up the great work, ‘Real Vision Finance’. Teza from Sydney Australia

  8. I am sure we can trust the USA?
    OF course anything the West say about China must be true.
    Funny that China is so untrustworthy, produced lousy sub-quality goods,
    yet your guys kept buying it up.
    Its economy is fake and the system is a house of card….and you guys are so interested about it?
    Why not just talk about Haiti, Sudan….why keep focusing ( bashing ) China??
    Why not pay some attention of how great USA is doing, How low your unemployment is and how
    happy Americans are about their personal well being??

  9. The best wau to check whether chinese government data is true, is to enter several grocery stores in china and compare your experience with that in a US store. Don't get fooled by those so called experts.

  10. Hong Kong can be set free as a democracy new nation without bloodshed; just push Trump to burst the bubble now because China is waiting it out so the HK protestors would be out of energy & savings & jobs & money & will…then move in for the great massacre.
    So destroy China on economic fronts as wanted by many Chinese.

  11. Dont judge our methods look the at the result, Our Glorious Han race risen above. we are the best country. I am so proud to be a Chinese. We Chinese are the Smartest, strongest, greatest and most beautiful race.

  12. 2:30 Lots of things in china not being addressed, like the fallout from their massive real estate economic prop up, the knife killing sprees by those who are so disenfranchised from society that their choice is to lash out against children. The casual practice of public urination/defecation, animal abuse by dog meat cooks, etc. etc.

  13. Mike Green can you write a weekly or a montly blog for the public expressing your views on the financial markets, economy, and geopolitical matters. You seem very knowledgeable and I really enjoy how you prepare the questions and debate the guests in your interviews. Many thanks also to RV for giving us free amazing content.

  14. Cost of surveillance in China is not factored into strains on the economy! It is non preforming expenditures that are growing!

  15. Interesting….a lot of folk forget that about 30 years ago owning a bicycle and refrigerator in china was the ultimate status symbol. Western socialist cucks and greedy global labor arbitrage speculators have created an unsustainable factory…where the workers now want more. Beware of greedy politicians and business who betray their own with treachery…and the clueless who believe they can build socialist utopias.

  16. China is on the decline economically… History teaches that every high flying economy has to take a crashing hit at some stage. This time round its Eminent. Europe first then Asia and on & on. The US will fear better due to its it's much stronger economy… The trend is a bearing on how to prepare for the Eminent Reset, By cash Out to Freehold, Invest in Precious Metals ,Crypto & Invest in the US… Even the Banks are towing this Line…

  17. Chinese plan is to continue to steal, lie and copy…..remanufacture badly made copied goods……destroy any competition. Send badly made copies to us then complain that the white ghosts are picking on them. Nothing new here.I remember badly copied music cassettes in the 90s.

  18. Americans talking about their favourite topic… The collapse of China! They'll be doing a rerun of this for the next 20yrs. Ask Gordon Chang!

  19. A better question would be: Can you trust you trust US Economic data? There is no business like show business as they say on Broadway. There is no corruption like American corruption. (where ever you look)According to Nikie Haley "America is the conscience of the world" Fact is you can't trust any central bank now they are all part and parcel of the same criminal cabal.

  20. The uneducated here: China's reserves fall short of being able to simulate their economy, right? The steps they took in multiple areas of the economy to keep asset values propped up and the books properly cooked, are likely to make each problem worse in the future? The government and the fractured financial system are flying blind and deeply corrupt? The answer is cameras that will most likely be destroyed on the first bad day in each area? I don't get the seemingly unfounded faith in China's leaders to contain the economic problems they clearly don't completely understand, or have enough control over.

  21. Excellent interview! Just like many of us who follow the topic, this guy has lived in china and knows what he's talking about… and on a personal note.. he's too nice about it. Thanks Real Vision!

  22. From Canada.
    To make statements like you do proves one of two things. Either you are ignorant of the facts or just a liar.
    America will prove to be in far far worse shape then China and as always time will prove who is right.
    America for example has a dwindling and financially cash strapped middle class, China has an ever growing middle class made up of savers. America is an economy made up of many service sector jobs. China is an economy made up of many manufacturing jobs.
    China’s debt per person is less then Americas. China’s savings is higher then America’s. China’s sphere of influence and trade is expanding, America’s is shrinking. China’s products are becoming superior to America’s. America has far more enemies then friends. China has more friends then enemies.

  23. From a centrally directed kleptocracy? Lysander Spooner covered this 150 years ago.
    “Those who are capable of tyranny are capable of perjury to sustain it.” – Lysander Spooner

  24. According to John Williams of Shadow Statistics, you cannot trust US economic statistics either. You cannot trust governments, full stop.

  25. how can China go to the direction of Japan? Japan is a democratic country but China is a communist country almost run by a dictator. When the economy go south, there would be more likely China face social unrests. Japan has never aimed to overpass the States after the War but China has been aiming for that.

  26. The only thing I can say is that these guys totally do not understand Chinese way at all like most USA people. And so all their judgement is wrong and all their prediction will be proven to be wrong. Just wait and watch. 🙂

  27. great interview
    I have been following Christopher Balding on Twitter for some time and appreciate very much his insights both there and here
    great work

  28. I have been to China , US and Canada recently. Overall I feel China's economy is underrated. I felt China's true GDP per person is around US$20,000 per year based on my observation. Maybe even more if they commercialize healthcare, university education, insurance, public transport and services like US.

  29. Have lived in Guangzhou, China since 2000 – presently 1000's of small factories have had to close due to the trade war with the USA – also while recently in the USA noticed more products being sourced from other countries – not from China, Also many companies in China are relocating to Vietnam, Cambodia, Indonesia due to labour costs rising in China.

  30. So we have Chris Baldwin associate professor at All right University of Vietnam and Mieke Green of Polo Marco telling us that we can't trust Chinese economic data, well all that I know is that China build ultra modern mega cities, 20.000 miles of high speed rails, took 700 million Chinese people out of poverty and yes we see these Chinese people celebrating holidays all over the world and than these guys are telling us that is all not true Mmmm you can not lie about physical facts and these are the facts!

  31. Instead of thinking about improving their country's industries these perple are busy analysing how to destroy other people economy. Nasty crooks!

  32. Informative! Needs a better title. The answer to "Can You Trust Chinese Economic Data?" is "of course not" even before you view the video.

    The mainstream media doesn't quite get the trade war with China yet. It's not just that we import more goods from them than they import from us. The trade war really comes down to the fact that China is running low on foreign reserve currencies. They have no dollars to pay tariffs with. They've foolishly squandered all their dollars buying gold and raw materials to build unoccupied cities with, and can't afford to keep their factories open now that tariffs are being imposed. Many of the factories were probably selling their goods at below their cost of goods anyway because local Chinese governments subsidize them rather than let them close.

  33. Sorry but they were saying is China want to become Thailand or Japan? I understood the part about Japan…but dont get it, what it means become like Thailand? Do they think on low debt country or something else?

  34. China's Economy is very different from anything we have seen before. No countries have ever built cities after cities after cities with no people actually living in it and no countries with that much CONTROL on the land and companies.
    That's why many prediction about China's economy failed to pass so far because of such different and people are learning from it and able see the true face of CCP on China's economy.

  35. This is all American wishful thinking. You all talk aboutthe China debt problem but you don't bother to mention that the debt is allmost all internal debt and has been primarily used to develop infrastructue both in China and in the rest of Asia and in Africa with a little in Europe and south America. Most of this debt is offset by the debt that these countries owe to China. You also insist to apply western capitalist economics to China which has its own economic system which is completely separate from your system which is about to collapse everywhere and will result in another global depression or at least recession that your negative interest rate can not fix. It is appropriate that your idiot professor was fired since he was teaching a false narative. His discussion here is only sour grapes and a pathetic excuse for his failure to recognize the difference. Only people affected by western propaganda would be dissatified when they have been lifeted out of abject poverty and lifted into lower middle class with every sign of being furtehr lifted into higher middle class very soon. grow up and stop trying to give western people false hope that America and Europe will continue to rule the world. That concept was a 19th century reality; this is the 21st century. You're both clinging to an obsolete paradigm.

  36. Do no go to Communist China. They can make up anything and prevent you from leaving and the oppression and surveillance is getting worse every day.

  37. I left China in April of 2016 after living and working in Beijing for four years. What he is saying is true. The CCP is evil.

  38. well depends what you're reading them for. if you're a common idiotic troll who is in love with bashing China then you've come to the right place. if you're here to make money, then i would suggest you put your personal feeling aside and believe the #. Market moves on those # regardless if it is fake, algo moves on them too. Any # out of any country is somewhat skeptical to a certain degree, and market rides on that. if you google WORST CORPORATE ACCOUNTING SCANDALS OF ALL TIME, Chinese companies don't even make it to the list, so yes, you can dislike China and continue to be ignorant about it or look out for yourself.

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