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Is China's economy about to nose -- there's been some troubling numbers manufacturing and the world's second largest economy contracted.
For the first time in nearly two years we've got Gordon Chang.
Author of the coming collapse of China he joins us now.
-- of course you've been predicting this for very very long -- time but China.
Really has been a juggernaut and economic juggernaut but you see -- wheels coming off now.
Certainly these PMI purchasing managers index numbers from both HSBC and from Beijing itself show a dramatic collapse industrial output.
-- -- -- -- -- -- Worst news bad news about this is not export orders that are falling so much as domestic orders.
And that points to real weakness in China's internal economy earlier in the week when the People's Bank of China.
-- told banks to lend more money.
Maybe -- every kind of knew this is gonna come -- they're trying to get ahead of the issues stoked their domestic economy right -- these PMI numbers come after falling electricity consumption.
Car sales property prices all sorts of things and so we've known for about since I guess beginning of October that the Chinese economy is headed down fast and also we've seen Chinese people take a lot of money out the country recently that's perhaps the worst sign -- -- You know but here's the thing some luxury retailer just went public a Burberry right right in Hong Kong.
And some other company just went public in Hong Kong because they wanted to be closer to their fastest growing clients -- customers China.
Right I think I keep hearing about always incredible millionaires -- billionaires being minted.
Almost daily in China but the picture that you often tell tell -- it's the exact opposite.
Well there is this widening wealth gap and -- and clearly.
At the top end of the range.
-- treat retailers have been doing extremely well so you have Coach you have Berber -- have all of them expanding operations.
And it not just along the coast in China but also throughout the country.
But nonetheless that's a very thin sliver and the rest of the economy is collapsing.
Real estate prices people sort of sort of saw themselves -- really wealthy because of this incredible property bubble but that's start -- -- and at.
And I think the problem what we're gonna see is that the retailers including a luxury ones are gonna suffer in the next year -- so.
Art but that mug to -- -- economies are cyclical right they go and they go down the longer term trend for China though they've they're sitting on three trillion dollars.
And and the.
We know they've had 35 years of almost uninterrupted growth and so what we're seeing now is the -- side of that.
-- got some really long term problems like internal local currency debt.
Which is maybe not as much as 3.2 trillion of their foreign exchange reserves but we got to remember that in a local currency crisis and that's what China has all this foreign money is dollars euros and yen.
Really aren't much use the only thing they can do with that is recapitalize the banks which is what they did in 2005.
Apart from not all that foreign money is of no use what they need is renminbi and they've got a local currency problem China collapses what does it mean for America.
Well you know there's going to be the panic of course but we got to remember that we've China's predatory Merck Angeles trade policies they've been stealing growth away from the United States -- -- -- the world's largest internal market we can buy our goods from Vietnam or Bangladesh.
I don't think it's really going to be that much of a problem in the long term.
Over the week that we've who buys our bonds -- who's who's sitting supplies is my gigantic deficit that we have.
Well if we're buying goods from Vietnam they'll have export dollars they'll have to recycle those they'll have to buying treasuries just like the Chinese did so we enter into these same sort of faustian deals.
Who -- now to Mexico and everyone else in Bangladesh has Bangladesh let them.
-- let's talk about a from an economic point of view we've got -- thirty seconds do other things Bob the unit do you equate for the pollution problems human right problem -- rights problems and those type of things.
Into your equation as well the other got a political problem because they've got so many protests perhaps 280000.
Last year and the protests are getting more violent as someone told me last night China is a volcano.
Alright great way to end it Gordon Chang -- where we commend what have you on the show coming up -- you're looking for a job you've.
You got a company out -- -- actually looking and struggling to fill hundreds of openings we have a good match here and we actually do have some good -- -- that's that Gerri Willis.