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“The Coming Collapse of China” author Gordon Chang on China’s economic slowdown and its impact on the U.S.
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And new reports tonight that China's economy continues to slow those reports showing China's manufacturing activity for May falling sharply.
And planning to deteriorating conditions for -- seventh straight month.
This comes after weak economic data in April showing GDP in decline and inflation rising.
The World Bank predicting the Chinese economy will expand by eight point 2% this year that is down from nine point 2% last year.
And ten point 4% in 2010.
And now is Gordon Chang author of the coming collapse of China.
He's not coming China is it collapsing -- we looking at a hard landing for the country.
Yeah analysts say hardware and -- seven point 5% growth but in April they had zero growth at best because if you look at the underlying official data.
Electricity production was up zero point 7% that's the most reliable indicator of Chinese economic activity.
And it historically -- is the growth of the underlying economy.
Other reliable factor show negative growth you know so essentially April was bad and the first numbers from may look even worse the last.
Angeles times today was reporting that the government said no to another stimulus yet there are conflicting reports about that I just kind of attributed to the way to Chinese Government has business but.
What does China do from here.
Well they don't really have any good options.
The outlook for the last three or four days there have been -- three or four announcements on on stimulus essentially they're gonna put money into seven strategic sectors and they're gonna mean like twenty major projects but -- -- gonna do those things anyway the problem is that they had this enormous stimulus program in 20082009.
They had a sugar high in 2010 and 2011.
And now they're coming off -- -- and there's very little they can do you know they can put more stimulus in the economy but that just makes the problems even more.
-- sounds terribly familiar this is what's going on in the US and considering the economic news today the may jobs report.
Slowing US economic growth a growing chorus calling for the Fed to do another round of stimulus here -- -- we -- what's going on in China or.
Definitely because China shows the stimulus doesn't work you know you have Paul Krugman Nobel laureate New York Times columnist says we should have 300 billion dollars of stimulus for each and every year until the economy gets better.
Well that's essentially what the Chinese did and now eventually it's catching up with them so you know we have to look at what has really occurred in China and said.
This is what's going to happen to us if we do the same thing.
Tom dot -- who is a Chinese economist who studies the Chinese economy -- writes about it.
Was saying that there are very popular western brands in China that Starbucks somehow managed and its Chinese people that they should drink more complicated as opposed -- -- -- -- Even telling me a break.
Has one of the best debt products for Chinese that we're at least that's how -- -- -- so.
Is this going to have an impact on our very fragile economy.
Yeah -- certainly GM Starbucks they're doing well right now but they're also in an economy which is in real and -- real perilous situation.
So people will stop buying cars and we've seen car sales and trying to come down a lot from last year that's gonna affect GM.
Some of these other brands may do OK but you got to remember that China is looking at.
Not just recession but perhaps worse and then none of those brands are gonna do well in that type of environment.
Real estate is cooling in China banks aren't lending banks like like for every day Chinese -- -- -- healing that's well they are really feeling her because in April households took a hundred.
Billion US dollars.
Out of the Chinese banking system these Chinese banks are large and insolvent on a balance -- point of view but their liquid.
Now if people continue to take money out of the banking system it means that those banks cannot go forward and that means -- -- -- into the economy.
Couple other political items to run by you Gordon China's nuclear weapons do not post the quote a direct threat you think.
That's according to the man in charge of the arsenal.
That's -- agree absolutely not on the real problem here is that the Chinese have often threatened to incinerate US cities.
There are indications that they're doctor and is to use nuclear weapons first against the United States.
I'm not saying that they will do that but we have to recognize what they've been actually saying in public.
Okay Defense Secretary Leon Panetta today in Singapore for Asian conference -- -- strategic partnerships with.
Countries like Vietnam and India to counterbalance China is this a good idea well the ramifications of this -- -- certainly that's gonna happen because countries in Asia want the United States -- -- -- leadership because they're really concerned about China which has been very belligerent recently and so the region is looking to the Obama administration to try to bring China in.
And one final point.
We look at the whole world it seems like the entire world is deleveraging watching economy slowed down are we all deal linking China and Europe the US but the going on -- what's the bigger picture.
I mean the trade I think will decline -- so there will be some do you linkage the big picture is that we're all gonna be poor -- three years but the United States is gonna be better off because we don't large internal market.
Trade for us is a negative for GDP.
So -- the rest the world falls apart which it looks like it's gonna do you have -- -- yeah will be worse off but we're gonna be so much better off on a relative basis look just look at.
Message in the treasury market right with yields coming counts so much.
Yeah I'd Gordon Chang it's it really nice to chat with you thanks for coming it's -- thank you.
