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Chang: China Not Engine of Global Economic Growth

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  • Description

    Author Gordon Chang on China’s efforts to stimulate the economy.

  • Duration 3:39
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I'd I'd.

Well the markets clamoring for -- analyst China already lowering its interest rates they took action yesterday.

At a market up so China once again becoming a market mover for the US at least the -- stock market by a China expert Gordon Chang may not agree.

Yeah really -- you know -- not so keen on the idea that China has been the straw that stirred the global economic drinking continues to be it would be figure.

The when you look at all of this China is not the engine of global growth because to -- engine of global growth you gotta buy export unit.

By exports from other countries only the United States -- that.

China with his friend for a lot of raw material we've been hit Australia's -- and a -- -- in the last three years and Australia it's been like that it.

Might grow up from almost the basal China it -- most -- gets manufactured and exported to someplace else which is usually the United States we are the engine of global growth.

You know the Chinese -- their predatory trade policies just are taking growth from other countries.

Our yesterday lowered their interest rates -- bumped into you know hall you.

We both agreed this is just the beginning right they have to do -- they probably will do a whole lot more than try to re stimulate their economy -- 125 basis points isn't gonna do it.

Chinese enterprises are not borrowing because we don't see the prospects at least in private.

Almost no Chinese company sees an increase in revenue or profits this year so it's gotta be a 15200.

Basis points but if they do that they've got another problem and that is that they've got deposits leaving the banking system.

-- -- that we talked about them before we get -- -- because I think it's a huge story no one's talking about about the rumors and -- -- overnight that a lot of banks are listening to the government and not gonna lower their rates given that they're not -- lower their deposit rates because they can't because they realize that's -- trigger an outflow of savings in April.

More than a hundred billion dollars in household deposits left the Chinese banking system so the way that money go hugger yeah let's -- some -- we talk about -- -- the -- senior -- let's talk about this because essentially run on the banks book it's not quite but it can get there and that's why the banks are really worried and that's why they're not -- dropping their deposit rates.

This money is going into gold.

It's going into wealth management project products it's going into Hong Kong and some of it's coming demand -- Added -- overheated real estate but the issue is that this is -- second largest economy in the world they live.

The ruling congress party is transferring power this year to the next generation I think -- today I think every -- -- -- keep this economy humming now.

Yeah a little yes fed doesn't try and do it but they don't really have the flexibility because they can't drop interest rates too much because of the problems in the bank.

They have too much debt about 200%.

Debt to GDP ratio in China -- you start counting up all the hidden liabilities.

They can do some more stimulus and they can create growth from may be another year but that's gonna leave them even worse position so they cannot avoid the problems the -- they can do it the best they can do is just avoid a postpone them.

Are -- making our mistakes.

They they've made our mistakes because in 20082009.

They had the biggest stimulus program in history about one point one trillion in stimulus into event.

Four point three trillion dollar economy and that's why they have the problems -- yes they created double digit growth but then they created the inflation the property bubble the stock market bubble and all the over investment and now they don't know what to do so the problems of too much growth -- greater than the problems of not enough.

Or before -- -- though the fact is though they went from trying to slow down their economy to and impart because inflation another just saying -- -- Get this economy going no matter what that's the bottom line that's the bottom line they they've really went too far in trying to put the brakes on.

And and that's they're really just a symptom they always do too far too far growth too far contraction sounds sounds familiar Gordon -- thanks --

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