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'Coming Collapse of China' author Gordon Chang on China's slowing economy and growth.
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-- thank you very much -- bad news by the way keeps on coming for China as well if you caught these headlines over the weekend from.
Wen Jiabao the Chinese premier but he -- calling for the government to fine -- its policies in a more aggressive manner even warning of and this is a quote.
Huge downward pressure.
On the Chinese economy Gordon Chang is the author of the book the coming collapse of China and he joins us right now to probably say I told to -- right.
Some would.
Yeah I mean they're trying to fine tune the economy but there's really panic -- -- trying to manage the economy they're trying to prevent this.
From happening right they're trying to say hey we know this economy is slowing in -- GDP numbers this week are probably going to be kind of rough and we're gonna jump in we're just not gonna allow to happen because that's how we run things in China.
You have but they they have not been able to stop this and and it clearly what you got right now -- they don't know what to do you know they dropped interest rates last month for the first time in three years it didn't work -- -- -- -- -- -- -- the Chinese context -- drastic because this -- risk triggering an outflow of funds from the state banks and that would really be a disaster so do you think -- really is obviously you do if -- -- -- book about an upcoming collapse in China and it's so.
What does that look like to some desert to the -- -- L -- the collapse ever happened to put a date right last year -- -- it was the end of last year -- and it didn't happen then.
But you still think it's gonna -- you're just gonna be off by a couple of years and what's gonna look like off maybe just by a year I think what we're going to see is the economy start to move into recession contraction for a prolonged period.
They don't have the ability to re stimulated at least on a prolonged basis and why -- -- sustainable basis why don't they have the ability because during the crisis China I think you could argue benefited from the fact that they -- this controlled.
About their Communist country that they had the government at so much control they -- -- the sake here we're gonna spend 800 billion on this and whatever.
They could just make decisions like this -- we're going through congress trying to get things passed they benefited then from that kind of approach they're not going to anymore.
That they overdid it in 2009 they've put one point one trillion of stimulus into -- -- four point six trillion dollar economy so yes they create a growth in 20092010.
And 2011.
But now they're coming off and you we see the end of a sugar high there is too much debt.
Perhaps they've got a group bad debt to gross domestic product ratio of something approaching 200%.
You know the banks are completely at the point where yes they can lend some more but they're in trouble if -- -- many of these loans go bad big effect on us.
The other will be in effect on us but -- be more like panic.
And remember the name.
I mean everyone believes the Chinese economy as you point out you know is is going great guns.
But I actually think that we're gonna see much worse economic results in China that's going to shock our markets yes -- financial market event -- sell off big time you figure I admit you know we don't really depend on the Chinese economy as much as they depend on us.
The multinationals will get hurt but small manufacturers in the US will do better.
We'll see much of this manufacturing come back to the US.
So it has a relatively little effect on us and the timing evidence the next few six months or so we're gonna see a very bad.
Second half of the year thank you Gordon could see it.
Thanks.
