You're watching...
'The Coming Collapse of China' author Gordon Chang weighs in on the state of China's economy.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Well over 900 Chinese listed firms expecting losses are lower profits for the first half of the year -- next guest is warning that the results could point to a tightening of the Chinese economy Gordon Chang as.
Author his number while the coming collapse of China.
And he joins me now so -- saying that the markets in China the stock market in China -- -- has been somewhat resilient.
Is in trouble.
Yes because corporate profits are down lot of companies are actually reporting losses and the prospect for the rest of the year isn't that good.
There's one Beijing University professor who says that no company he talks to is seeing an increase in revenue or profits for the year.
So what these companies are saying to the public is one thing.
But what they're saying in private is much more bearish what.
That doesn't explain -- it does it in your opinion the GDP numbers I mean they've got -- percent GDP growth.
Out of China in the United States would love to have 8% GDP growth facing -- -- that number is not yeah.
-- after saying the Chinese tightening.
-- we would die for -- seven point 6% that they reported for Q2.
What they don't have seven point 6% then -- -- know.
Well if you look at electricity production which is by far the most reliable indicator of Chinese economic activity after the second quarter it was flat so because electricity is essentially.
Out -- the growth of the Chinese economy.
When you have zero growth -- electricity it means you're economy can't be growing more than zero so they're not growing at seven point six or eight point one or whatever they're saying.
They're growing at zero may be negative one.
Possibly positive one but that's about it.
Yet but one of the things that we have seen many US companies that didn't mean -- Clamoring to expand in China obviously we just have ahead of us -- global luxury -- that is resolutely enemy expanding.
And China and Asia you think US companies are making a mistake then.
A lot of them are and a lot of them are starting to suffer especially you know Caterpillar to three years ago you listen to what -- said that they -- oh China was the future of the company.
And now we know in their last conference call -- -- or China well it's not that important for us and the reason is that they concede the trend of the economy.
-- -- cats biggest competitors sandy heavy industry.
Is producing all sorts of forecasted show much slower growth than anyone would expect.
And that's really leading everyone's perceptions of China it is not -- is growing country anymore but one that is going to come down to earth very very fast.
Current though that when when you do hear those that come out Wall Street analysts for example that warn about me that slowdown what slowdown in China but -- -- on it's it's going to be a short.
Slow down time for your payment.
Well I think that there will be a rebound but it probably won't be this quarter if there's going to be your rebound because of their masters and one quarter of the get that -- But -- Korea back just -- -- active.
Don't know probably be a -- rebound in the fourth quarter but it be very very amenable to reason is the Chinese companies and provinces and cities just don't have the cash so you know essentially every province in China is Greece.
You know the country's debt to GDP ratio is not what they -- it's probably approaching.
200%.
It just it's just a very difficult situation they put -- too much debt no less stimulus in 20082009.
And now they've come off the sugar high.
Gordon Chang exchange talk to you -- respectively -- and Montana -- heavy --
