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China's New Leadership

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    'Coming Collapse of China' author Gordon Chang on concerns about China's new leaders.

  • Duration 4:22
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The Chinese Communist Party revealed its new generation of leaders today but our next guest is really concerned that this older conservative.

Leadership lineup.

Is unlikely to take any drastic action needed to tackle the pressing issues like social unrest in crops and that basically played this economy.

Not to mention China slowing economy overall Gordon Chang author of the coming collapse of China says the wheels are finally coming off.

He's here with us Gordon I know you've been saying this for a long time first let's talk about.

The seven member team that's -- -- every ten years they elect new leadership.

Actually every five but ten is the really big one where you have the generational change so this time we went from the fourth generation leaders of the fifth the new guy is siege in thing.

-- what -- the people looking for that they did not get this group.

Well I think there were looking for reformers in there were a couple of them who had a real chance of getting on the Politburo standing committee.

But none of them did so conservatives now dominate this committee with foreign members to seven.

Or maybe even six to -- you know six conservatives and that really means that China's gonna go in the wrong directions it's been on this anti reform binge for about six years now they're not gonna change course and and really move forward.

What's confusing I think to a lot of people is conservatism here in the United States actually sounds like a good thing that the government be conservative -- -- change right and you're saying over there in China.

Not so much yet they use that term differently in China conservatives there are really the hardliners the anti reformers the guys who -- to go back to like the old ways of doing things.

And so this is not a good sign when you have the conservatives will dominate the standing committee.

You know 'cause they'll have at least four maybe six members up so what does that mean we will see more inflation in China.

Well I think what we're gonna see is first of -- there's gonna be really no push to consumption which is really what they need to do they're not gonna open up their economy.

The entrenched interest have done very well shutting -- the foreign competitors and that's really going to be a problem for us because you know -- complain about access to the Chinese economy it's gonna probably get worse not better.

Will their standards change with this conservative leadership and we we talk often how they don't have audited financial statements they don't have their own version the FDA will -- see that.

Now I don't think so I just don't really see the push for reform and the other thing is politics you know.

Most observers now think the Chinese economy has just about going as far as it can within the existing political framework so no political reform means no long term grains communism.

It well -- means communism means a command led economy where the -- interest you very very well and the foreigners and the domestic entrepreneur -- don't do so well so.

OK so now let's talk about here in the United States you -- this is so bad for our foreign companies that are trying to get in there to do business and all -- many of our factories and -- China to sit.

You -- across the board is a problem.

-- this is going to be a problem and it comes at a bad time for China because they've got a lot of other -- related challenges they got -- demography problem which means they don't have enough -- right you know there's all sorts of manufacturing problem for you see companies now starting to go to Vietnam.

Indonesia Mexico even coming back to the US.

So how the Chinese people feeling about this -- you right there is a labor shortage you know this whole push from the farms the factories.

It's kind of done isn't it yeah now where these people getting are -- working you know -- -- working but also because of the slow down now we're starting to see more and more unemployment has not become a major factor -- and social unrest but could easily do so and you know everyone was sort of hoping -- -- always hope when you have a new chant Chinese leader.

But with this old conservative group coming back you know people are sort of gonna turn off and I think siege in -- the new ruler is got a real legitimacy crisis on his hands.

The negativity.

That from the people is.

Going to be the real problem for China isn't it we're starting to see right here we're just and our markets are negative everything is negative that doesn't help the country grow right and got to remember the Communist party's legitimacy has really been derived from the continual delivery of prosperity right and and now when you can't deliver prosperity because China is not growing at the seven point 4% -- -- It's probably going like one or two when you look at the electricity statistics.

Manufacturing survey's price indices but got deflation how can you have robust growth and deflation the same time it just doesn't happen in -- galleries July saw much on China Gordon Chang thank you very much for bring in -- -- has -- explaining.

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