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Gordon Chang, author of “The Coming Collapse of China,” weighs in on China’s economic future.
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I think acting -- tough.
China making -- once in a decade change of leadership -- the big question is how is it going to affect our markets and our economy our next guest says.
Be prepared for things to get worse a lot want to offer -- the coming collapse of China Gordon Chang.
Joins us now Gordon yeah thank you first let's talk about these new characters who are -- Well the number three -- leader in China is a North Korean trained economist you just can't make this fluid waive it wave it.
Is that first of all I didn't know there was such a thing is economics in North Korea because it doesn't make sense to and I -- that's the point.
What's happening is that at least five and probably six members of the seven member Politburo standing committee which is the apex of political power in China.
The so called conservatives these in the Chinese car by conservative you are you are hard core Marxist but if you reformers -- -- event date they have to be realistic they're living in -- country that has been transformed.
As a result not of marxism but as of -- a move towards a free market.
So how is their election going to change your economic policy well I think that we're gonna see no economic reform to speak out if you have no economic reform it means you have no long term growth and you just don't wanna be -- -- -- China that's not growing.
So what does this mean for our economy because we still depend a lot of -- -- Chinese imports and and of course a lot of companies -- export to China.
Companies like Caterpillar I think what it really means and and it affects the US most vitally is that we're counting on China as an export market for our companies like -- -- and I don't think there will be able to do that because Chinese consumers won't have the cash to go out and -- and also because -- conservatives are gonna try to do their best to shut out foreign companies in the Chinese market they've been trying to do that since the middle of 2006.
They've been also going after the domestic private entrepreneur -- who are very very productive so really what they're doing is they're getting rid of the best elements of the Chinese economy.
And they're trying to -- state owned enterprises which are really the worst -- -- they try what what techniques today used to try to keep our companies out.
Well the first thing they did in the middle of 2006 we saw this with Microsoft and Goldman and a lot of other Carlyle trying to get -- they just prevented takeovers.
And then they've been trying to make sure that foreign companies have to surrender technology.
And all sorts of these types of little techniques it it's it's also they've been violating their World Trade Organization obligations just blatantly so the real problem here is that foreign business has not had a good environment that it did say a decade ago you worked in China you worked -- lived in China do you do you think -- it more difficult to work -- now as a foreigner than it used to be it certainly is they've been much more restrictive on all sorts of things including -- which are really important because you know your business you wanna bring in people to China they've been making it more difficult to do that this is not a good sign.
Can we turn it around a little and look for opportunities so sometimes you try to look at a problem and fine -- is there any opportunity in all list I think the American companies that will do the best in China going forward -- the mcdonalds the KFC's.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Because they've been sort of contemplating this growth in China that'll go on indefinitely you know cat has had some problems recently especially in the first quarter of this year.
You know cat now is saying oh China's not unimportant or swim in the past six FO China China China so I think that that's really -- -- OK finally and this this may be the biggest -- for its geopolitical concerns -- military build up it whenever whenever things get really down and accommodate they're always looking for somebody to blame and usually helps those in the military's say.
-- -- -- -- The Australians particularly are very concerned about a military buildup in China are you yeah of course it's not just the military build up -- the flag officers in generals and admirals are breaking free of civilian control their acting independently and many times criticizing the civilians and and that really means we have a much more uncoordinated Chinese policy you just can't go talk to the leader of China anymore you -- talk to the generals and admirals as well there's -- sort of a dissolution of central authority.
That that you.
