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Right now we want -- about China because China released a slew of economic data and the numbers are alarming for a lot of people what.
Has experts most concerned is the export number it rose just 1% year over year vs expectations of seven point 4% growth.
Our next guest says this is just the beginning and predicts more of a slowdown in coming months.
Joining us now Patrick.
-- -- silver crest asset management chief strategist and former professor.
Pitching like university in Beijing -- want to read something you wrote in your most recent blog on this very issue.
Slower GDP growth for the right reasons is okay.
This is not the right reasons what we're witnessing in China so what's going on and why should eyes and invest in the United States be concerned.
Well what's going on right now in China is that they've been driving growth.
Through a credit fueled investment boom over the past several years and he went through that in the United States 2001 to 2007.
And who and it's it is it is created overcapacity in industry it is -- created -- capacity in housing.
And and right now the challenges that they may need to make an economic adjustment away from dependence on investment and export -- growth.
Towards a more balanced approach with -- Swiss consumer spending.
But -- what I keep hearing from people like yourself then and Jim -- -- side you know with the very wise people who say China China China lies about its economic data.
And that this is a country that is going to have a very hard landing they've been saying that however the last six or seven years and it hasn't happened yet.
Well you know it's first -- -- one of the things is that you've got a system that is.
There's a lot of moral hazard that is you've got to close financial system.
And a lot of people continue to by financial instruments in China and -- -- step because they assume that it's all backed by the government.
And that can keep things going on for quite awhile.
You know the other thing is that there is productive potential -- -- Chinese economy there's potential -- agriculture logistics retail health care.
But China needs an economic adjustment to be able to tap that in in the past.
With joining WTO.
-- And reforming state enterprises they did unleash a lot of that -- -- -- carried him through but right now we don't see that kind of reform.
Look at those numbers it -- to find out what it means again for me as an investor in the United States I think it's a trillion dollars.
In new credit in just the first quarter of 2013 is that right that's right I mean that's the real problem right now in China is that they have been throwing.
Money into the system.
To stimulate the economy.
A lot of people say we'll wait what if if -- -- -- growth slows are gonna have to stimulate they had -- -- -- -- that is the shadow banking system and even their own regulator has said Ponzi -- that's right I mean more and more of the credit creation it's taking place in China.
Is taking form and it is taking a former risky financial instruments.
The kind of feed off their offer themselves so -- buy into that China is I don't wanna say collapse for China's in for a very nasty hard landing -- -- protect myself as a US investor.
Well I think you've got to look at who the winners and losers you can be sure a lot of -- -- countries and a lot of companies have benefited from China's investment over the past few years.
Australian iron or the whole commodities play and -- Saturday after all what exactly -- China slows.
And Germany selling machinery into China so you know all of and an end of caterpillar -- -- a caterpillar they got there there earnings -- quarter once a terrific itself.
Are we winner as the -- the United States -- winner if this happens I think you know one of the things that's gonna happen is China's you're gonna have the investment meaningful way but.
Consumption in China is gonna remain fairly resilient and so if you're selling consumer goods or -- selling food to China.
That is that that's gonna benefit -- fact we see the Chinese wanted to buy gas for field you know talking about -- -- for -- states to chided the very quickly do you see that deal going through or do you think that there might be some kind of public there was years ago when they try to by the oil company and in -- -- buy anything for two years because we -- that deal you know there's a visceral reaction because.
The food safety scandals have taken place in China and concerns here about what happens if you -- the Chinese invest in food sector here.
But the reality is it opens the doors to US farm exports to China and China has been very concerned about food security.
They didn't want to open -- -- -- US imports but I think this is gonna help open that door and it's going to be good for the United States Patrick -- about a thank you very much for joining us here to talk about -- it's something that every American has to talk about has so much of our economy is now tied to -- -- --
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