China Economy: What People Have Said
15 April, 2011, 4:05. Posted by ZarathustraTags: Big Swinging Dick, Economy
China Bulls and Bears are attacking each other for their misunderstanding of the Chinese economy.
What people are thinking over the past year or so? Here’s just a collection of a few videos of people talking about the Chinese economy.
Nassim Nicholas Taleb (9:48) had no idea about China, but pointed out that Argentina was thought to be “the next great country”. In fact, I can remind you that there used to be two Harrods in the world in the early 20th century. One was in Knightsbridge of London UK, and the other one was in Argentina, which was really a manifestation of how rich this country once was. Of course, we know the rest of the story. He added that the rise great powers could only be judged in retrospect. That was right: no one thought the British Empire would become the largest in history.
Hugh Hendry (10:26) pointed out the similarities between the Great Depression of 1930s, the lost decades of Japan, and the current days China. All three became creditors nation, all three had persistent current account surplus, and all three had fixed-exchange rates in one form or another, i.e. gold standard in the US, the peg of JPY with USD in the case of Japan (which was then scrapped in the Plaza Accord, but the Japanese continued its attempt to keep its currency low), and the peg of Chinese Yuan with USD. Fixed exchange rate regime is pro-cyclical, which says a lot of things happening in the China economy now. One may now ridicule Hugh (and other bulls) for being wrong on his short China story for years, his argument is actually quite sensible.
Jim Chanos, like Andy Xie and others, are most worried about the property bubble.
Though Chano’s comparison between China and the Soviet certainly sounded a bit absurd, while Mohamed El-Erian has asked some sensible questions here.
Andy Xie sounded a bit odd here that he blamed the government for not making his forecast come true. No worry, I think it will eventually come true.
And if Jim Chanos sounded ridiculous, do did Shaun Rein, who said:
… people who are buying the homes, can they afford it? Absolutely they can… one rich person can buy 10 homes
If this is not bubble, what is?
Read more about China Economy
China Economy Predictions for 2011
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About Zarathustra
Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.
