Xiang Songzuo’s speech was just 25 minutes long. But the comments made by the professor of Renmin University’s School of Finance look certain to remain relevant long after his address is consigned to academic history.
In a far-reaching assessment, he talked about China’s slowing economy, rampant speculation and debt, and the fallout from the trade war with the United States.
“Basically, China’s economy is all built on speculation, and everything is over-leveraged,” the former chief economist of the Agricultural Bank of China, one of the big four lenders, told a seminar at the Renmin Business School at the end of last month.
“China’s economic decline indicates that there is a major issue with the focus on expansion and growth: It has deviated from the fundamental and moved to speculation. These are the words of [the former Governor of the People’s Bank of China] Zhou Xiaochuan,” Xiang continued.
“Starting in 2009, China embarked on this path of no return. The leverage ratio has soared sharply. Our current leverage ratio is three times that of the United States and twice that of Japan. The debt ratio of non-financial companies is the highest in the world, not to mention real estate,” he added.
Rapid downturn
Moreover, this comes at a time when the economy is experiencing a rapid downturn.
Manufacturing activity has declined, consumer spending has shrunk and new car sales have stalled. A cooling property market has also been squeezed by tighter credit restrictions.
On top of that, the state-run Academy of Information and Communications Technology reported earlier this week that smartphone shipments last year plunged by 15.5%.
In part, this is a byproduct of the trade conflict, with Xiang pointing out that this has changed the landscape of China’s relations with the world’s other major economies, particularly the US.
“We used to speak of ‘China’s period of strategic opportunity for economic growth.’ Does this period of strategic opportunity still exist? Personally, looking at the international situation, I think this period of strategic opportunity is fading quickly,” he said.
“The trade war is in fact no longer a trade war but rather a clash between two opposed value systems. It can be said with certainty that the Sino-US relationship has come to a crossroads and faces significant historic challenges. What are we to do? To be honest, I don’t think we have really found much of a solution,” Xiang, whose comments were translated from Mandarin and appeared in full on the influential China Change website, added.
Resetting that “relationship” was brought into sharp focus on Wednesday when the latest round of trade talks between the world’s two biggest economies finally ended in Beijing.
Signs of optimism triggered a rally in Asian markets and continued after Ted McKinney, the US Undersecretary of Agriculture for Trade and Foreign Agricultural Affairs, told the media it had been a “good few days.”
‘Good result’
The mood was also buoyed after comments from China’s Ministry of Foreign Affairs. “A good result will not only benefit both China and the United States [but] is also good news for the world economy,” spokesman Lu Kang said at a media briefing.
The mid-level discussions were the first since US President Donald Trump and China’s head of state Xi Jinping hammered out a 90-day trade war truce at the Group of 20 summit in Buenos Aires last month.
But with initial details sparse, concerns remain about core issues such as intellectual property violations, cyber theft, and Beijing’s state-backed economic model.
A meeting between senior officials, such as Vice-Premier Liu He and US Trade Representative Robert Lighthizer, is widely expected in the second act of this geopolitical power play.
“I am looking for Liu He to go to Washington after this round of talks [but] the timing is actually very critical,” Iris Pang, the China economist at ING Bank, told the South China Morning Post. “If it is immediately after these talks, it really means that something is going to happen.”
Still, as Xiang pointed out, the relationship is now at a “crossroads.” Resolving the dilemma will take more than just three days of discussions or Liu’s trek to Washington.
The US government is controlled by finance capital. In China, the government controls finance capital to a high degree. Debt can be delt with by debt to equity swaps. The large banks could spin off the equity into holding companies. Squeezing debt out of the system will greatly strengthen the economy. In the US, debt is strangling the economy. This is the situation’s bottom line.
The US government is controlled by finance capital. In China, the government controls finance capital to a high degree. Debt can be delt with by debt to equity swaps. The large banks could spin off the equity into holding companies. Squeezing debt out of the system will greatly strengthen the economy. In the US, debt is strangling the economy. This is the situation’s bottom line.
Gordan W – What ‘REFORMS’ did Xiang lay out to address the ‘total failures’ of China’s policies conducted past 40 years?
Gordan W – What ‘REFORMS’ did Xiang lay out to address the ‘total failures’ of China’s policies conducted past 40 years?
Xiang Songzuo’s assessment of China’s current economic situation caused an uproar in the Chinese-speaking China research community for four reasons. 1. Xiang is not a "one of pack" economics professor at a top Chinese university. As former chief economist of the Agricultural Bank of China (one of top five state banks), he is actually an "establishment" economist, meaning he is a trusted economic consultant to the Chinese government and is positioned to know all internal information outsiders do not have access to. Any information disclosed by people like him is 100% trusted. 2. He cited two "very very authoritative sources" that China’s real GDP growth for 2018 will be 1.67% or even negative, as against the 6.5% predicted by the government. Anyslists believe the vey authoriative source is the State Council’s Economic and Financial Leadership Team led by Xi Jinping. 3. Since his disclosure, not a single official source has disputed or rebutted the numbers, which is so abnormal that it is actually considered a confirmation of what he said. 4. If the GDP growth numbers are true, it is the worst ever recorded during the 40 years since China’s Reform and Opening in 1978, and arguements about whether China is experiencing an economic crisis is over.
Xiang Songzuo’s assessment of China’s current economic situation caused an uproar in the Chinese-speaking China research community for four reasons. 1. Xiang is not a "one of pack" economics professor at a top Chinese university. As former chief economist of the Agricultural Bank of China (one of top five state banks), he is actually an "establishment" economist, meaning he is a trusted economic consultant to the Chinese government and is positioned to know all internal information outsiders do not have access to. Any information disclosed by people like him is 100% trusted. 2. He cited two "very very authoritative sources" that China’s real GDP growth for 2018 will be 1.67% or even negative, as against the 6.5% predicted by the government. Anyslists believe the vey authoriative source is the State Council’s Economic and Financial Leadership Team led by Xi Jinping. 3. Since his disclosure, not a single official source has disputed or rebutted the numbers, which is so abnormal that it is actually considered a confirmation of what he said. 4. If the GDP growth numbers are true, it is the worst ever recorded during the 40 years since China’s Reform and Opening in 1978, and arguements about whether China is experiencing an economic crisis is over.
Again, what can you expect out of China ? Everything’s fudged, fake, artificial, or propaganda. Most things are as clear as mud.
Not only is the economy built on speculation, but, on a Ponzi scheme- that’s the right term
Again, what can you expect out of China ? Everything’s fudged, fake, artificial, or propaganda. Most things are as clear as mud.
Not only is the economy built on speculation, but, on a Ponzi scheme- that’s the right term
US has given China a wake-up call. China is getting the same medicine as Iran, Syria, Venezuela, and Russia to mention a few. US Empire is on a suicidal path and China will start looking for alternate producers and stopp all dependency on US products.
China has been aware the US is not a friend. The US is running terrorists training camps in Northern Afghanistan to be used in former Soviets and China. US openly supports the Uighurs demands to separate Xinjang to become an independent US friendly country. Asia is the future for China’s exports and investments.
Reduction in poverty in Asia opens a huge new market that will compensate for reduced sales to the US and “Western Countries”. US purchasing power will be reduced in the future due to the fact 60% of US Citizens is one paycheck from poverty and 14% of US Citizens live below the poverty line.
US and China trade war has been going on for more than a decade. US Intelligence agencies has done their utmost to stop Chinese export of electronics and high-tech equipment. Now the US is trying to get all the countries in the extended “Five-eyes” intelligence community to boycott Chinese made products. This is a “hidden” war, unlike the public tariff war. The US Intelligence agencies want the “West” to buy substandard and more expensive products from other suppliers.
Germany has objected to the US demands of boycotting Chinese products. Germany think buying substandard and more expensive products from the “West” is a bad idea.
The Chinese companies Huawei and ZTE targeted long before 2012. Huawei has been “robbed” for HUGE contracts with AT&T, US Sprint, and many other large companies because the US Government and the FBI has intervened and blocked the sale of “national security” reasons. 60 minutes documentary about Huawei from 2012 https://youtu.be/8AR3emaMdBc
There will be a trade agreement, but it is worthless. The US destructive agenda will increase and more fines, arrests, and covert operations will be launched against Chinese companies in the "West".
US has given China a wake-up call. China is getting the same medicine as Iran, Syria, Venezuela, and Russia to mention a few. US Empire is on a suicidal path and China will start looking for alternate producers and stopp all dependency on US products.
China has been aware the US is not a friend. The US is running terrorists training camps in Northern Afghanistan to be used in former Soviets and China. US openly supports the Uighurs demands to separate Xinjang to become an independent US friendly country. Asia is the future for China’s exports and investments.
Reduction in poverty in Asia opens a huge new market that will compensate for reduced sales to the US and “Western Countries”. US purchasing power will be reduced in the future due to the fact 60% of US Citizens is one paycheck from poverty and 14% of US Citizens live below the poverty line.
US and China trade war has been going on for more than a decade. US Intelligence agencies has done their utmost to stop Chinese export of electronics and high-tech equipment. Now the US is trying to get all the countries in the extended “Five-eyes” intelligence community to boycott Chinese made products. This is a “hidden” war, unlike the public tariff war. The US Intelligence agencies want the “West” to buy substandard and more expensive products from other suppliers.
Germany has objected to the US demands of boycotting Chinese products. Germany think buying substandard and more expensive products from the “West” is a bad idea.
The Chinese companies Huawei and ZTE targeted long before 2012. Huawei has been “robbed” for HUGE contracts with AT&T, US Sprint, and many other large companies because the US Government and the FBI has intervened and blocked the sale of “national security” reasons. 60 minutes documentary about Huawei from 2012 https://youtu.be/8AR3emaMdBc
There will be a trade agreement, but it is worthless. The US destructive agenda will increase and more fines, arrests, and covert operations will be launched against Chinese companies in the "West".
Genius Trump is right on saying that Wumao nation was rebuilt by US. China rose coz of FDI’s and US+Western largesse. Now that it’s biting the hand that feeds it, what to do ? Bring it down to earth.
Genius Trump is right on saying that Wumao nation was rebuilt by US. China rose coz of FDI’s and US+Western largesse. Now that it’s biting the hand that feeds it, what to do ? Bring it down to earth.
US history has been infested by fake facts. From the start, the constitution had not a single words referred to democracy. Its founders declared in open speech to its people, they wanted a republic to refuse the democratic . Yet the republic they built allowed slave trade, to calculate the voting powers of each state, one slave was counted as 4/5 of a full man. But slaves of course were refused voting right, as all women, and most male whites who could not pay tax as forced labourers. So the later myth which pictured US had been founded on democracy is totally fake news, the president and most the drafters of the constitution were slave owners themselves. Washington even declined to let free of his slaves, and promised to liberate them after end of his life. And totally fake that democracy makes US rich and strong. Women were allowed voting until 1920, the black people had to wait until 200 years after the founding of the nation, only then had the hurdles and obstacles to their voting rights been cleared in law. So have been the free market , free speech, free of intervention to tribute. No need for a degree to understand the fake facts. Your still could not avoid colored beggars in your hotel door at big city as LA and Chicago, pity is they dare to beg a coin to colored people only .
Trump has helped China to understand all these fake words and intention. Return to closed door years spirits, depend again on your self will and reliance . When you exceed all categories of weapons and mights over the US, wait for another Nixon to beg your door, and it’ll be China’s age of globalisation. Hope you would play no fake truth and freedom to others at that time.
US history has been infested by fake facts. From the start, the constitution had not a single words referred to democracy. Its founders declared in open speech to its people, they wanted a republic to refuse the democratic . Yet the republic they built allowed slave trade, to calculate the voting powers of each state, one slave was counted as 4/5 of a full man. But slaves of course were refused voting right, as all women, and most male whites who could not pay tax as forced labourers. So the later myth which pictured US had been founded on democracy is totally fake news, the president and most the drafters of the constitution were slave owners themselves. Washington even declined to let free of his slaves, and promised to liberate them after end of his life. And totally fake that democracy makes US rich and strong. Women were allowed voting until 1920, the black people had to wait until 200 years after the founding of the nation, only then had the hurdles and obstacles to their voting rights been cleared in law. So have been the free market , free speech, free of intervention to tribute. No need for a degree to understand the fake facts. Your still could not avoid colored beggars in your hotel door at big city as LA and Chicago, pity is they dare to beg a coin to colored people only .
Trump has helped China to understand all these fake words and intention. Return to closed door years spirits, depend again on your self will and reliance . When you exceed all categories of weapons and mights over the US, wait for another Nixon to beg your door, and it’ll be China’s age of globalisation. Hope you would play no fake truth and freedom to others at that time.
WUMAO NATION MUST RECOGINZE WHO’S BOSS ! US OF A
WUMAO NATION MUST RECOGINZE WHO’S BOSS ! US OF A
Who says Germany not banning Huawei ? Only dreamers !
https://www.theinquirer.net/inquirer/news/3066339/germany-mulling-ban-on-huawei-and-zte-5g-equipment
https://www.theepochtimes.com/czech-republic-bans-huawei-devices-for-government-office-use_2761138.html
https://economictimes.indiatimes.com/news/international/business/chinas-huawei-faces-new-setbacks-in-europes-telecom-market/articleshow/67216367.cms
Who says Germany not banning Huawei ? Only dreamers !
https://www.theinquirer.net/inquirer/news/3066339/germany-mulling-ban-on-huawei-and-zte-5g-equipment
https://www.theepochtimes.com/czech-republic-bans-huawei-devices-for-government-office-use_2761138.html
https://economictimes.indiatimes.com/news/international/business/chinas-huawei-faces-new-setbacks-in-europes-telecom-market/articleshow/67216367.cms