Michael Pettis explains why debt is not the problem, but the symptoms of China's economic woes

Michael Pettis of Carnegie China says we are beginning to see the impact of China's high debt-to-GDP levels and the country will need another source of real growth if the "rapid expansion" of infrastructure comes to an end.

[@dm9078]

China Update has been looking to Prof Pettis for years for unvarnished facts about the PRC economy. It’s good to see him on here. Just a shame this was so short

[@HTeo-og1lg]

Well, I know he had been with the World Bank and several of those institutions that predicted the economy of the US and China for several years unsuccessfully. Whilst he had been in China in the 2010s teaching in a university there, he hasn't quite understand the how, the priorities, and the mechanism of a state capitalism economy. Sadly, he is similar to Gordon Chang in that they both do not comprehend anything that do not follow the purely capitalistic economy framework. As a result, they continue to get their predictions on "state- capitalism economy" faulty.

[@jerryrichardson2799]

Pettis telling it like it is, thank you.

[@MrStephenmindo]

So this is how he sounds. Seen and read about him for about 10 years now.

[@valetudo1569]

Love Pettis. He has quite a few interviews here on youtube

[@obsidianrevenger]

@@valetudo1569 Thats an issue. He only has a few. I petition for more.

[@dragonflydreamer7658]

So our debt now problem there debt the sky is falling typical hack.

[@christopherd.winnan8701]

@@valetudo1569 please recommend some - I was impressed that he mentioned Guizhou.

[@jbrown6367]

Tony from CHINA UPDATE says Hi.

[@leekinboo]

finally professor Michael get noticed by the so called main stream

[@DW-op7ly]

MSM and people like him are purposefully misleading these days That Chinese debt is mostly Internal debt Where they have little external debt Notice how when the do the China vs US debt comparisons they leave out the US internal debt But lump in all Chinese debt If they were to include US internal debt with that 34 trillion US external sovereign debt You would have 3 trillion in Local and State debt Non Financial Corporate debt 11 trillion Corporate debt securities 23 trillion SS liability 26 trillion Medicare Liability 40 trillion Unfunded Liabilities 212 trillion Nominal amount of Derivatives bets by the TooBigTooFail Investment banks 200 trillion 👆 But then no one gives a sheeet because that is internal debt and if all else fails you borrow externally to cover that debt you don’t sweep under the table Where the Chinese stick their debt (mostly internal debt to boot) on the Corporations and Local Governments The USA sticks it’s debt on the “people” Btw who also had no problems taking internal debt not backed by the US Federal Government turn it into external Sovereign debt backed by the “people”

[@valetudo1569]

He should get way more attention

[@SMoore-vj7bt]

@@valetudo1569 Renown China expert Michael Pettis who I’ve followed since ~2012 and whom I’ve had private email conversations as well as interactions on his former blog, says the technological innovation sector is too small to compensate for China’s mercantile economy collapse. The problem is that the global economy will not grow fast enough, nor will China be able to prevent competition from their status as the world’s exporter, to continue to grow China out-of-poverty (and the interior of China is still impoverished). Pettis for over a decade has been arguing that China must transition from 60% in exports to 60% in domestic services and consumption. But Zeihan is correct that you need the demographic bubble (pyramid) in the 30 - 40 year old bracket for that (along with a consumer debt bubble financed by a country who can hold the world reserve current as a fiat, which is never going to happen again with Bitcoin having a fixed and declining supply as people lose their private keys). The underlying and inherent reason is China’s horrid geography and thus China is nearly impossible to rule in a way that rewards a low Gini coefficient. The East is not the West. And the West will soon be no more.

[@SMoore-vj7bt]

@@valetudo1569 Renown China expert Michael Pettis who I’ve followed since ~2012 and whom I’ve had private conversations as well as interactions on his former site, says the technological innovation sector is too small to compensate for China’s mercantile economy collapse. The problem is that the global economy will not grow fast enough, nor will China be able to prevent competition from their status as the world’s exporter, to continue to grow China out-of-poverty (and the interior of China is still impoverished). Pettis for over a decade has been arguing that China must transition from 60% in exports to 60% in domestic services and consumption. But Zeihan is correct that you need the demographic bubble (pyramid) in the 30 - 40 year old bracket for that (along with a consumer debt bubble financed by a country who can hold the world reserve current as a fiat, which is never going to happen again with bits corn having a fixed and declining supply as people lose their private keys). The underlying and inherent reason is China’s horrid geography and thus China is nearly impossible to rule in a way that achieves a low Gini coefficient. The East is not the West. And the West is fading.

[@SMoore-vj7bt]

@@valetudo1569 Renown China expert Michael Pettis who I’ve followed since ~2012 and whom I’ve had private as well as public interactions, says the technological innovation sector is too small to compensate for China’s mercantile economy collapse. The problem is that the global economy will not grow fast enough, nor will China be able to prevent competition from their status as the world’s exporter, to continue to grow China out-of-poverty (and the interior of China is still impoverished).

[@dashong8912]

HE should worry more about the USA's debt.

[@untitled6391]

He lives and has lived in China for a long time, Wang Shong

[@dashong8912]

@@untitled6391 which changes nothing of my previous comment.

[@SMoore-vj7bt]

Renown China expert Michael Pettis says the technological innovation sector is too small to compensate for China’s mercantile economy demise. The problem is that the global economy will not grow fast enough, nor will China be able to prevent competition from their status as the world’s exporter, to continue to grow China out-of-poverty (and the interior of China is still impoverished). Pettis for over a decade has been arguing that China must transition from 60% in exports to 60% in domestic services and consumption. But Zeihan is correct that you need the demographic bubble (pyramid) in the 30 - 40 year old bracket for that (along with a consumer debt bubble financed by a country who can hold the world reserve currency as a fiat, which is never going to happen again with bits corn having a fixed and declining supply as people lose their private keys). The underlying and inherent reason is China’s horrid geography and thus China is nearly impossible to rule in a way that achieves a low Gini coefficient. The East is not the West. And the West is fading.

[@SMoore-vj7bt]

This doesn’t mean that China can’t muddle through as Japan did- Asians are well adapt to sacrifice and given worse living conditions than Western pets. Asians are well adapted to group sacrifice- as long as they are all suffering, they suffer together without making too much trouble unlike Westerners. It is the implication for the world that is more stark as again Westerners will not cope well with looming impoverishment.

[@SMoore-vj7bt]

This doesn’t mean that China can’t muddle through as Japan did- Asians are well adapted to sacrifice and given worse living conditions than livestock. Asians are well adapted to group sacrifice- as long as they are all suffering, they suffer together without making too much trouble unlike Westerners. It is the implication for the world that is more stark as again Westerners will not tolerate stark outcomes with the same complacency or Stockholm syndrome.

[@skydragon23101979]

China doesn’t have to prevent competition but is encouraging competition in China. So the companies that succeed in China because of the massive competition of a single 1.4 billion people market would easily outdo any outside competition. Global economy would grow very fast once China’s housing crisis is solved which would be within this year end earliest or latest next year end. This is because China has a lot of savings that they are not spending they are waiting for things to improve once the housing crisis is bottomed out then that release in spending plus the technological innovation would boost domestic growth which would pull the global economy.

[@NewmaticKe]

You just enlightened someone who spent the last 24 years in China

[@ruckerchen2252]

who？

[@JB-xl2jc]

​@@ruckerchen2252Dong Zhuo

[@SigFigNewton]

Once property prices crash, the Chinese economy can begin to heal. People will actually spend money again instead of saving everything in the hopes of owning an insanely high priced home.

[@NewmaticKe]

Its beyond property prices, this time, its the perfect storm

[@kevoreilly6557]

Unfortunately, no. Historically this worked through the system because growth fueled demand that let prices rise with time - a short term deflationary cycle. With falling growth you end up with long term deflationary cycle and a collapse in the debt cycle.

[@TomTomicMic]

Over leveraged debt in property paid for the wealth in China since 2008, if that goes there is no money to spend, all houses will devalue by over 50% and nothing in China will give a return, China has been living off it savings in the form of non productive debt, there is no future prosperity only reset and cutback to pay off the 57 Trillion USD total on and off books debt, a little bit more than the US and all the Wider West debt combined!?!

[@MithunOnTheNet]

"Once property prices crash, the Chinese economy can begin to heal" LOL, tell that to all those who are going to lose so much wealth in that crash! You think when an apartment in China crashes in value from $1 million to $500,000, the bank loan drops as well? Nope. The loan taker still has to deal with the stress of repayment. And that homebuyer isn't going to be spending on other things to prop up the economy. Now multiply this situation with the millions of homebuyers of Evergrande, Kaisa, Country Garden, etc.

[@atb8660]

Remains to be seen the impact, I think they should stop the extend and pretend stuff and rip the bandaid. Then lots of stimulus on the other side, a quick painful rebalancing can be better to long one

[@tondematongo32]

Look who is talking about debt

[@aburetik4866]

A country that owes China trillions of dollars is warning China of debt 😆 The difference is Chinese debt is used to build superb infrastructure and supply chains while American debt is primarily for consumption that turns into sh*t in the toilet 😅

[@gotfan7743]

You obviously have no idea how world's economy is designed. Americans can print money out of thin air. Since the start of the pandemic they printed $5 Trillion. What China has is paper currency. And guess what? most of China's forex is in US and one of those Euro countries since their forex is mainly in dollars and Euros. The world's financial system is designed to be favored towards Western countries. According to this system America does not owe any money to China, it is China which has invested in American debt. When you have dollar assets you don't want dollar to collapse or lose value so you invest in American treasury bills to prop it up just like Gulf countries do with their surplus dollars, that is why they call it as petro-dollars.

[@TheJohn222222]

usa can print the dollar , china can't that is the difference.

[@skydragon23101979]

@@TheJohn222222Who says China can’t print yuan? She is just choosing not to.

[@advancetotabletop5328]

Remember Chinabots, no amount of regurgitating CCP propaganda will save your economy.

[@TheJohn222222]

@@skydragon23101979 because that will devalue yuan . It is not out of good of hearts.

[@ssuwandi3240]

Well that's crashed valuation exactly has been the high tisk in US banks..

[@davidrichards1741]

Why has china had no inflation whilst the US has seen prices for everything double or triple in 3-4 years, and now we see even official US inflation re-surging today! The US middle class is wiped out and no longer exists.

[@raoplns]

What CCP wants is what matters....thats not economy

[@exploreplanet930]

CCP wants Chinese people to be happy.

[@headoverheels88]

PS Pettis isn't just a "expert on China", he's a professor at Beijing's version of Harvard. I'm not quite sure why more people don't tap into his insights.

[@matsmcmats]

They don't like the message. The critical western people here belong to this weird alt-right/MAGA/Brexit/conspiracy group of people who love everything about China, Russia, and BRICS. They want the west to go down for some weird reason (even though they live here). 😂 It's like a doomsday cult of sorts.

[@HTeo-og1lg]

Sadly, he is similar to Gordon Chang in that they both do not comprehend anything that do not follow the purely capitalistic economy framework. As a result, they continue to get their predictions on "state- capitalism economy" wrong.

[@i-love-space390]

A Classic bubble. We had something similar in the latter part of the 19th Century when we overbuilt the railroads. We had terrible bubble collapses that caused several economic "panics". China is trying to defy gravity and the boom and bust business cycle that comes from unregulated capitalism. People in business hate the regulations that permeate the United States version and the European version of capitalism, but those regulations were put in place because the " great hand" of Adam Smith works very catastrophically in a series of booms and busts, which are detrimental to the health of society, our way of life, the stability of our government, etc. Every time we are behind the curve of regulating new activities, or we foolishly remove regulations, like the ones put in place after the Great Depression, we get some sort of bubble and collapse, like in 2007. The Chinese are just late to the party. They got to enjoy the high times of rapid growth, and they foolishly thought the good times would never end. The government had no incentive to rein in the capitalists as long as they were contributing to the government's legitimacy and building wealth and political influence. But it turns out the missing part of the "secret sauce" is strong regulatory bodies and laws to rein in excesses in the market, and corruption.

[@SonjaBlackall-qb1nb]

Debt is and has been Always there , while there's debt and trust no problem ,, debt and absolutely no trust ,,BIG. PROBLEM!!

[@bulthaosen1169]

This. Trust is extremely important when dealing with debt and fiat currency.

[@davidrichards1741]

Ray Dalio: "China needs a beautiful deleveraging" ... print money as the US has done like mad for 16 years since 2008, but china hasn't.

[@ShnNar1000x]

I would not worry too much about this. Technology is actually enormous and China leads the world, by far, in renewables, which is the next big energy market. There are lots of ways for China to deal with this. Also, China is very far from being bankrupt.

[@MultiMenvafan]

Also, there is no war in Ba Sing Se.

[@TheJohn222222]

china have difficult decade ahead but it will survive.

[@MultiMenvafan]

@@TheJohn222222 for sure. North Korea is surviving since the 50s.

[@TheJohn222222]

@@MultiMenvafan surviving yeh .do you even pay attention to the economic condition of North korea.

[@MultiMenvafan]

@@TheJohn222222 that's my point

[@davidrichards1741]

Don't overlook that China holds $7-tillion of US assets it could sell to pay debt. But the US has the world's worst financial position, ie, the most negative NIIP (net international investment position) of ANY country in the world.

[@ctrl-shift-run8681]

Biggest problem is demographics. There are less people to push the debt on to. But there's just too much doom and gloom going around.

[@qake2021]

😃 NO‼️ declining demographic is no a real problem as for now and in the next 10 to 20 years. ✌️

[@yopyop3241]

⁠@@qake2021The biggest cohort of any country ever is from 1963 China. The next biggest are all from China in the following few years. People born in 1963 turn 61 in 2024. Results from populations all over the world have found that people who have spent their lives doing manual labor (like almost all of the Chinese who had their childhoods during the Cultural Revolution and therefore never had the education to do non-manual work have) are forced to retire at around age 60. Demographics are a major problem for China. The retirement crisis is hitting them as we speak.

[@DW-op7ly]

90% of Chinese families own a home in China If the the Chinese emperor kid does not take care of their Senior parents the have their nest egg of a home they can reverse mortgage But then the older Chinese have been big savers saving 30% of their slave like wages since the 1970s Yeah not as much money as we make in the west But enough to be indirectly loaning us those savings over the decades This is not unlike in the west where we have our own demographic nightmares But where we lived overindulged lifestyles on borrowed money in debt or broke Where Chinese debt is mostly internal and put in their Local Governments or corporations Our internal debts are also substantial but we are sitting on External Sovereign debts we can’t pay off and need to borrow against to keep our Ponzi scheme going Their Government is purposely deflating their overheated markets. We just wait for a crash Plus like I always say to Americans who feel it’s okay for the US population to decrease Yeah you could close off the country…. but then you have this huge external debt load That no AI robot, will pay off as it won’t pay income tax, spend money for food clothes etc etc etc

[@valetudo1569]

demographics are more of a medium and especially longterm problem. Debt is a near-term problem.... but regardless, they have a near term problem (debt), medium + longterm problem (demographics). It doesn't bode well for the Chinese economy

[@DW-op7ly]

Debt is internal debt that can be swept under the table If their automation AI revolution does not work out???? They can always go back to those illegals immigrants 👇 Special Report: How smuggled workers power 'Made in China' The smuggling of illegal workers from Vietnam across the 1,400-km (840-mile) border into China is growing. Labour brokers estimate that tens of thousands work at factories in the Pearl River Delta, which abuts Hong Kong. Workers from other Southeast Asian nations are joining them. Visits by Reuters to a half-dozen factory towns in southern China revealed the employment of illegal workers from Vietnam is widespread, and authorities often turn a blind eye to their presence. Workers from Myanmar and Laos were also discovered to be working in these areas. Reuters found that employers supply these illegal workers with fake identity cards and sometimes confine them to factory compounds to keep them out of sight of the authorities. Reuters

[@VisionPlanetMedia]

with respect to debt he describes the US economy as $34 T is no small matter

[@davidrichards1741]

It's really $340 trillion including so-called off-balance sheet items (unfunded pensions, medicare, veteran costs, social security, massive defense commitments, etc) which are estimated at another 300 TRILLION dollars. But many countries including China either don't have these debts, or have much less of these type of debts, or have them on the books already. So in fact US federal debt dwarfs China's, which is plenty bad enough. I think Japan is the worst of all though, proportionately, being a small country.

[@user-et7vi7hx1s]

Don't worry we have printing press

[@lv9657]

Never ending prediction of China's economy collapse stories which the west has been talking & hoping for several decades. LOL

[@prashant-ul2sn]

No one is saying it is collapsing. But boom is over and it will become normal economy

[@alibaba855]

They need to sell more contaminated food products

[@ktefccre]

China has a lot of problems (social, political, health, moral) but I don't think economy is one of them.

[@davidrichards1741]

Why health? They recently surpassed the US in life expectancy. And Hong Kong has the longest life of anywhere on earth. And they're not as fat like too many of us :(

[@douyu1971]

1. the debt in China is that the debt was used to create infrastructure or create buildings whose value is less than the cost, 2.the technology sector is very glamorous and very sexy and we like to talk about it but the truth is it's quite small

[@AnthonyTolhurst-dw1nc]

They followed Murica! With Chynese Characteristics!

[@user-xb8kz2my7d]

There are 2 kinds of debt, debt for investment and debt for consumption. china is the former and is not a problem. china can charge for usage or increase train fare to pay off debt/interest, even by putting money in people pocket to spur economy activities. usa is the later for healthcare and retirement payout, u cannot charge other than reduce healthcare/payout which is political suicide. good luck to usa. cos they either do a greece or start ww3 like how they got out of the great depression. that is why is obvious usa instigate the war in ukraine and gaza (cos they r losing in ukraine). i m not surprise taiwan or Philippines will go ukraine. 2 puppet govt there funded by usa. doing a greece mean no more world no.1 which the hawkish people in usa don't wish. sorry to say this is more likely so as the world has wisen up to the 'dirty tricks' of usa .

[@mizanrahman5194]

100 💯

[@Red1Moon]

America has no debt woes. None.

[@cd7707a]

Of course the problem is not debt, it is not knowing how much debt existed and the non transparency of government data as everything is national secrets.

[@uselessoldman7964]

Chinese growth was built on the back of trade with the west which originally financed spending on infrastructure. Wages paid for property since the Chinese have a population of about 1 billion, there was a demand whilst people had jobs !!! Now the jobs are no longer there and trade has crashed leading to mass unemployment and low domestic demand. What happened since Xi came to power was a massive increase in dept driving their growth higher than it should have been, 30% GDP on housing alone which created huge demands for steel and other materials. China is screwed no way to generate growth cos it needs to create trade and NO ONE is going to deal with China anymore cos Xi has purposefully destroyed private enterprise and with it the power and wealth of the middle class.

[@qake2021]

🤣🤣🤣 in your FAKE dream‼️🥸🥸🥸

[@DW-op7ly]

MSM and people like him are purposefully misleading these days That Chinese debt is mostly Internal debt Where they have little external debt Notice how when the do the China va US debt comparisons they leave out the US internal debt But lump in all Chinese debt If they were to include US internal debt with that 34 trillion US external sovereign debt You would have 3 trillion in Local and State debt Non Financial Corporate debt 11 trillion Cooorate debt securities 23 trillion SS liability 26 trillion Medicare Liability 40 trillion Unfunded Liabilities 212 trillion Nominal amount of Derivatives bets by the TooBigTooFail Investment banks 200 trillion 👆 But then no one gives a sheeet because that is internal debt and if all else fails you borrow externally to cover that debt you don’t sweep under the table Where the Chinese stick their debt (mostly internal debt to boot) on the Corporations and Local Governments The USA sticks it’s debt on the “people” Btw who also had no problems taking internal debt not backed by the US Federal Government turning it into external Sovereign debt

[@DW-op7ly]

In China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities That’s why you are hearing about problems with their property developers these days. Because back in 2010? Their Central Government started cutting of money flow to these developers. Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate. Even then, It took them almost 14 years to get their overheated real estate under control Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018 Why is their Central Government doing this? Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen. Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need In China Owning a home in the city you migrate to? Affects your employment, health, education and even marriage prospects don’t have a house you don’t get married Thus the common prosperity push and the crackdown on the overt displays of wealth in China Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest

[@DW-op7ly]

China has a 800 billion USD trade surplus with the “world” nice narrative though

[@mizanrahman5194]

IMF/ World Bank estimated/anticipated China's GDP growth is still the envy of the West, America included.

[@jeffreykalb9752]

China's debt to GDP is actually several times that of the U.S. That has been the case for many, many years. Where have you been?

[@davidrichards1741]

In fact, as multi-billionairre investor Ray Dalio explained in a recent book, the thing about the US debt figures is they exclude so-called off-balance sheet items (unfunded pensions, medicare, veteran costs, social security, massive defense commitments, etc) which are estimated at another 200-300 TRILLION dollars. But many countries including China either don't have these debts, or have much less of these type of debts, or have them on the books already. So in fact US federal debt dwarfs China's. Nevertheless, Dalio also says now that "China needs a beautiful deleveraging", which means printing money as the US has done like mad for 16 years since 2008, but china hasn't. Only the US could get away with that because only the US has had the enormous privilege of reserve currency status. If china or someone else does that, they end up like Argentina, Turkey, Greece, etc. But if/when the US loses reserve currency status, it'll be the next Argentina too. So we need the gov't to spend much less to preclude that possibility!

[@WillMajor-sy2et]

China isn't creating a panic because they want to start liquidating assets from all over the world to restore some of their losses, bargain price action is happening but who has the funds to do buybacks at this extreme liquidity pool?

[@jeremynewell9903]

The fact that Chinese national debt + provincial debt totaled together = half of U.S. national debt gives some perspective.

[@LukeBarkerJLPB]

Debt to gdp

[@infoseeker1187]

@@LukeBarkerJLPB How about a look at debt to asset ratio? If you look at Singapore government, their debt to gdp is also very high, but in fact the government is very rich as shown with huge asset holdings. The reason is in order to develop their financial market on bonds/debts, Singapore issues a large amount (relative to their size) of national debt to the market for local investors to buy. China and Hong Kong had copied this model. So these governemnts have high debt, but even higher asset holdings.

[@LukeBarkerJLPB]

reasonable

[@ThomasVWorm]

​@@infoseeker1187assets don't help. The house owners, who went bust in the USA at 2007 did all have assets: the houses. It did not help them nor their banks, who got those houses. People who think, assets are securities, don't understand credit. In order to repay his debt the debtor must create a supply for what those people demand, who did get the money - otherwise they will not give the money to the debtors. The crisis became a crisis because the banks gave a damn whether the debtors will ever be able to create such a supply and often they did know, that they never will. But what type of people did have a demand for those houses? Only those debtors who went bust. So it was impossible to sell them to get the money back. Securities don't back debt. They only work as an exception of this rule: once for a while you may be able to sell a house when a debtor goes bust. But the securities never back all the debt but almost nothing.

[@davidrichards1741]

The thing about the US debt figures is they exclude so-called off-balance sheet items (unfunded pensions, medicare, veteran costs, social security, massive defense commitments, etc) which are estimated at another 200-300 TRILLION dollars. But many countries including China either don't have these debts, or have much less of these type of debts, or have them on the books already. So in fact US federal debt dwarfs China's.

[@chiscoply97]

Trillion? 😂😂😂😂😂, so X2 or X3 the global GDP? jajajaja.

[@davidrichards1741]

@@chiscoply97 Cirrect, 300 trillion. So do in-depth research (not google lol) and/or read the new Principles book by Ray Dalio, the multi-billionaire investor and founder/CEO of the world's most successful hedge fund (retired last year).

[@advancetotabletop5328]

Yet our youth are employed, our homes habitable, our infrastructure not falling apart, and we can protect CHINA’S trade routes in the Red Sea.

[@khtan585]

But that is against the narrative of talking down China and its impending crash .....

[@GlobalDrifter1000]

Nonsense.

[@SpaghetteMan]

😂 wow so it's almost like all economies are suppose to go through cycles of booms and busts in order to evolve. Any investors worth their salt can smell the opportunity...

[@matsmcmats]

Yeah, tell that to all those Chinese who paid for a home with all their savings and never will get it built.

[@SpaghetteMan]

@@matsmcmats home ownership in china is in the 80-90% range, most of those are investments. the US is sitting at 66%.

[@davidkoh7097]

Sounds remarkably like Japan's own experience. Welcome, China's Lost Decade(s).

[@JB-xl2jc]

China's will be a hundred times worse because of their demographics, their frosty relations with the West, and their complete and total dependence on real estate and manufacturing being rapidly exported en masse. China cannot even come remotely close to feeding its own population without spending fortunes on importing food. This is going to be rough longterm.

[@eddyr1041]

They must change to real production... real economic growth... since low hanging fruits is gone... Not these fake value that worlrth less than its cost as the prof said..😅😊

[@Gemini73883]

Most Americans sitting on the sidelines looking in at the Chinese economic system don't see the whole picture. Why? Because they evaluate it from their own perspectives. Take road building. In the old days it was the government that built roads. If the government had waited till the population had grown big enough (western model) the road wouldn't be built. If you don't build the road, the population cannot grow big enough. This is a chicken or egg scenario. Thankfully, Chinese emperors of old did build the roads and the canals. Time and again experience shows that access leads to growth. Even that old English observance that more roads lead to more traffic is confirming old Chinese wisdom. "If you want to get rich, build roads/canals etc

[@jackchid6040]

The problem is that there is a limit to this kind of growth. Plus if it is centrally planned for many years in the future, real developments might go another way. In the end it leads to massive malinvestment and someone has to pay for it one way or another. I am absolutely not against government spending on infrastructure but in China it seems to be the main reason for growth and not an enabling factor for more organic economic activities.

[@matsmcmats]

Building infrastructure that no one wants or has to be heavily subsidised in order to be used is just the worst investment. 😂 It works for some time.

[@zz3410]

Too much bezzle

[@mensrea1251]

Same ‘ol same ‘ol… they been talking about “debt” for the Japanese economy too for decades and they’re “somehow” doing just fine. China does have its problems but it is not going away any time soon.

[@jeek78]

US rapid expansion of foreign aid and war is a debt of wasteful while China is debts is internal infrastructure which still generate income..

[@sarabeth8050]

Much of that debt is from 1st world countries. They'll simply not pay it back. Who'll be in trouble then? China is a terrible investment. That didn't stop 1st world countries from piling money into there. Singapore, which should know better (being mostly ethnic Chinese), is China's #1 investor. How crazy is that?

[@jerryinmon2731]

In absolute terms yes but most of that private investment didn't go into infrastructure like roads and bridges. It went into factories and equipment that help turn China into a manufacturing giant. The infrastructure money comes from the Chinese people who aren't allowed to transfer significant amounts of their money out of the country. So they have to keep huge amounts in the government control banks that then loan this money out for infrastructure and residential real estate.

[@michaelrenper796]

Not correct, most oft chinese debt is domestic

[@icu17siberia]

BRI and 1.5 billion empty residences

[@eddyr1041]

Singspore investment often is on middle man roles..

[@user-xb8kz2my7d]

singapore investment in china is mainly building industrial parks, hospitals and commerical buildings and the estate mgt of these. the west is there to build factories for goods for the china/world. the imoact there now is the Residential mkt (china govt poke the bubble) n factories due to usa initiated trade war.

[@alex-shanghai]

when experts can’t solve their own country’s problem like debt, inflation, homelessness, gun violence, etc., they start to prove that other countries have more severe problems 😂😂😂

[@angusmckenzie9622]

@alex-shanghai "when experts can’t solve their ow..." classic pinky / wumoa whataboutism. The TOPIC of the video is CCP China's indebetness, not US problems. Logic isn't your strong suit.

[@M1911jln]

I guess you don’t realize that Prof. Pettis teaches at a university in China.

[@HTeo-og1lg]

Sadly, they both do not comprehend anything that do not follow the purely capitalistic economy framework. As a result, they continue to get their predictions on "state- capitalism economy" wrong.

[@angusmckenzie9622]

@ Alex Shanghai. “When experts can’t solve…”. The video is about CCP’s debt issue. Which is all over the media, yet you criticise the commentator for being unable to solve what you say are US problems ! Such a typical pinky response, whataboutism, blame USA. Pathetic.

[@edgardovillacorte7012]

China's looming economic depression might spread to the US where major companies such as Apple, Tesla, etc. derive a large part of their earnings from China. This can lead to large drops in their stock prices and the US stock market index which will substantially wipe out the wealth of many Americans.

[@matsmcmats]

Oh no! Anyway... They'll be fine. Both companies, people and stock market.

[@ThomasVWorm]

In China we have still about 25% of the workforce working in agriculture. In fully developed countries it is about 2%. And the number ist still declining. About 10 years ago it were at about 33%. So there will be still a strong demand for houses in the future when those people will go to live in cities and work in the industry or other professions. So construction is only a bit ahead of time. I wonder how much of this is an effect of the economic crisises in the western economies. Since at least 2008 the USA and esp. Europe are in a permanent economic crisis and China did have to deal with the effects for its economy. And until covid it did it quite well.

[@matsmcmats]

Um... They have a population decline out of this world. They shrink by millions every year. Besides... With a youth unemployment at 20 % who wants to leave the farm?

[@ThomasVWorm]

@@matsmcmats they do leave the farms, which is why those numbers dropped from 33% to 25% in only ten years. And a shrinking population means a shrinking demand for food. And there is a reason why the Chinese did not die from starvation though so many people did stop working in agriculture: the industrialisation of agriculture.

[@matsmcmats]

@@ThomasVWorm this urbanisation would have to be massive in order to counter all the excess housing. This won't help much.

[@ThomasVWorm]

@@matsmcmatsjust do the math: 20% or more of about 1400 million people. This is about the size of the USA.

[@Seven.Heavenly.Sins.666]

😆😅🤣😂🤣🤣There are no infrastructure in the US, but they have >$34 trillion debt, homelessness and drug addicts. 😆😆😅🤣😂😂

[@encinobalboa]

This guy is typical for college "educators". They will never acknowledge that easy credit policies enabled what Alan Greenspan called "irrational behavior". In short, the egg came before the chicken. Same thing happened in the 2000's real estate bubble that led to the great recession. ACORN made credit super easy to obtain which led to real estate boom.

[@HKim0072]

lol, you are a fool. Literally, he was an international / sovereign debt guy and worked on Wall Street for 15+ years. When you trade foreign debt, it's all about macro stuff.

[@kevoreilly6557]

Well that was more to do with Wall Street being allowed to issue MBS, but yes, free money (0% interest rates) was the fuel

[@billknudson2236]

Having a political bias leads to distorted view of reality. I worked at two of the top 10 banks doing home equity 1st and 2nd D/T, portfolio product pricing and market share/competitor pricing..... ACORN was never mentioned in ANY meetings or private conversations. I doubt 10% of my fellow bankers would know who/what ACORN was or what they did. Best to read The Big Short to understand what took place leading up to the 2008 fiasco. ACORN was not mentioned in the Big Short. Political bias.

[@encinobalboa]

@@billknudson2236 Your were part of the problem. Citing a movie as a source is laughable.

[@billknudson2236]

@@encinobalboa Your reading comprehension is lacking. Please note the word "read" in my post. There are BIG differences between a book and a movie. The book is quite good. In the BOOK, there is NO mention of ACORN and there is a reason for this, it was not relevant to the 2008 fiasco. Cheers.

[@qake2021]

😯😯😯 Mike is full of it and 🇨🇳 allow him to teach at the Chinese university. That is tell you where the real democracy exist. ✌️✌️✌️

[@qake2021]

👍👍👍🇨🇳🇨🇳🇨🇳 has WON‼️👏👏👏

[@qake2021]

🤣🤣🤣 🇺🇲🇬🇧🇪🇺neocons have LOST ‼️😁😁😁

[@bullpup1337]

china the real democracy…. right…. tell me more, please. No seriously I want to know what else you think.

[@gliu1431]

China has freedom of safety which US and the west hardly have.

[@DW-op7ly]

MSM and people like him are purposefully misleading these days That Chinese debt is mostly Internal debt Where they have little external debt Notice how when the do the China va US debt comparisons they leave out the US internal debt But lump in all Chinese debt If they were to include US internal debt with that 34 trillion US external sovereign debt You would have 3 trillion in Local and State debt Non Financial Corporate debt 11 trillion Cooorate debt securities 23 trillion SS liability 26 trillion Medicare Liability 40 trillion Unfunded Liabilities 212 trillion Nominal amount of Derivatives bets by the TooBigTooFail Investment banks 200 trillion 👆 But then no one gives a sheeet because that is internal debt and if all else fails you borrow externally to cover that debt you don’t sweep under the table Where the Chinese stick their debt (mostly internal debt to boot) on the Corporations and Local Governments The USA sticks it’s debt on the “people” Btw who also had no problems taking internal debt not backed by the US Federal Government turning it into external Sovereign debt

[@hkfoo3333]

China' capital is the infrastructures which everyone in the west esp these experts do not know. China is like a super rich man with a great deal of properties and assets in the world and China. Not only that China had built China into a super business making the entire China into one business unit from the most remote to the most urban areas. .... that transform into huge huge business opportunities for nearly the entire 1.4 billion people . Compare this to India ... a world of difference. US? Its infrastructures are more and more outdated. China's current cash flow is just like the business with temporary cash flow. it does not mean that rich man will collapse!! KNow why China does not go to war everywhere. China is making another economic and military power for the century. US and West , continue with your useless wars... while China quietly builds and builds.

[@matsmcmats]

Nothing magical about China. 😂 Before China everyone thought that Japan would be the number one economy... That was a long time ago and it is pretty similar to what is happening in china.

[@hkfoo3333]

@@matsmcmats Japanese do have Chinese business ethics and honesty . that was why Japan grew and grew until it became very rich and people all high income and ONLY to be destroyed by US economically and became uncompatitive. There are a lot of issues contributiong to China's growth at such astronomical rate even surpassing the Japanese. These include the poor status of the large population of China , plus the rich overseas Chinese in Taiwan, Hong Kong , Malaysia , indonesia. These latter Chinese provided the capital while poor mainland Chinese provided the cheap and reliable labour. Once mainland Chinese had mastered the issues of poverty and with Chinese's in born love for education for themselves and children .. propelled the nation at lightning speed. The rest is history ... These Characterisitics you can never find in other countries in the world. If you notice even today , China is indulging into building and building huge infra structures on scale never will be repeated. These will make China into one big factory from the most rural to the most urban areas and no country will ever be able to compete with China ....not even if the entire world combine and try. Too long to talk ... just know the Chinese next revolution is in the horizon you have not seen before. if you want to see the first sights of the future , go to China today.

[@manwingchi9156]

China economy is not collapsing, only the main steam media made it China is collapsing. Just look back 2007 US finance crisis, US is doing ok now. 😂😂😂😂

[@kwamebushman606]

The US is over $34 Trillion in debt mate...stop hating on China 🤣🤣

[@bullpup1337]

I dont get it… you think this kind of whataboutism is a good argument? Seriously?

[@Nnomadd]

yes it is @@bullpup1337

[@DW-op7ly]

The guy is using US debt to GDP as a benchmark MSM and people like him are purposefully misleading these days That Chinese debt is mostly Internal debt Where they have little external debt Notice how when the do the China va US debt comparisons they leave out the US internal debt But lump in all Chinese debt If they were to include US internal debt with that 34 trillion US external sovereign debt You would have 3 trillion in Local and State debt Non Financial Corporate debt 11 trillion Cooorate debt securities 23 trillion SS liability 26 trillion Medicare Liability 40 trillion Unfunded Liabilities 212 trillion Nominal amount of Derivatives bets by the TooBigTooFail Investment banks 200 trillion 👆 But then no one gives a sheeet because that is internal debt and if all else fails you borrow externally to cover that debt you don’t sweep under the table Where the Chinese stick their debt (mostly internal debt to boot) on the Corporations and Local Governments The USA sticks it’s debt on the “people” Btw who also had no problems taking internal debt not backed by the US Federal Government turning it into external Sovereign debt

[@flyawayhome3]

He doesn’t hate China, he lives there and is a professor of finance at Peking University. Ignoring the issue isn’t going to solve anything

[@Nnomadd]

@@flyawayhome3 which issue ?

[@ssuwandi3240]

The CCP didn't build the infrastructures. But private corporations debts.. He can see China debts to gdp ratio per IMF tracker..

[@jerryinmon2731]

It wasn't just private companies and but mostly local governments that finished all of this infrastructure. And they did it through land rights sales which have dried up because of the real-estate collapse.

[@ssuwandi3240]

​@@jerryinmon2731didn'matter. The bonds were in Yuan and the PBOC did NOT hike their rates .

[@ssuwandi3240]

​@@jerryinmon2731 China Yuan bonds are at historic low.. do you get the correlation between bonds coupon and principles,??

[@ssuwandi3240]

​@@jerryinmon2731Coz that's the main problem I'm crashing bond valuation in US. . Why do you think none of 3 Agencies downgraded China Souvereign Debts but TWICE for US? BOOM there's your fault .EAT UP THE PROPAGANDA 😂

[@ssuwandi3240]

​@@jerryinmon2731 good luck holding those high risk assets. Maybe try not to bash other countries problems because China is clearly one step ahead in policies normalization.. on the backdrop of personal savings at record high. That's a very different story of Credits Recovery and Self Reliant Growth.. Their stock markets are never the main source of capital anyway..

[@harryquah]

Rubbish

[@RandomAussieGuy87]

How?

[@hansvetter8653]

Incompetent bla bla!

[@matsmcmats]

Where is the lie? I bet you know better. 😂

[@hansvetter8653]

​@@matsmcmats ... there is no such thing as property in China!

[@matsmcmats]

@@hansvetter8653 true, it's even worse... Just a lease. I guess you own the house though. You don't think this professor knows this? 😂

[@hansvetter8653]

@@matsmcmats ... so ... the chinese must be very happy ... because they own nothing. Klaus Schwab told me that ... ;-)

[@bricsscorcepcstobriopecvsu8796]

CCP WORLD NUMBER ONE GDP IN PPP TERM👍

[@eddyr1041]

Ppp can easily change with unstablility... eg . Big inflation or deflation 😅

[@jimwuhan5336]

100T built the infrastructure, but value slip to 80T, so China should write down 20T, what a brilliant economic professor of India.

[@TheJohn222222]

seeing indian in a white man, you guys are that scared of india.

[@HTeo-og1lg]

Exactly. Comments that he is a brilliant economist that teaches in Tsinghua University in Beijing, is not only amusing, but actually tells you why he is, like many academics in the US, his own country, doesn't want his advice. For they are famously always wrong!