Submitted by Taps Coogan on the 29th of August 2019 to The Sounding Line.
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Christopher Balding, associate professor at the Fulbright University of Vietnam and long time China resident, recently spoke with Real Vision in a highly informative interview about what has changed in China since Xi Jinping’s rise to power and his concerns that China’s economic model is on a path towards North Korea’s. Click the play button below to hear the interview.
Some excerpts from Christopher Balding:
“You began to really feel China change in 2012. When I first arrived in 2006 and 2009, in relative terms, China seemed, looking back now, almost open and free wheeling. But, things began to really change in 2012 when Xi was there and I think those changes began to really accelerate in… 2014-2015.”
“Xi is almost… singularly focused on not just the collapse of China (as it pertains to parallels to the collapse of the Soviet Union), but the accompanying numerology that is there right now. One of the ones is… the Soviet Union was on its 13th ‘Five Year Plan’ and China is in the middle or near the end of its 13th ‘Five Year Plan’ now and the Soviet Union did not see a 14th. Xi is singularly focused on not just having a 14th but on not replicating the errors of the Soviet Union that led to its demise, specifically opening and liberalization.”
“I was talking to someone a couple years ago in Beijing… about the debt pressures China was facing and I was unconvinced that Beijing even understood the severity of the debt problem and I asked this person ‘Do you think they understand the severity?’ and they said ‘Absolutely, they understand the severity. But you’re looking at it as if there is a problem to be reformed… Their goal is just to become Japan, not Thailand.’ …In the bureaucrats mind debt is not a problem as long as they can essentially always stay one step ahead of a plate that might fall off. However, that is becoming… more and more difficult… What that requires is almost going the DPRK model (North Korea) of financial repression and I think, more and more, that is what you are seeing… We are seeing a lot of evidence that there are essentially price mandates on real-estate prices. Just over the past couple of weeks we are seeing evidence of financial repression with regards to pork sales: subsidies and you need identity cards to purchase pork… They are realizing that it is becoming more and more difficult for them to even become Japan… and they have to become more and more financially repressive at every step of the escalation.”
“They don’t want (home) prices to fall because that will create a real societal risk. There are people who track where riots or conflicts take place in China and one of the more common reasons that riots or conflicts take place in China is a developer will sell 50% or 75% of a development, and then they’ll lower the prices for the remaining 25% units… and the people who have already bought come out and riot… Those are the types of things that keep Chinese technocrats and Chinese politicians, if they ever have to announce broad based falls in asset prices like real-estate.”
There is much, much more to the interview which lasts roughly an hour, so enjoy it above. For a more in depth discussion of China’s economy by Christopher Balding, read here.
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