Taps Coogan – October 17th, 2023

Leland Miller, the man who runs the largest private in-country data-collection network in China: China Beige Book International, spoke with CNBC to thread the needle between warning that China’s economic golden era is over while downplaying the risk of a Leman-like collapse:

Leland Miller:

“Markets did not get the recovery they wanted in the first half of 2023 and because markets are bipolar on China, everything is either great or it’s terrible. We’re now in the terrible phase and we’ve been dealing with this three to four months of people speculating that China’s economy could be on the brink of collapse, that shadow banks are wobbling… so people are justified in being a little bit gloomy… but sequentially everything is improving in 2023… except property. So, you’re seeing a recovery, it’s just not the recovery everybody was expecting.”

“The idea that China is going to be this strong economic engine at high levels of growth, no, that’s over. The idea that China is going away, or that it’s going to collapse, or that it’s got a Lehman Moment, that’s also incorrect. People are too bearish cyclically on China… but people should remain pretty bearish structurally. They’re too bullish structurally…”

“China investing used to be, to some degree, ‘set it and forget it,’ a least for the big tech companies… That changed a handful of years ago and we’re not going back and if you add on to that the fact that supply chains are getting pulled out of China… this has made it more and more difficult to invest in China and China has not made it particularly easy for foreign businesses to operate on the ground… The days of investing the way you used to are over. You have to be very sophisticated now… If you’re investing in China, you should be producing for Chinese consumers.”

We couldn’t agree more. There is more to the interview, so enjoy it above.