Taps Coogan – August 5th, 2021

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Leland Miller, CEO of China Beige Book International and one of the best informed observers of China’s economy, recently spoke with Bloomberg to warn western investors about the risk of investing in China.

Leland Miller on Investing in China:

“People forget that there is real risk and so every once in a while the Chinese government does something and people get really scared because they have very little visibility into what happening on the policy side. They have very little visibility into what’s happening in true economic data… This is actually a regular cycle for investing in China, it just hasn’t happened in a while and investors have short memories.”

On foreign capital in Hong Kong:

“They are trying to send the signal that they don’t care at all about it (foreign capital). They’re arresting children’s book sellers, dissidents, of course, people who are protesting, of course, opposition candidates, of course, but the level to which the National Security Law has been used to do a complete and total crack down on Hong Kong society, I think it has been pretty much a worst case scenario…”

“Everyone has to have their eyes very much open to what China wants, to what Beijing leadership wants, to what the party wants, and how they want the international system to work… Any wishy-washy hope at that things are suddenly going to change, that there is going to be a reproachment between the United States and China tomorrow, these are not likely. We have to look at the world as it is, not as we’d like it to be and the world looks very different today than it did five years ago.”

It’s hard to overstate just how much the ‘conversation’ about China has changed in the last few years. Even conversations with a staid observer like Mr. Leland Miller, which used to be largely optimistic discussions of business surveys, have basically become warnings about political prosecutions in Hong Kong, hostage diplomacy, human rights abuses, going after foreign investors and capital, and so on. 

If none of that fazes you, remember this: China’s population has likely peaked, it’s workforce age population peaked a decade ago, it’s one of the fastest ageing countries in the world, it’s likely more indebted than the US, and wages in neighboring India are about six times lower. Oh, and their GDP growth figures are wildly exaggerated.  

There is much more to the interview so enjoy it above.