The claimed huge amounts of Chinese bad loans are a major threat to the Chinese economy, coupled with a new Government no longer solely focused on growth. Dr Andy Xie shared his insights on the Chinese bad loans for Australia’s ABC. He says the Chinese Government can cover any bad loans problems, but that means that the Government will have less money to spend elsewhere, and that in return will have a big knock-on effect on economic growth.
Check Andy’s video on the Chinese bad loans here…
Andy considers that another hurdle facing authorities in Beijing is the financial speculation that could increase inflation, which in return could bring social instability in China.
The ruling class in China are very much driven by financial speculation. And they have a disproportionate influence over monetary policy. […] Chinese economic turmoil has all come from inflation, not from unemployment rate. So there’s a mistaken view that if unemployment rate is high, China is not stable. That’s not true. That’s not borne out by history. Chinese social instability is all associated with a period of high inflation.
Regarding China’s economy, Andy Xie is also mentioned in a live update on financial markets for the 18th of April in a Sidney Morning Herald article. Andy’s warning on too much reliance on China is put in attention:”China’s demand for hard commodities in coming years will decline. Australia needs to change, last decade of boom is over”.
Dr Andy Xie 謝國忠 is a Shanghai-based independent economist specialising in China and Asia. He is currently director of Rosetta Stone Advisors and of China Boqi Environmental Science and Technology. He is also a guest columnist for the South China Morning Post and New Century Weekly.
Dr Xie is one of the few economists who has accurately predicted economic bubbles including the 1997 Asian Financial Crisis and the more recent subprime meltdown in the United States. He joined Morgan Stanley in 1997 and was Managing Director and Head of the firm’s Asia/Pacific economics team until 2006. Prior to that he spent two years with Macquarie Bank in Singapore, where he was an associate director in corporate finance. He also spent five years as an economist with the World Bank.