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Chinese Billionaire Zhang Xin: 'The Old Model Doesn't Work Anymore'
Der Spiegel ^ | January 22, 2016 – 07:59 PM | Bernhard Zand

Posted on 02/03/2016 11:49:30 AM PST by Zhang Fei

SPIEGEL: After the stock market turbulences, does it surprise you that people have started to worry?

Zhang: China has consistently surprised us. When I returned from the United States 20 years ago, it was unimaginable that we would end up where we are now. What China has achieved defies all logic. I credit this to the hard work and enterprising spirit of the Chinese people.

SPIEGEL: Can you give an example?

Zhang: I am a runner. Last October, there was a marathon here in Beijing. I didn't participate this time, but friends told me that the run wasn't prepared too well. The organizers had only arranged about three hours' worth of food and water supplies. Most people don't finish within three hours, however. Too bad for them -- or so it seemed. In fact, however, even those finishing last were perfectly taken care of, particularly during the fourth and fifth hour when demand is highest.

SPIEGEL: Why?

Zhang: Because people along the route had realized that there was demand and quickly organized supply. That's so Chinese. In a well-organized country like Germany, such a problem may not have arisen in the first place, but in China people immediately recognized an opportunity.

(Excerpt) Read more at spiegel.de ...


TOPICS: Extended News; Foreign Affairs; Government; News/Current Events
KEYWORDS: changhsin; china; neweconomicpolicy; redchina; zhangxin
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To: central_va
China is a fake house of cards ready to fall apart.

Could you define in concrete terms what you mean by fall apart? In 10 years, what changes do you see coming for China?

21 posted on 02/03/2016 2:15:38 PM PST by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always.)
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To: Zhang Fei

They built fake cities whenever their gdp started to slip. that was the safety valve. How long do yo think that is sustainable?


22 posted on 02/03/2016 2:16:42 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: central_va
They built fake cities whenever their gdp started to slip. that was the safety valve. How long do yo think that is sustainable?

Growth has not only started to slip - it may have gone into reverse, on the heels of a massive real estate bust. With this in mind - could you define in concrete terms where you see China 10 years from now? What do you mean by fall apart?

23 posted on 02/03/2016 2:26:40 PM PST by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always.)
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To: Zhang Fei

China has not really built up its military forces in proportional to its GDP growth. This was done to not “piss off” the west and rock the boat. More fake cities are not going to do the trick anymore. I think China has no choice but to build up their military simply to help GDP. That will in turn start the US in a military of our own. The USA will have to close off the open access to our markets ending forever the silly era of “free trade”, and that will trigger a new cold war with a hot potential.


24 posted on 02/03/2016 2:33:38 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: central_va
China has not really built up its military forces in proportional to its GDP growth. This was done to not “piss off” the west and rock the boat. More fake cities are not going to do the trick anymore. I think China has no choice but to build up their military simply to help GDP. That will in turn start the US in a military of our own. The USA will have to close off the open access to our markets ending forever the silly era of “free trade”, and that will trigger a new cold war with a hot potential.

Given all these developments, where do you see the Chinese economy in 10 years?

25 posted on 02/03/2016 2:47:06 PM PST by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always.)
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To: Zhang Fei

Flat with growing domestic political issues.


26 posted on 02/03/2016 2:50:25 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: central_va
Flat with growing domestic political issues.

My prediction is that in 10 years. China's per capita GDP will be up roughly 60% from what it is today. This is probably Year 1 of China's version of the Asian Financial Crisis of the late 90's. I base my 10-year projection on South Korea's progress during a 10-year period starting in 1996, in which time frame Korea's per capita income went up about 60%.

In the worst case, Chinese incomes will track Thailand's, which went up 10% in that decade. If this second scenario materializes in China, I think we can expect the same kind of unrest that has wracked Thailand for the past decade or so with Party factions squaring off against and scapegoating each other. I really don't see any foreign adventurism while they're whaling away at each other.

As to the effect of Trump's 45% tariff on China, I don't really see it having that much of an impact. A big chunk of the US trade deficit comes from transfer pricing that US corporations use to avoid US taxes, not value-added in China. I expect we'll find out soon enough, if the Donald is elected to office. Assuming the tariff is targeted at China alone, China's neighbors will be elated. It will definitely improve our relationships with countries in the region, as their economies benefit.

27 posted on 02/03/2016 3:11:19 PM PST by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always.)
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To: kearnyirish2

Not sure what they mean by the “old model” but he seems to have a good grasp that voluntary supply in response to demand is what drives wealth creation and economic expansion in the free market. That will never change.


28 posted on 02/03/2016 3:16:54 PM PST by Jim W N
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To: Zhang Fei

You could move there and be part of it all! Why not leave now!


29 posted on 02/03/2016 3:17:26 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: central_va
You could move there and be part of it all! Why not leave now!

Because I'm not Chinese? And they don't take immigrants?

30 posted on 02/03/2016 3:19:11 PM PST by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always.)
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To: Zhang Fei

I think they’d take you. You seem like one of them.


31 posted on 02/03/2016 3:23:29 PM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: central_va
I think they’d take you. You seem like one of them.

Actually, I'm just a long-time amateur China watcher who switched from being an amateur Russia watcher when the Berlin Wall came down. I know more about China than most people because I've spent a lot more time looking at the country from all angles. Some people track football teams. I track China.

32 posted on 02/03/2016 3:32:26 PM PST by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always.)
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To: Zhang Fei

33 posted on 02/03/2016 3:35:11 PM PST by dfwgator
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To: Chad_the_Impaler

Cool! I had no idea.


34 posted on 02/03/2016 4:35:57 PM PST by Vigilanteman (ObaMao: Fake America, Fake Messiah, Fake Black man. How many fakes can you fit into one Zer0?)
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To: Zhang Fei

“Where do you see the Chinese economy in 10 years?”

There is a very wide range of possible outcomes. Political developments could be huge - a new cultural revolution or an overthrow of the communist party. International developments could be huge - war, depressions, booms, boycotts, or sanctions. Technological developments could be huge - robotic job replacement, industrial scale human cloning, lower energy costs from nuclear and solar.

Most likely, per capita GDP will be up everywhere in ten years, but most likely China will no longer be at the forefront of high growth rates, and will likely have a somewhat lower relative economic position, as compared to its Asian neighbors, India and the West.

Unlike the Asian financial crisis, China has real economic adjustments to make (Ghost cities and zombie factories) in addition to the financial adjustments of currency devaluation, excessive debt, and capital flight.

The bottom line for the next ten years in China is that growth rates should slow significantly, and they could well suffer a “lost decade” of near zero net growth. There could well be a significant up front crash if the government runs out of real money (possible in a year or two, if things go badly).

Ultimately, China has excellent human capital, who will produce despite what the Party does to them. Given good policies, they could be like Poland - taking their adjustments up front for two hard years, and then being the fastest growing economy in Europe for two decades. With bad policies they could suffer depression-like mass unemployment in the cities, leading to unprecedented unrest.

Only time will tell, but kicking the can down the road on adjustment is probably no longer an option for China. People are voting with their feet and their dollars.

Because of the excessive control of the communist Party, economic projections are unreliable - the system is too rigged, too subject to the whims of a few individuals. The lower growth projection is assuming that they enact wise management from this bad position. If they react badly to developments, they could knock the floor out from under the economy.

There is no plausible case that I have seen for China to return to the high growth rates of the last couple of decades, over the next decade.


35 posted on 02/03/2016 6:11:28 PM PST by BeauBo
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