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Popular commentator and finance professor, Larry Lang, didn’t want anyone to hear his real thoughts about China’s economy, but his Oct. 22 speech in Shenyang City is making the rounds.
The Epoch Times reports on Lang’s roundhouse of the Chinese economy, a speech that he requested not be recorded or reported to the media:
Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.
Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.
Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.
Lang, who has PhD from the Wharton School, is a professor at the Chinese University of Hong Kong. He is also a consultant on corporate governance to China Shenzhen Stock Exchange Hong Kong Government.
Other noteable analysts have said that China, not Europe, is the world’s number one economic problem right now.
Image of Larry Lang on YouTube from a previous engagement
6 Comments
ThEMaCdD
Let them eat PLASTIC!!!
Chisha
D’accord. It is time bomb waiting to explode. Nobody knows the seconds, minutes, hours or days it is timed to explode. World shall ringfence quickly and protect their economies. It might as well turn the tide back to Europe and America to shine again.
LoQueb
mmm, Europe probably already in recession or soon will be, 50% chance U.S. will be in recession in 2012, but anyway already in a stagnation state like Japan, and been reading many conflicting reports about China… so will Canada, Australia, the Scandinavians, Brazil and few others will resist the downward trend?
Aloevera
According to another independent economist, who was prior JPMorgan Asia Pac chief economist, Europe and U.S. are the first to enter into crisis. China is in a much better shape, although if it does not handle correctly, it could be dragged down by the west.
haljett
I was listening to Jim Rickards today on King World News and he had some similar comments on China that ring with Lang’s.
It looks like the monster that is going to swallow us all is DEBT.
Bill E.
China’s recession would signal a deflationary spiral in commodities. But the big world economies with their fiat currencies are attempting to inflate their way out of the magnetic draw of the deflationary black hole powered by debt. So is short term strategy to hold cash in a relatively stable currency (the world reserve $), with longer term position in gold? This tug of war between inflation/deflation is tough to get one’s mind around. After just reading “Currency Wars” ( Jim Rickards), things are clearer now, but without a large position in a variety pack of liquid assets to weather the storm, the future looks a little dicey. This is , of course. assuming the crony capitalists and their corrupt representatives of all parties and countries are incapable of doing anything other than selling the rope they eventually hang from.