Love this episode. Great to have guests as that adds another dimension to the dynamics of the conversations and of course additional perspectives. Keep up the great work!
Thanks for this episode. Almost at the end there was a statement on how "China desperately needs foreign investment". I am not sure that is correct. Do you have anyone you talk to that might be willing to join you in a podcast to talk about it?
I asked my German financier this question. His answer was this:
GDP (Gross Domestic Product) is calculated by adding up the following components: Consumption (C), Investment (I), Government Spending (G), and Net Exports (NX). So with less investment you get less GDP. Notice Chinese consumption is also quite flat. I would also add this that without FDI you will also get a lot less innovation in the economy. In the past much Chinese innovation was from copying or stealing foreign technology and practices from foreign companies in China. This is not going to happen now. Government spending is not going to work either - China already has very high debt and a huge wave of entitlements coming it's way from an aging population. Net exports is going to be hard to increase. You have growing pushback against China imports in OECD and India. This doesn't leave much room for export increase.
True, but the I in the GDP equation is not just FDI, it is also domestic investment. And that, I think, China has plenty of. Nevertheless it is true that with weak consumer spending GDP growth would slow. But a little slowdown is not as big of an issue as everyone seems to make for this 13 trillion dollar economy.
The problem is that unless China drops its ideological pursuit of GDP targets, overcapacity in everything will persist because the headline numbers have to be generated somehow.
Andrew, Bill, pls invite Ambassador Rahm Emanuel onto the podcast at some point.
Second that!
Love this episode. Great to have guests as that adds another dimension to the dynamics of the conversations and of course additional perspectives. Keep up the great work!
Thanks for this episode. Almost at the end there was a statement on how "China desperately needs foreign investment". I am not sure that is correct. Do you have anyone you talk to that might be willing to join you in a podcast to talk about it?
I asked my German financier this question. His answer was this:
GDP (Gross Domestic Product) is calculated by adding up the following components: Consumption (C), Investment (I), Government Spending (G), and Net Exports (NX). So with less investment you get less GDP. Notice Chinese consumption is also quite flat. I would also add this that without FDI you will also get a lot less innovation in the economy. In the past much Chinese innovation was from copying or stealing foreign technology and practices from foreign companies in China. This is not going to happen now. Government spending is not going to work either - China already has very high debt and a huge wave of entitlements coming it's way from an aging population. Net exports is going to be hard to increase. You have growing pushback against China imports in OECD and India. This doesn't leave much room for export increase.
True, but the I in the GDP equation is not just FDI, it is also domestic investment. And that, I think, China has plenty of. Nevertheless it is true that with weak consumer spending GDP growth would slow. But a little slowdown is not as big of an issue as everyone seems to make for this 13 trillion dollar economy.
The problem is that unless China drops its ideological pursuit of GDP targets, overcapacity in everything will persist because the headline numbers have to be generated somehow.