WEBVTT - Episode 2: Should You Be Freaking Out Over China?

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<v Speaker 1>I was there in May and the Starbucks in the

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<v Speaker 1>basement of our office in Beijing was hopping. Welcome back

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<v Speaker 1>to the Bloomberg Benchmark podcast. I'm your host, Tori Soella

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<v Speaker 1>Bloomberg News. Thanks for listening to our first episode, and

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<v Speaker 1>we just couldn't wait to get out another one, so

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<v Speaker 1>we have a bonus show for you guys today. I

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<v Speaker 1>am joined by my colleagues and co host Dan Moss,

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<v Speaker 1>also in d C and Akio in San Francisco. Hey guys,

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<v Speaker 1>Hey guys, what's the weather like in San Francisco. It's

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<v Speaker 1>like boiling here, foggy and cold, the way a good

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<v Speaker 1>San Francisco summer should be like. In case you missed

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<v Speaker 1>us last week, Benchmark is a podcast about the global economy.

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<v Speaker 1>It's twists, it's turns, it's upstance, downs, and how it

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<v Speaker 1>affects you. We break down the most interesting numbers and

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<v Speaker 1>ideas from around the world, share them with you in

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<v Speaker 1>a way that hopefully will be understandable and lo and

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<v Speaker 1>behold fun. So last week we talked about productivity and

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<v Speaker 1>we were talking about, um, what we could potentially talk

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<v Speaker 1>about this week. A lot has happened over the past week,

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<v Speaker 1>but nothing has kept us up at night the way

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<v Speaker 1>China has um. So this week we're going to be

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<v Speaker 1>talking about China. Some quick context here. The Shanghai Main

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<v Speaker 1>Stock Index is down thirty nine percent since it hit

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<v Speaker 1>its peak in June. And when China sneezes, everyone captured

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<v Speaker 1>a cold, so um emerging market stock markets have lost

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<v Speaker 1>two trillion dollars collectively just over the course of August,

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<v Speaker 1>So you know, this is a pretty big meltdown. Today

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<v Speaker 1>we're going to be talking about this and what it

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<v Speaker 1>means for the rest of us, and we're also going

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<v Speaker 1>to talk a little bit about China's economy. You know, how,

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<v Speaker 1>how would you guys describe what China's economy is like?

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<v Speaker 1>Socialism with Chinese characteristics was the way down described it.

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<v Speaker 1>But I gotta tell you I was there in May

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<v Speaker 1>and the Starbucks in the basement of our office in

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<v Speaker 1>Aging Wall was holping, absolutely hoping. And you know what else,

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<v Speaker 1>Grande plant cost about the same as it cost me

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<v Speaker 1>across the street this morning. So it seems like there's

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<v Speaker 1>a decent amount of private enterprise going on there now.

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<v Speaker 1>But also the government still has a ton of control.

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<v Speaker 1>To shed some more light on all these things, we've

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<v Speaker 1>got Kenneth Lieberthal from the Brookings Institution here to help us.

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<v Speaker 1>Ken thank you so much for joining us. A pleasure

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<v Speaker 1>to be here. Aki. Those numbers were crazy, and clearly

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<v Speaker 1>investors are semi panicking. So it's kind of weird because

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<v Speaker 1>we always think of China, or we've historically thought of

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<v Speaker 1>China as this place where you know, growth is nuts,

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<v Speaker 1>it's off the charts, they're stealing us jobs, are doing

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<v Speaker 1>all this stuff. What's changed and what's happening now? Well,

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<v Speaker 1>first of all, i'd encourage you not to attach too

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<v Speaker 1>much important to the fall off in china stock market.

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<v Speaker 1>That stock market went up by a hundred and fifty

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<v Speaker 1>percent over the last eighteen months, so the fall off

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<v Speaker 1>of thirty so it still has most investors way ahead

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<v Speaker 1>of the game. Number one, but number two, it clearly

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<v Speaker 1>was a bubble. It had to burst, and it burst,

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<v Speaker 1>and it still has a ways to go, probably before

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<v Speaker 1>you hit a real market determined uh, you know, equilibrium

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<v Speaker 1>rate there. The good news is that the stock market

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<v Speaker 1>is very little to do with the real economy in China.

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<v Speaker 1>While the stock market was going up, the real economy

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<v Speaker 1>was slowing dramatically. You know, the China stock market is

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<v Speaker 1>not like the US market or the markets in Japan

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<v Speaker 1>or Europe. The thing to focus on really is what

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<v Speaker 1>is going on in the management of China's economy. How

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<v Speaker 1>accurate are the numbers? So what do we know about

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<v Speaker 1>it and what are the implications of that for US

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<v Speaker 1>and UH. I think there are now a lot of

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<v Speaker 1>worries about the quality of management of the economy about UH,

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<v Speaker 1>the accuracy of the numbers coming out of China, and

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<v Speaker 1>since as the second largest economy in the world and

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<v Speaker 1>the largest trading partner of more than half the countries

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<v Speaker 1>in the world, if not mistaken, what happens in its

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<v Speaker 1>real economy is a great significance and we be happy

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<v Speaker 1>to explore that as you know, as you want to

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<v Speaker 1>get into it. Many people probably aren't used to seeing

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<v Speaker 1>the words Slowdown and China next to each other. Yet

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<v Speaker 1>if you look under the hood, it's been a couple

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<v Speaker 1>of years since they clocked ten, but even so seven

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<v Speaker 1>that's the official target. So many countries would kill for that.

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<v Speaker 1>You bet they would. I think we would kill for that.

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<v Speaker 1>China for years grew at ten percent on average real

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<v Speaker 1>growth of GDP per year, absolutely astonishing, especially when you

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<v Speaker 1>consider they're almost one point four billion people there. But

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<v Speaker 1>a lot of that growth was a combination of smart

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<v Speaker 1>economic management but also the having rapid growth by bringing

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<v Speaker 1>people in from the countryside to the cities, getting inserted

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<v Speaker 1>into the global supply chains so that you take high

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<v Speaker 1>value added products from Japan, from South Korea, from the

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<v Speaker 1>US and elsewhere and assemble them in China and then

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<v Speaker 1>sell them, then export them out of China, and you

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<v Speaker 1>build infrastructure to make all that quite efficient. So that's

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<v Speaker 1>not technologically innovative. Growth is not very high quality growth.

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<v Speaker 1>Catching up story, it's really catching up, and it's following

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<v Speaker 1>a model that a number of East Asian countries have

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<v Speaker 1>followed before, and they ran with that model. They ran

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<v Speaker 1>very effectively with us. They deserve a lot of credit

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<v Speaker 1>for it, but they've exhausted that model. That model assumed

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<v Speaker 1>that trying to keep pumping out exports, increasing the exports

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<v Speaker 1>at a substantial rate every year. But then the global

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<v Speaker 1>economy has slowed. Uh. Protection is sentiment on a lot

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<v Speaker 1>of places has increased, and there's no way that trying

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<v Speaker 1>to can grow by simply pumping out exports in larger

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<v Speaker 1>and larder large your volumes Secondly, it counted on a

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<v Speaker 1>huge labor surplus. You look at the age distribution of

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<v Speaker 1>the Chinese population, and from the time they started this

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<v Speaker 1>grossburg until two thousand and thirteen, they had more people

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<v Speaker 1>of working age than they had people either too young

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<v Speaker 1>or too old to work, than is typical of countries

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<v Speaker 1>at that stage and development. So they had a lot

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<v Speaker 1>of cheap labor coming in and they could afford to

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<v Speaker 1>pay them little, give them very few benefits, work them

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<v Speaker 1>very hard, and make a lot of money off of it.

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<v Speaker 1>And that is more or less the model they had

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<v Speaker 1>since done. Began the opening in seven so it's been

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<v Speaker 1>going for three decades. Yet I have the impression that's

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<v Speaker 1>certainly in the minds of most Americans and most Western

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<v Speaker 1>is that's all they still think China is. Yeah, and

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<v Speaker 1>it isn't. That's the point. It takes a while for

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<v Speaker 1>a changing reality to kind of catch up and how

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<v Speaker 1>people think about things. China actually is now entering a

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<v Speaker 1>period is working age population is shrinking in absolute terms

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<v Speaker 1>of shrinking. Does that have anything to do with their

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<v Speaker 1>one child pause? It's it's a kind of result of

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<v Speaker 1>their one child policy, which began back in the early nineties.

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<v Speaker 1>When this big growth spurt began, and they still don't

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<v Speaker 1>have a lot of kids too young to work. What

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<v Speaker 1>they're going to get a huge increase of is people

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<v Speaker 1>too old to work, and those are very expensive people.

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<v Speaker 1>And they went on a huge infrastructure binge, which made

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<v Speaker 1>a lot of sense. But they've now basically build out

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<v Speaker 1>the infrastructure that has high payoff. And so if you

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<v Speaker 1>want to keep investing in infrastructure, you're going to be

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<v Speaker 1>investing in things. You know, see proverbial bridge to nowhere,

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<v Speaker 1>and the bridge is still as expensive as a bridge

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<v Speaker 1>in the middle of New York, but you aren't making

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<v Speaker 1>money from it. And so this combination of things has

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<v Speaker 1>forced them to look at how to transition to a

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<v Speaker 1>to an innovative economy. During economy that's creating new technology

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<v Speaker 1>that's competing at the high end of the international economic

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<v Speaker 1>profiles you see, and have the low end assembly operations

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<v Speaker 1>and that kind of thing moved to places like Vietnam

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<v Speaker 1>and Bangladesh and India, Pakistan. It's it's interesting you should

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<v Speaker 1>say that. I mean, last weekend I did back to

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<v Speaker 1>school shopping for my son, and I bought him some clothes.

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<v Speaker 1>I probably shouldn't name the outlets I went to. But

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<v Speaker 1>it's the sort of thing you can imagine, and just

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<v Speaker 1>out of curiosity, when I got home, I looked at

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<v Speaker 1>the tags to see where all these things were made.

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<v Speaker 1>Not a one of them. And I went to three

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<v Speaker 1>name brand outlets, not a one of them was made

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<v Speaker 1>in China. It's Vietnam, Pakistan and Indonesia. Yet I'm sure

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<v Speaker 1>if I was doing that ten years ago, they all

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<v Speaker 1>would have been made in China. And how did this happen?

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<v Speaker 1>Yet somehow not permanent to popular consciousness here. Many of

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<v Speaker 1>the producers in these other countries now are actually Chinese

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<v Speaker 1>businesses that had moved their business out of China to

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<v Speaker 1>lower cost places to produce. So they're doing a shen

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<v Speaker 1>z and elsewhere exactly everyone not on the scale of Shenjum,

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<v Speaker 1>but that kind of thing. You know, there's a lot

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<v Speaker 1>of capital coming out of China, especially initially things like textiles,

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<v Speaker 1>because you know there's such a small margin in that

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<v Speaker 1>you and it's so labor intensive. You go where the

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<v Speaker 1>inexpensive labor and basic infrastructure is and that's for example

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<v Speaker 1>of Vietnam Um. So China is trying to shift the

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<v Speaker 1>problem is it's a very hard shift to do without

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<v Speaker 1>some significant disruptions. So, you know, we have this great

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<v Speaker 1>team here at Bloomberg and they regularly survey economists around

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<v Speaker 1>the world, announced them, you know, health asces each country

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<v Speaker 1>you're going to grow over the next year, over the

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<v Speaker 1>next two years, three years, And right now the expectation

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<v Speaker 1>is for China to grow six point nine percent this year.

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<v Speaker 1>Um So, like we said, this is way slower than

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<v Speaker 1>a ten percent average over over the past few decades.

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<v Speaker 1>Is six point nine percent really that bad? And earlier

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<v Speaker 1>you mentioned that, you know, some people don't really trust

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<v Speaker 1>the numbers that are coming from the Chinese government anymore.

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<v Speaker 1>You know, I've read some reports that maybe growth is

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<v Speaker 1>closer to six percent, Like, what does that really? What

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<v Speaker 1>does that look like? If you're you know, a normal

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<v Speaker 1>person in China talking to normal people in China, It

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<v Speaker 1>is a mixed back. People are worried about the economy.

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<v Speaker 1>Their unemployment figures are very low quality for a variety

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<v Speaker 1>of technical reasons, they're not very accurate. I think a

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<v Speaker 1>key thing here is that the statistical system in China

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<v Speaker 1>that we all rely on is really quite good at

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<v Speaker 1>measuring capital investment, at measuring output of industrial firms UH,

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<v Speaker 1>those kinds of things. The old economy, if you will,

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<v Speaker 1>UH is quite poor and measuring things like service sector

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<v Speaker 1>businesses UH and consumption. Those figures are collected less frequently

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<v Speaker 1>and they're usually subject to large adjustments. The system just

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<v Speaker 1>was geared to what the Chinese were most concerned about

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<v Speaker 1>over the last three decades. They're now trying to shrink

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<v Speaker 1>the relative portions of investment of exports and manufacturing in

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<v Speaker 1>their economy, and they're trying to grow the service sector

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<v Speaker 1>and especially household consumption as a demand driver since exports

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<v Speaker 1>can go longer do The trick part of the problem

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<v Speaker 1>with that is their own numbers are not high quality. Yeah,

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<v Speaker 1>I know, I know if people don't really trust the

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<v Speaker 1>numbers out of China depending on who you talk to.

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<v Speaker 1>So I'm just kind of curious to why that is.

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<v Speaker 1>We have always theories about numbers here as well. Of course,

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<v Speaker 1>it sounds like you're saying it is a little more

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<v Speaker 1>too of them. I think there is a little more

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<v Speaker 1>to her. I don't think the government is lying. I

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<v Speaker 1>think the government's reporting the best it's got. The problem

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<v Speaker 1>is the growth sectors of the economy are the ones

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<v Speaker 1>where their numbers aren't as good, and the sectors that

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<v Speaker 1>are ratcheting down are the ones that their numbers are

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<v Speaker 1>come out every month and they're actually pretty good, and

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<v Speaker 1>we know how to do adjustments and that kind of thing.

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<v Speaker 1>So it's a problem in figuring out what's really going on.

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<v Speaker 1>It appears that while manufacturing is clearly in the dumps,

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<v Speaker 1>the reality is it seems that wages actually are continuing

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<v Speaker 1>to go up. Well, the housing market is way off

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<v Speaker 1>from where it was. Real estate development, especially of residential

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<v Speaker 1>real estate, is way off, and that was a huge

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<v Speaker 1>driver in the Chinese economy. Uh So there's just a

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<v Speaker 1>lot that is shifting around in China. It's very hard

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<v Speaker 1>to get your arms around it. So I can I

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<v Speaker 1>are primarily US focused reporters, you know, I'm curious on

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<v Speaker 1>your thoughts. We can't really just tune out China, even

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<v Speaker 1>though we mostly focus on what's going on here in America. Um,

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<v Speaker 1>it's not only we can just block out China, especially

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<v Speaker 1>not with markets doing what they're doing. So for someone

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<v Speaker 1>who doesn't cover economics, why should the average American care

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<v Speaker 1>about what's going on in China beyond what it's doing

0:13:11.320 --> 0:13:16.160
<v Speaker 1>to their stock portfolios? We do roughly six billion dollars

0:13:16.160 --> 0:13:19.640
<v Speaker 1>of trade a year, and with China, so relative prices

0:13:19.679 --> 0:13:22.439
<v Speaker 1>of goods, relative competitiveness, and that kind of thing matter

0:13:22.520 --> 0:13:26.760
<v Speaker 1>a lot. Secondly, the Chinese are now very rapidly increasing

0:13:26.800 --> 0:13:29.960
<v Speaker 1>their direct investment in the United States. They're building factories,

0:13:29.960 --> 0:13:32.160
<v Speaker 1>they're investing in the energy sector, They're doing a lot

0:13:32.200 --> 0:13:37.240
<v Speaker 1>of things. Uh. If you live in San Francisco, pay attention,

0:13:37.480 --> 0:13:40.720
<v Speaker 1>or in New York, the Chinese are driving up your

0:13:41.120 --> 0:13:45.400
<v Speaker 1>real estate values by a lot, especially at the if you're,

0:13:45.640 --> 0:13:49.840
<v Speaker 1>for example, in the American automotive sector and you look

0:13:49.880 --> 0:13:52.760
<v Speaker 1>at let me take GM as an example. GM early

0:13:52.840 --> 0:13:56.840
<v Speaker 1>on got into China. For I think the better part

0:13:56.880 --> 0:13:58.880
<v Speaker 1>of a decade, maybe even a little longer than that,

0:13:59.240 --> 0:14:01.280
<v Speaker 1>China has been the bigest private center in the world

0:14:01.280 --> 0:14:04.760
<v Speaker 1>for GM. Well, North America has lost money every year.

0:14:05.320 --> 0:14:09.240
<v Speaker 1>China has been a huge profit center. Now, vehicle sales

0:14:09.280 --> 0:14:12.240
<v Speaker 1>in China are slowing and in some cases actually the

0:14:12.280 --> 0:14:16.440
<v Speaker 1>market is actually going down. If you're paying GM retired

0:14:16.480 --> 0:14:20.240
<v Speaker 1>workers pensions, it's money from China in a real sentence

0:14:20.320 --> 0:14:23.360
<v Speaker 1>that is making that more affordable. So given all of that,

0:14:23.480 --> 0:14:25.560
<v Speaker 1>let me just ask you to step back in time

0:14:25.600 --> 0:14:28.160
<v Speaker 1>and we should mention to our listeners that you were

0:14:28.480 --> 0:14:32.920
<v Speaker 1>the China guy at the National Security Council during the

0:14:33.320 --> 0:14:37.920
<v Speaker 1>Clinton administration. China's economy is so much bigger now than

0:14:37.960 --> 0:14:41.080
<v Speaker 1>it was then. What would happen now? I mean, you're

0:14:41.080 --> 0:14:43.120
<v Speaker 1>a sleep in bed, you get a call from one

0:14:43.160 --> 0:14:46.240
<v Speaker 1>of your aids. They've just reset the reference rate for

0:14:46.280 --> 0:14:49.760
<v Speaker 1>the yuan, or they're doing this with the stock market,

0:14:49.960 --> 0:14:52.040
<v Speaker 1>and there's been a shift in this and the Premier

0:14:52.120 --> 0:14:54.800
<v Speaker 1>has just said X. What happens? Do you get the

0:14:54.840 --> 0:14:57.520
<v Speaker 1>call say, come in brief the president at seven o'clock

0:14:57.640 --> 0:15:00.800
<v Speaker 1>and he or in the future, maybe she's is ken

0:15:00.880 --> 0:15:02.680
<v Speaker 1>what the heck is going on? I thought we had

0:15:02.680 --> 0:15:04.840
<v Speaker 1>this figured out. I thought it was the second biggest

0:15:04.840 --> 0:15:07.200
<v Speaker 1>economy in the world on the way to be the biggest.

0:15:07.240 --> 0:15:09.440
<v Speaker 1>I thought they had it all figured out. What goes

0:15:09.560 --> 0:15:14.200
<v Speaker 1>through the minds of policymakers during a period like this way?

0:15:14.240 --> 0:15:18.160
<v Speaker 1>The US does have so much at stake. It's a

0:15:18.280 --> 0:15:21.800
<v Speaker 1>very good question. It's very important when you get that

0:15:21.880 --> 0:15:24.480
<v Speaker 1>kind of calm, that you have very clearly in your

0:15:24.480 --> 0:15:27.720
<v Speaker 1>mind what really matters short term and long term to

0:15:27.760 --> 0:15:29.880
<v Speaker 1>the US and what is just one of these things

0:15:29.920 --> 0:15:33.160
<v Speaker 1>that's a blip. The stock market in China in terms

0:15:33.440 --> 0:15:37.440
<v Speaker 1>of its economic impact on the US is frankly a blip.

0:15:37.960 --> 0:15:39.920
<v Speaker 1>And you want to say that, You want to say,

0:15:39.960 --> 0:15:42.120
<v Speaker 1>you know, the stock market doesn't tell you much about

0:15:42.160 --> 0:15:45.120
<v Speaker 1>what's going on in China. And as you all know

0:15:45.200 --> 0:15:49.040
<v Speaker 1>better than I do, markets act on sentiment very often

0:15:49.080 --> 0:15:52.160
<v Speaker 1>as much as they act on hard numbers and deep analysis,

0:15:52.200 --> 0:15:55.560
<v Speaker 1>you know. And what we've seen is a classic example

0:15:55.600 --> 0:15:58.680
<v Speaker 1>of that. Where people were worried about China. They're worried

0:15:58.720 --> 0:16:01.640
<v Speaker 1>about emergant markets are over are all don't quite know

0:16:01.640 --> 0:16:04.400
<v Speaker 1>what's going on, and suddenly it looks like a bubble

0:16:04.480 --> 0:16:07.640
<v Speaker 1>has burst in China, and Chinese are losing their shirts

0:16:07.640 --> 0:16:11.920
<v Speaker 1>in the market, and so markets everywhere react dramatically. You

0:16:11.920 --> 0:16:13.800
<v Speaker 1>won't be able to say to the President and to

0:16:13.840 --> 0:16:16.680
<v Speaker 1>the National Security Advisor and the National Economic Advisor and

0:16:16.760 --> 0:16:20.760
<v Speaker 1>so forth, that's not what's going on. You see this sentiment,

0:16:22.160 --> 0:16:26.520
<v Speaker 1>but the real economic significance of it is small. What

0:16:26.520 --> 0:16:30.600
<v Speaker 1>what I would be more concerned about is not, for example,

0:16:30.640 --> 0:16:34.000
<v Speaker 1>the stock market went down, but what the Chinese leadership

0:16:34.080 --> 0:16:36.800
<v Speaker 1>did when they saw it going down, because they then

0:16:36.840 --> 0:16:41.760
<v Speaker 1>intervened in almost startling fashion. I would say that the

0:16:41.920 --> 0:16:44.520
<v Speaker 1>really big problem is here. A lot of people are

0:16:44.520 --> 0:16:47.480
<v Speaker 1>going to feel that the reforms that Chi ching Ping,

0:16:47.600 --> 0:16:50.760
<v Speaker 1>the Chinese leaders, has put right up on the wall

0:16:50.800 --> 0:16:53.360
<v Speaker 1>and said this is where we're headed. It didn't take

0:16:53.480 --> 0:16:57.360
<v Speaker 1>much to knock them back a good peg and resort

0:16:57.440 --> 0:17:01.200
<v Speaker 1>to very non market approaches and do it, frankly, at

0:17:01.240 --> 0:17:03.560
<v Speaker 1>the wrong time, so they were bound to fail. He

0:17:03.600 --> 0:17:06.560
<v Speaker 1>didn't wait till the market was near as natter and

0:17:06.600 --> 0:17:09.439
<v Speaker 1>then try to provide confidence and move it up. It

0:17:09.520 --> 0:17:11.280
<v Speaker 1>was still in the middle of a fall, so they

0:17:11.520 --> 0:17:14.919
<v Speaker 1>expended something like two hundred billion dollars in addition to

0:17:15.000 --> 0:17:17.600
<v Speaker 1>all kinds of other interventions. They put out roughly two

0:17:17.960 --> 0:17:21.600
<v Speaker 1>billion dollars to stabilize that market, and then the market fell,

0:17:22.320 --> 0:17:24.840
<v Speaker 1>so a key. You know, when Ken was talking earlier

0:17:24.920 --> 0:17:29.960
<v Speaker 1>about demographics and a shrinking labor market, did that make

0:17:30.000 --> 0:17:33.560
<v Speaker 1>you wonder about your own homeland? Yeah, I was about

0:17:33.680 --> 0:17:37.480
<v Speaker 1>to say this sounds a lot like Japan. Well, in

0:17:37.520 --> 0:17:42.600
<v Speaker 1>a sense resonates with Japan. China's age distribution by I

0:17:42.600 --> 0:17:45.880
<v Speaker 1>believe two thousand and thirty will be roughly what Japan's

0:17:46.000 --> 0:17:48.800
<v Speaker 1>is now. And as you know, Japan, it's a very

0:17:48.960 --> 0:17:53.360
<v Speaker 1>old society, uh, in terms of age distribution, the big

0:17:53.400 --> 0:17:57.679
<v Speaker 1>differences China doesn't have nearly now or perspectively even by

0:17:57.760 --> 0:18:01.359
<v Speaker 1>two thousand and thirty, the per capita wealth that Japan

0:18:01.480 --> 0:18:05.240
<v Speaker 1>has what it has had, and we don't know the

0:18:05.280 --> 0:18:08.200
<v Speaker 1>future on this, what it has had is very dynamic

0:18:08.240 --> 0:18:11.439
<v Speaker 1>economic decision making, you know, I used to say, and

0:18:11.480 --> 0:18:16.040
<v Speaker 1>it was true experience supported this that one of the

0:18:16.080 --> 0:18:19.240
<v Speaker 1>things you could admire about the Chinese leadership, regardless of

0:18:19.280 --> 0:18:21.560
<v Speaker 1>what you think about the nature of their system, is

0:18:21.600 --> 0:18:24.480
<v Speaker 1>they did not duck problems coming up when you talk

0:18:24.600 --> 0:18:27.000
<v Speaker 1>to them. They talked about the future. And let me

0:18:27.000 --> 0:18:28.960
<v Speaker 1>tell you, if you pointed out problems that you don't

0:18:29.040 --> 0:18:31.879
<v Speaker 1>understand how big those problems are. And here are some

0:18:31.960 --> 0:18:33.840
<v Speaker 1>other things, and let me tell you what we're gonna

0:18:33.840 --> 0:18:37.119
<v Speaker 1>do about them, you know, and we'll experiment. But fundamentally

0:18:37.160 --> 0:18:39.200
<v Speaker 1>we've got to move in this direction, and they would

0:18:39.200 --> 0:18:41.520
<v Speaker 1>do it. You look over the ensume a few years

0:18:42.119 --> 0:18:45.240
<v Speaker 1>and they do it even more than you thought. Big

0:18:45.320 --> 0:18:48.119
<v Speaker 1>question and for Japan that has not been the case,

0:18:48.400 --> 0:18:53.119
<v Speaker 1>you know, sincerely and uh. And the question is whether

0:18:53.240 --> 0:18:57.280
<v Speaker 1>China is going to get tripped up as it goes forward,

0:18:57.400 --> 0:18:59.960
<v Speaker 1>And frankly, no one knows the future. It would be

0:19:00.080 --> 0:19:03.080
<v Speaker 1>nice if we did, but no one does. But these

0:19:03.160 --> 0:19:08.240
<v Speaker 1>last few weeks have I think raised more doubts and

0:19:08.320 --> 0:19:12.200
<v Speaker 1>more concerns abroad, and I suspect in China too than

0:19:12.320 --> 0:19:14.520
<v Speaker 1>we are accustomed to With China. That's not a good thing.

0:19:14.880 --> 0:19:17.959
<v Speaker 1>So we used to worry about Japan and then Aki

0:19:18.080 --> 0:19:21.760
<v Speaker 1>when Japan's big growths but finished and we thought it

0:19:21.800 --> 0:19:24.040
<v Speaker 1>was just a temper everything in the country would get

0:19:24.080 --> 0:19:26.240
<v Speaker 1>back on its fate and go back to what it

0:19:26.320 --> 0:19:28.720
<v Speaker 1>was doing in the late nighties and the early nineties.

0:19:29.600 --> 0:19:31.800
<v Speaker 1>That didn't happen, but that was a cave of the

0:19:31.800 --> 0:19:35.480
<v Speaker 1>world economy because China came online and its economy began

0:19:35.560 --> 0:19:40.120
<v Speaker 1>growing and growing and growing. Do we need a new China? Well,

0:19:40.480 --> 0:19:44.359
<v Speaker 1>what is it? Frankly, is too soon to tell what's

0:19:44.400 --> 0:19:46.960
<v Speaker 1>going to happen to China. They may pick up where

0:19:46.960 --> 0:19:48.800
<v Speaker 1>they are going to get to tempercent again, but they

0:19:48.800 --> 0:19:51.760
<v Speaker 1>can sustain five to seven percent for the that's fifteen

0:19:51.840 --> 0:19:56.400
<v Speaker 1>years on average, and transition to higher quality growth, less

0:19:56.480 --> 0:19:59.720
<v Speaker 1>environmental impact and all that. Uh, that will be a

0:20:00.080 --> 0:20:03.160
<v Speaker 1>be a huge contribution to global economic growth. The next

0:20:03.160 --> 0:20:08.840
<v Speaker 1>big comer possibly will be India. They're already. No, their

0:20:08.920 --> 0:20:14.800
<v Speaker 1>per capita GDP is miniscule compared to China's. Their infrastructure

0:20:14.920 --> 0:20:18.840
<v Speaker 1>is almost non existent compared to China's. So you know,

0:20:18.920 --> 0:20:21.439
<v Speaker 1>India is not there by a very long shot, and

0:20:21.480 --> 0:20:24.840
<v Speaker 1>therefore you have this huge growth potential in India. It's

0:20:24.880 --> 0:20:26.800
<v Speaker 1>really great you could be with us today and we

0:20:26.920 --> 0:20:30.600
<v Speaker 1>loved your insights. It's great to hear from someone who

0:20:30.720 --> 0:20:34.960
<v Speaker 1>has studied China both academically and has been involved at

0:20:34.960 --> 0:20:40.359
<v Speaker 1>the nexus of US policy banking on it. Well, all right,

0:20:40.400 --> 0:20:43.119
<v Speaker 1>that's it for us today. Thanks again for listening to

0:20:43.240 --> 0:20:46.359
<v Speaker 1>Bloomberg Benchmark. We will be back next week and until

0:20:46.400 --> 0:20:48.960
<v Speaker 1>then you can find us on the Bloomberg terminal as

0:20:49.000 --> 0:20:52.399
<v Speaker 1>well as Bloomberg dot com. We are also on iTunes,

0:20:52.800 --> 0:20:55.320
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0:20:55.480 --> 0:20:58.560
<v Speaker 1>more listeners can find us and let us know what

0:20:58.600 --> 0:21:01.640
<v Speaker 1>you thought of the show. We love feedback here um.

0:21:01.720 --> 0:21:03.600
<v Speaker 1>You can talk to us and follow us on Twitter

0:21:03.800 --> 0:21:07.240
<v Speaker 1>at at the Eto seven, at Tori Stowell with one

0:21:07.440 --> 0:21:09.720
<v Speaker 1>L in the middle, and at Dan Moss d C.

0:21:10.640 --> 0:21:19.639
<v Speaker 1>Thanks again, and toward the goodness I can exploring is