Andrew Collier, Orient Capital Research: Trump is essentially asking China to change the entire basis of its economy; China washes its hands of the whole matter. I think [the dispute] will go on for years.

Oct 04, 04:03 AM

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Photo: The “Guangzhou powerhouse” a century ago: Tang-Lang St., Canton

Andrew Collier (@acollier), managing director of Orient Capital Research in Hong Kong and author of Shadow Banking and the Rise of Capitalism in China, discusses the state of the Chinese economy, and Hong Kong and Chinese attitudes on current trade friction. Larry Kudlow yesterday reported that after the signing of the USMCA, the EU, including the UK, Mexico, Canada, and Japan, are looking to speak with one voice to correct China’s [malfeasant] trading practices.

Kudlow was dreaming: Europeans are desperate for growth and don't want to offend China; expect very little agreement here, and China is banking on this. The Chinese economy: exports are up healthily, and imports are up 20%; there's a bit of weakness in the export powerhouse of Guangdong Province, which accounts for 28% of exports. Weakness is related to trade friction.

China will borrow $3 billion—from Western investors? and why? Yes. China hasn’t defaulted; it has $3 trillion of overseas forex; if they can get a good interest rate, they'll borrow. Domestically, China has a huge amount of debt; this is a strategy for bringing in capital.

Trump is essentially asking China to change the entire basis of its economy; China washes its hands of the whole matter. I think it’ll go on for years. Chinese have figured out that Trump won't change; that the only way to fix it is for US small businesses to suffer and put political pressure on Washington. . . . Booming Chinese tech sector – Baidu and TenCent, e.g..

After tightening credit for a while, now opening spigots again to keep employment up – but a lot of the funds will go to SOE (state-owned enterprises), which does not much for the economy. Xi is dealing with a lot of domestic problems.