Fraser Howie on the Chinese economy: They'll have a Lehman moment.
(Photo:English: View of Canton c. 1800.
Date circa 1800
Author Unknown Chinese artist
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Fraser Howie, author, Red Capitalism: The Fragile Financial Foundations of China's Extraordinary Rise; writes for SCMP, Lowy Institute, et al.; in re: The game of chicken last week with the Decatur. Has Xi Jinping ceded control of the face of China controlling the world? In some ways, acting predictably; in the case of the Interpol chief, you couldn’t make that up for a novel. Chinese have had it their way for a long time and aren't getting their way any more, and are acting rattled.
Their economy has been slowing for a long time; they'll have a Lehman moment. Stress in the economy; have grown addicted to credit. Bloomberg article last week about the big hack, that goes right to the heart of Chinese manufacturing. Struggling, or should be, to find a new model – but they’re so used to running rings around others, esp the US, they’re fighting back in the ways that they do. The very mention of the notion of Hong Kong independence gets Beijing rattled, you have completely intemperate behavior.
For the CCP, loyalty is all that matters, no matter how ridiculous it appears; when that doesn’t occur, they become irrational. No longer talk of deleveraging their economy; have staked their legitimacy on keeping the economy growing. The private sector exista at the tolerance of the State sector. As free as it appears, everything is at the discretion of the state; now have a leader focussed on a very strong state. Siphoning money off to overseas is not approved. Not everything is nationalized, but all of private enterprise sees that, “I’ve got to fall in to line.”