Indicators of a Chinese Collapse

Source: Daily Reckoning, by James Rickards

I recently returned from a weeklong trip to China, specifically Shanghai and Nanjing. In Shanghai, I met with a group of forty of the top China economists, mostly from major Chinese banks and brokers, at an annual event called the China Chief Economist Forum. I was a keynote presenter at the forum to 400 invited guests made up of major institutional investors and wealth managers in China.

In Nanjing, I met with provincial government officials and economic development experts. They are building a high-tech research center of excellence called UTown on the southern outskirts of the city. I was even permitted to enter a top-secret Huawei laboratory used for testing new internet data-mining algorithms. Huawei is closely affiliated with the People’s Liberation Army — and is banned from most business in the United States because they are suspected of hacking and espionage aimed at U.S. critical infrastructure.

In addition to our proprietary models and analytic techniques — including complexity theory, causal inference, and behavioral psychology — I have always been of the view that there is no substitute for foreign travel and face-to-face contact with both experts and everyday citizens in the countries we are trying to understand.

That’s why I also took every opportunity I could find to speak with drivers, clerks, bellhops, and passersby. That’s not as difficult as it sounds. In a country like China, few citizens have traveled abroad and they are often eager to practice English conversation with a real American.

People you meet in the street are often a better source of information than the experts in the hotel conference rooms. I asked one student if people in China were trying to get their money out of the country.

His eyes lit up and he replied, “Yes, everybody I know!”

Why are the Chinese moving their money out of the country? Because they know, as I’ll explain below, the yuan could lose its value any day now.

China’s Hurricane Strength Headwinds

The process of connecting the dots between the political, economic, and social forces buffeting China is complicated. By using technical analysis and information gathered on the ground, we are able to cut through the haze of political rhetoric and propaganda coming from Washington and Beijing. Then we bring you a reasoned estimate of what the near future holds in store for markets as the world’s two largest economies — China and the U.S. — work out their differences for better or worse.

In 2016, we know that China, the world’s second largest economy, defied predictions of a slowdown by unleashing massive amounts of government spending and adding mountains of debt to stimulate its economy.

But we expect 2017 may turn out very differently. China is encountering hurricane force headwinds that will cause its nonsustainable debt-driven policies to reach a critical state.

Read More Here: Indicators of a Chinese Collapse – The Daily Reckoning



Categories: Financial/Societal Collapse and Dependence

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