Kyle Bass on the Chinese economic model

[China's] economy has given them the confidence globally to be more geopolitically assertive in their dealings.  It's given their military the ability to be much more assertive in the South China Sea.  And it's given Xi [Jinping] an aura that he's made the west think that somehow his economic model is superior to that of western capitalism.  And it's all a facade.  The whole thing is a mirage.  The whole thing is made up with the printing press, keeping a closed capital account, and hoping the world doesn't notice it.

~ Kyle Bass, RealVision interview at the 6:15 mark, "China's Crisis and the Coming Global Recession," March 1, 2019

Ed Yardeni and China's expected soft landing

The Chinese are doing everything to keep their economy growing.  Maybe it's a soft landing, but it's certainly not a hard landing over there.

~ Ed Yardeni, as appeared on CNBC, April 3, 2014

Australian Prime Minister Julia Gillard on the global commodity boom

There's no advice to me that would cause me concern about Chinese demand collapsing.

~ Julia Gillard, Australian Prime Minister, "Unease in Australia," Bloomberg Markets, November 2011

"Warren Buffett of China" Yang Liu, on Buffett and China

I'm 45 years old, he's 80. My compounded annual gross return is 30% a year. His isn't. My returns are seven times over the past 15 years. Is that a miracle? It is.

This coming 10 years is the golden age. You must own China.

~Yang Liu, manager, Atlantis China fund, Barron's, May 7, 2011

China analyst says ride the real estate bull

The long-term structural trend for China's real estate is up, so long as its economy continues to grow at 8% to 10% per year. 1.3 billion people, increasing affluence and more rural-to-urban migration can only mean higher demand for housing and generally higher real-estate prices. At any given time, some areas may be overpriced or have an element of speculation, but is there is no nationwide real-estate bubble in China.

~Kevin Gin, head of Greater China Property Research, Yuanta Securities in Hong Kong, "Mulling a Play by Superman", Barron's.com, April 23, 2011

Marc Faber on the China bubble

naIt may be a painful adjustment, but in the near term there is no danger of an implosion in China. If I was negative about China and the credit implosion in China, I would short the Chinese banks.
~ Marc Faber, Hong Kong-based investment adviser and fund manager who publishes the Gloom, Boom & Doom report, "Eclectica's Hendry Turns Greece Profit Into China Failure Bet," Bloomberg, January 9, 2011

Jim Chanos on the China property bubble

Dubai, at the peak of its building boom, had 240 square meters of property under development for every $1 million in national GDP. In urban China today that ratio is four times as high. We've seen this movie before. It was Dubai a couple of years ago, Thailand and Indonesia during the Asian crisis of the late '90s, and Tokyo in 1989. This movie has a bad ending.

~ Jim Chanos, "Chanos vs. China," Fortune, December 6, 2010

Adrian Day on the commodity "super-cycle" (2010)

China is at the takeoff phase.

[...]

China being twenty percent of the world’s population is probably going to take longer than the ['super-cycles'] of Japan and Korea, which were both 10 years. The good news for commodity investors is that once China matures and [its] demand for resources plateaus, behind [it] you’ve got India.

[...]

Supply simply cannot keep up with demand.

[...]

I have no doubt that at some point over the next five or ten years we are going to have one or two or three vicious corrections. [citing the nearly $100 oil price plunge in 2008 and 2009 as an example] [But] if you really understand the long-term fundamentals, then you just need to stick with it and ride out those corrections.

~ Adrian Day, "'Just Stick With It': Commodity 'Super-Cycle' Will Last Decades, Day Says," Yahoo! Finance tech/ticker, November 22, 2010

Alan Abelson builds the skeptic's case against China

In a kind of backhanded recognition of the country's status as a growing economic colossus is the fear, voiced occasionally by market mavens, that should the perpetual China boom go bust, the result would be widespread havoc. As it is, of course, Corporate America and investors here are wild about China.

All of this is a prelude to recommending a piece on China by Ian Johnson in the Sept. 30 issue of the New York Review of Books. Johnson, now based in Beijing, is a former Wall Street Journal writer and bureau chief (we never met him), who has collected a number of awards, including a Pulitzer. His take on China is not only informed but extraordinarily revelatory and compelling.

Early on, he points to "the spectacular misperceptions about China, a key one being that the government has been privatizing the economy." Actually, he says, what it has been doing is turning state-owned enterprises into shareholder-owned companies but—and this is rather a big but—with the government holding a controlling stake. And, he adds, "even today, almost all Chinese companies of any size and importance remain in government hands."

Throughout the '90s and into this decade, he recounts, prospectuses for IPOs of Chinese companies written by Western lawyers fudged the fact that the Communist Party's Organization Department, rather than the company, would remain in control of all personnel decisions. The ability to hire and fire is scarcely trivial. And major Chinese companies, Ian relates, have Party secretaries who manage them in conjunction with the CEO.

China has changed and for the better in many ways, Ian feels, such as largely withdrawing from what he dubs the "personal lives of Chinese citizens," permitting them to "pursue their own ambitions and goals as long as they avoid the high crime of directly challenging the party."

For all the economic growth achieved by what Ian calls China's "conventional mercantilist policies" in the past 30 years, he's skeptical those policies will continue to work in the future. What's badly lacking, in his opinion, is a "more open economic and social system that can foster innovation and creativity." One badly needed reform on this score, he argues, would be to pry loose the Party's iron grip on businesses. But don't hold your breath waiting for that to happen.

The tight ties in China between politics and economics have "created giant state-owned companies that have had spectacular success on foreign stock markets." Those big companies, he goes on, are giants, but merely because of their size. Essentially, they're little more than partially privatized quasi monopolies, not very nimble or inventive or even influential in global markets, except "when trying to buy natural resources."

Ian bemoans the fact that after Tiananmen, the Chinese government "channeled huge sums into better dorms for students, housing for teachers, labs for scientists and junkets for administrators" to little avail. This may have satisfied material demands and lured foreign universities hoping to set up programs in China. But it hasn't produced a bumper crop of "creative and innovative" students that Chinese companies can draw on.

"Even among China's elite universities," Ian claims, the academic level, in most cases, is on a par with one of our "mediocre community colleges."

While economic reform hasn't quite come to a halt, says Ian, the state sector is regaining lost ground in part because of Beijing's policy of "recentralizing control." The powers that be lack any impetus to reform. That would suggest that an awful lot of folks, businessmen and investors alike, in our blessed land who can't wait to get a piece of the Chinese miracle might wake up one day more than a little disappointed.

~Alan Abelson, Barron's magazine, "The Bad News Bulls", September 25th, 2010

Marc Faber on the risks of the Chinese bubble bursting

First of all, the Chinese stock market is still well below its peak in 2007. Secondly, the stock market in China is lower than in August 2009, and is lower, as is the Hang Seng Index, than in November 2009. In other words, we have essentially a boom in properties not reflected in the stock market. I think maybe the stock market is giving us a signal that not all is right in China. And, all I am maintaining is that if the bubble bursts in China, you don't want to be in say, Australian stocks, in the Australian dollar, in commodities and industrial commodities like copper and nickel and aluminum, because the demand for commodities in a scenario of the Chinese bubble bursting is going to go down very substantially.

There's a risk now, it may not happen right away, it may only happen next year, but an investor should keep this in mind-- that when a bubble bursts in China, and for sure, if it doesn't burst now it will burst in 6 months, and if it doesn't burst in 6 months it will burst in 12 months or in 18 months, but the longer it doesn't happen the worse it will be.

~ Marc Faber, editor, Gloom, Boom and Doom Report, Bloomberg TV interview, April 21, 2010

Alan Greenspan on the China bubble

There are significant bubbles in Shanghai and along the coastal provinces, but there’s some of that going back into the hinterlands as well. Remember that the bursting of the bubble by itself is not a big catastrophe. We had a dot-com bubble, it burst, and the economy barely moved.

~ Alan Greenspan, "Greenspan Calls Treasury Yields ‘Canary in the Mine'," Bloomberg.com, March 26, 2010

Felix Zulauf: "China is in a dangerous situation"

China is in a dangerous situation. Credit growth is the one factor that all the bubbles that burst had in common. Because China isn't an open economy, the bubble there can probably keep inflating longer than it otherwise would have. But the Chinese can't escape the laws of economics. If China's bubble bursts, it would cause a second hit to the world economy, and that would be terrible...

Where would China be without the huge fiscal programs its government put in place? The numbers already are beginning to come down. Export statistics show diminished growth. China's net exports -- exports minus imports -- are at 8% of GDP. But gross exports are one-third of GDP, so the dependence on exports is much higher than economists say. You can keep the engine running for a while, if you have the finances. If you can't sell the products, you fill up inventories. But that is not a policy for the long term.

~ Felix Zulauf, "New Strategies for a New Era," Barron's, January 18, 2010

Shaun Rein on the non-bubble Chinese economy

Betting against China in 2010 is a bad mistake for investors and companies alike... The Chinese government also has no qualms about overseeing the market and has not been run by Ayn-Rand-loving free marketers like Alan Greenspan, who seemed to believe that no government intervention at all was best.... China is not in imminent threat of collapse, and investors and companies are wise to stay involved with it, as [Jim] Rogers argues.

~Shaun Rein, Harvard graduate and founder and managing director of China Market Research Group, "Jim Chanos Is Wrong: There Is No China Bubble," Forbes.com, January 11, 2010

Sovereign wealth funds play bubbles

It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose.

~ Lou Jiwei, Chairman China’s sovereign wealth fund, China Investment Corporation, "Wealth Fund Muscles Up as Markets Recover," Reuters, August 28, 2009