Preventing a Financial Crisis: Why China Won't Open Its Economy (w/ Chris Balding)

Chris Balding, Associate Professor at Peking University, discusses the intersection of finance and politics, China trade policy, and China's big data challenges. Balding drills down into the deleveraging of Chinese debt, and sheds light on how the Chinese leadership views the risk of a future financial crisis. Filmed on May 29, 2018 in New York.

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Preventing a Financial Crisis: Why China Won't Open Its Economy (w/ Chris Balding)

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[ivancheong]

US rejected MoneyGram being sold to ANT, US Reason: National Security
China rejected MasterCard/ Visa in China, China Reason: National Security or Market Access Restriction?

[ovndfbs]

He was a professor and living at Shenzhen.
After this interview came out, he will be fired and his visa will be cancelled.

[RealVisionFinance]

No more waiting for the content to make it here weeks or even months after it was shot and no missing out on insights and information that move markets. Better yet.... No advertisements! Join today!

[Rach]

Very interesting talk by a well informed China insider. My only question is how the CCP can successfully prevent a major financial crisis from occurring as debt continues to pile up across consumer, banking, public (i.e., local governments), and some corporate sectors. Try as they might to control events and keeping it from happening, there comes a point where some major series of catastrophies (e.g., a collapse in consumer faith in the survival of their property equities across the major cities, a series of closely timed large bank failures) will exceed even the party's and central bank's ability to keep the deck of cards from collapsing in on itself.

[noahlockwood]

Q: Where do you find your keys? A: The last place you look.

[sunwm]

The professor has some very accurate and in-depth view of China economy. He is absolutely right about one thing - Beijing will prevent a financial crisis with all costs. For people out there wishing for a sudden collapse of China, sorry folks, it won’t happen. CCP will spread all the financial risks, debts or suffering to its common people. It’s a simple trick to pull on its people. And the best part is no matter what the government do, people will cheer and appraise it even though they could suffer financially or be starved to death. Chinese population is very obedient and easy to manipulate. It makes the government’s job to prevent any crisis much easier. Plus they have the control of the media, the banks, the police, the military, the schools, the hospitals. You name it they have it. So no, China won’t fall overnight. CCP will survive for a long time. And the people will go with whatever the decision the CCP makes. They will go down together like in a grinder.

[chunglee]

Here is a person really understand China

[linmal]

Kick them out of the WTO for breaching conditions of entry!

[BrandonAEnglish]

Saying that it is a "once in a century event, Beijing will do everything they can from allowing it to happen, " and "it would change everything we know about China overnight" doesn't actually offer any legitimate reasoning as to why there won't be a financial crisis in China. Actually, there arguably already is a financial crisis in China that has increasingly become worse over the past few years and seems to be accelerating. Wages for skilled workers are higher than what companies are willing to pay, housing prices are absolutely astronomical and still skyrocketing, various food prices are exactly the same as more "expensive, " developed countries and in some cases higher, the majority of middle class workers barely make enough to cover their bills, and families have to pool their money just to get a car or down payment to buy a house for their son (or sometimes daughter).


I have no idea when the feces is going to strike the fan in China, but I can tell you this much: there are a lot of crazy, out of control things getting worse and, ironically related to his point, I believe it will be the Party's very own "control" that causes it to come apart.

[brianingram]

Another narrative from a New Zealand perspective.


New Zealand goods exports to China have quadrupled since a free trade agreement was signed and entered into force in 2008. China is now New Zealand’s largest trading partner, with two-way trade valued at over NZ$28 billion in 2018. NZ has a trade surplus of $5.1 billion with China.

Tariffs are now eliminated for over 97% of New Zealand goods exports to China. In 2018, all exports other than dairy (some products remain subject to tariffs and safeguards that will be phased out by 2024), and a small number of products that were excluded from the FTA are eligible for tariff-free access into China.

Better access to high quality Chinese goods for New Zealand businesses and consumers. In 2018, all imports from China are eligible for tariff-free access.
Improved access to Chinese markets for New Zealand service providers, including future-proofing rules that ensure service exporters in some sectors will benefit from any improved access that China grants to other FTA partners.
Faster and easier temporary entry to China for business people through improved visa processing.
Greater cooperation in areas such as sanitary and phytosanitary measures and technical barriers to trade.
A clear process for settling disputes related to the FTA.
Dedicated agreements on environment and labour that provide for more effective discussion and cooperation.
Reduced red tape, including an easier and less costly route for New Zealand exporters of certain electrical and electronic equipment products to comply with Chinese certification requirements.

[RonzigtheWizard]

One thing that is missing in every discussion about Chinese debt is the huge amount of income that China is creating with its Belt and Road program. Granted there is the possibility of a large portion of that projected income being rather shakey but it is well protected by the assets that guarantee the loans. Those guaranteed assets if they become Chinese properties such as ports or railways will more than cover the lost income if repayment fails. Those assets would become perpetual sources of income as well as strategic values.

[TamBeauProductions]

Can someone please explain to me how the tariffs affect the farmland in California of which China owns 90%?

[mfk]

The parallels between China today and Japan in the late 1980s are striking.

[lance]

Don’t trade with Communist China, trade balance goes down and technology thief goes away. Factories and jobs stay in America.

[jasonleetaiwan]

Beijing will do everything possible to prevent a financial crash to their currency, but that doesn't mean it won't happen. It is a once in a century or maybe once every 70 years event, but it is still coming because in the last 2 years things seem to be getting more and more desperate for them. There doesn't seem to be any way they can stop it and even if they do hold on for a few more years, the situation will be even worse then.

In 2016, it looked really bad with the capital outflow, but they stabilized in 2017. Then in June 2018 with the start of the trade war, it started going badly again with even more corporate debt being added. Now things are even worse than 2016.

This RMB apocalypse is coming no matter how much they don't want it to happen.

[obijuan]

China’s payment market is on wechat, everyone uses their phone to pay for products and services, they don’t use credit cards. In fact in many large cities don’t accept cash or cards. These cities are more advanced than US cities.

[cratonin]

Should Beijing would allow it's financial. Crisis to get out of control, what will happen to its economy?

[marcduchamp]

What kind of economy that doesn’t open reciprocal businesses to their partners in trade? You can’t have cake and eat them all and not get noticed

[MindandQiR]

We wish him luck, particularly safety!

[Ballistichydrant]

What happened yesterday with the NY Fed?