China Bubble
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Episode 85
Featuring Anne Stevenson-Yang
Demetri Kofinas speaks with China expert Anne Stevenson-Yang about the imminent dangers facing global financial markets in the event of a break in the renminbi-dollar peg.

In this week’s episode of Hidden Forces, Demetri Kofinas speaks with China expert Anne Stevenson-Yang about the imminent dangers facing global financial markets in the event of a break in the renminbi-dollar peg.

 

In the years leading up to the Great Financial Crisis, it was generally understood that the Chinese were artificially depressing the value of the RMB vis-à-vis the USD, in order maintain an abnormally large current account surplus that would be recycled into western financial markets in the form of government securities, equities, real estate, etc. By recycling so much of the proceeds from trade back into foreign markets, the CCP managed to maintain a lower exchange rate than it otherwise would be, were it to convert those dollars back into renminbi. In other words, China was suppressing the value of its currency. Bob Wittbrot calls this recycling process the “Boomerang Greenback.” This dynamic worked extraordinary well until the world went into recession around the time of the great financial crisis, which marked a peak in China’s current account. The CCP also met the crisis by expanding bank lending, easing credit, and fueling investment even further. In addition, by maintaining interest rates and the cost of capital well-below the rate of inflation during China’s multi-decade boom, the CCP has managed to keep households’ share of the economy at low enough levels to induce an overall high-savings rate for the country (by having less disposable income than would otherwise be expected for an economy this size, the average Chinese citizen spends less on consumption than he or she otherwise would, absent financial repression). This has been an additional shot in the arm for investment.

 

At some point post-2008 (judging from their foreign exchange reserves, this appears to have started somewhere around the start of 2014) China went from artificially suppressing the value of its currency to artificially supporting it. Unlike a country like Thailand, however, whose currency peg famously broke under the speculative attacks of foreign investors during the 1997-98’ Asian Financial Crisis, the Chinese have managed to avoid such a scenario on account of maintaining a closed capital account (exercising tight capital controls). Coupling that with a current account surplus, the CCP has been able to obtain the hard currency it has needed in the last 5 years or so in order to buy the various inputs required to run their economy and keep the cycle going.

 

The problem is that China generated a tremendous amount of money and credit since the GFC, in particular, and therefore risks a major devaluation in the value of the RMB should the country no longer be able to get the foreign exchange reserves it needs through a sustainable current account surplus. They are, at the moment, running a negative current account, a negative fiscal balance (of roughly 9% of GDP), their foreign exchange reserves are declining for the first time ever, while the country’s external debt has doubled in the last five years, increasing by an average of $70 billion per quarter since the beginning of 2017. More than half of this debt is short-term, which means it needs to be constantly rolled over. Up until the Fed paused it’s tightening cycle, the rising interest rates coupled with new tariffs on Chinese goods were creating a pincer-like effect on China’s economy and on its ability to maintain its peg, forcing it to fund more of its dollar needs through borrowing at ever higher interest rates.

 

China cannot maintain a credible peg between the RMB and the USD when its money supply is growing, by some calculations at more than 10x that of the United States over the last 10 years. This is a fundamental problem of accounting. If China were completely self-sufficient – if it had access to sufficient energy, food, base metals, etc. within its own borders – then its inability to obtain dollars would not be an issue. The problem is that it is desperately short these commodities as inputs for its manufacturing and domestic consumption. The recent drop in the price of oil helped them out a bit, but it has been rising again, just as China’s oil imports are surging. The country recently surpassed the United States as the world’s largest crude importer. For a nation with dwindling foreign exchange reserves, this is not a good trend. And, it isn’t even clear what the real FOREX numbers are in China. Official foreign exchange reserve put that number at $3.2 Trillion, but US treasury tick data shows that China owns a little bit less than $1.2 trillion in US Treasuries, which according to some people, suggests that their overall FOREX position is closer to $2 Trillion.

 

Meanwhile, the U.S. trade deficit fell to $49.4 billion in February, the lowest level since June 2018, and well below what economists had expected. A 20.2% drop in imports from China was the main driver behind the nearly 3.4% improvement in the trade deficit in February, data from the Commerce Department showed. The trade deficit has narrowed for two straight months now.

There seems to be a growing sense of awareness among many in China that all is not well with the country’s capital account. We have seen numbers suggesting that illicit capital has been flowing out of China (whether we are talking about precious stones, Bitcoins, or other means available to the wealthier citizens of China) in noticeably higher amounts since the mini-devaluation in August 2015. This is consistent with what we often see in countries ahead of a devaluation, default, or some other financial disturbance. Do China’s wealthy know something we don’t?

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

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Episode 43
Featuring Elizabeth C. Economy
Episode 43
Featuring Elizabeth C. Economy

Anne Stevenson-Yang co-founded J Capital Research in late 2007 and is J Capital's Research Director. Her coverage areas include solar, internet, medical devices, property, some consumer and direct-sales names, and China's macro-economy. Anne was formerly co-founder of a group of Online Media Businesses called Blue Bamboo Ventures and also founded and operated a CRM software company, Clarity Data Systems, and a publishing company whose flagship magazine is City Weekend. Over 25 years in China, Anne has also worked as an industry analyst and trade advocate, heading the US Information Technology Office and, 1993 through 1997, the China operations of the US-China Business Council. Anne authored the 2013 monograph China Alone: China's Emergence and Potential Return to Isolation for the National Autonomous University of Mexico. The book set argued that China historically repeats a cycle of expansion and retreat. It can be downloaded in English in PDF form here.

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Economy
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Economy
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Episode 83
Featuring Raghuram Rajan
Demetri speaks with the former head of the Bank of India, Raghuram Rajan, on issues ranging from central banking and interest rate policies, to alternative theories of money, geopolitics, populism, and the systemic risks facing the global economy, including a discussion about leveraged loans, junk bonds, and emerging markets.

In this week’s episode of Hidden Forces, Demetri Kofinas speaks with Raghuram Rajan, about the future of capitalism and the global economy amid rising rates of populism and disintegration in the global order.

 

Raghu Rajan was named by Euromoney magazine as Central Banker of the Year in 2014 while serving as the 23rd Governor of the Reserve Bank of India. Dr. Rajan has also held the position of Chief Economist at the IMF and is currently a professor of finance at the University of Chicago Booth School of Business. He is the author of several books, including his most recent, The Third Pillar: How Markets and the State Leave the Community Behind.   

 

In this conversation, Demetri engages Raghu on a wide range of issues, from central banking and interest rate policies to geopolitics, populism, and the systemic risks facing the global economy, including a discussion about leveraged loans, junk bonds, and emerging markets. The two talk about the demographic challenges confronting countries around the world, particularly developed nations with large unfunded liabilities and debt levels that exceed, in many cases, one-hundred percent of gross domestic product. They go into great detail about the Chinese political economy and the challenges it faces amid prospects for slower growth, while simultaneously exploring the challenges it creates for the United States amid a disintegrating global order. Demetri asks Raghuram Rajan if he thinks that the market’s confidence in central banks’ abilities to stem deflation is misplaced or if extraordinary measures, including the outright monetization of government deficits and bailouts of non-financial companies, will come into play during the next downturn. He also gets the former Governor’s opinion on Modern Monetary Theory (MMT), regulations, immigration, and how to reform education for the 21st century.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

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Episode 43
Featuring Elizabeth C. Economy
Episode 43
Featuring Elizabeth C. Economy

Raghuram Rajan is the Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth. He was the 23rd Governor of the Reserve Bank of India between September 2013 and September 2016. Between 2003 and 2006, Dr. Rajan was the Chief Economist and Director of Research at the International Monetary Fund.

 

Dr. Rajan’s research interests are in banking, corporate finance, and economic development, especially the role finance plays in it. The books he has written include The Third Pillar: How the State and Markets are leaving Communities Behind forthcoming, 2019, I do What I do: On Reform, Rhetoric, and Resolve, 2017, and Fault Lines: How Hidden Fractures Still Threaten the World Economy, for which he was awarded the Financial Times-Goldman Sachs prize for best business book in 2010.
 

Dr. Rajan is a member of the Group of Thirty. He was the President of the American Finance Association in 2011 and is a member of the American Academy of Arts and Sciences. In January 2003, the American Finance Association awarded Dr. Rajan the inaugural Fischer Black Prize for the best finance researcher under the age of 40. The other awards he has received include the Infosys prize for the Economic Sciences in 2012, the Deutsche Bank Prize for Financial Economics in 2013, Euromoney Central Banker Governor of the Year 2014, and Banker Magazine (FT Group) Central Bank Governor of the Year 2016.

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Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.

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China Relations
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China Relations
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Episode 71
Featuring James Mulvenon
James Mulvenon is an expert on Chinese military affairs, cyber issues, and commercial espionage. He has been investigating and writing about Chinese telecommunications giant Huawei, for years, which makes him the ideal person to speak to about the recent arrest of the company’s CFO and its implication for US-China trade talks.

In this week’s episode of Hidden Forces, Demetri Kofinas speaks with James Mulvenon, Vice-President of Defense Group Inc.’s Intelligence Division and Director of DGI’s Center for Intelligence Research and Analysis. Dr. Mulvenon is an expert on the Chinese military and Chinese cyber issues and has published widely on Chinese military affairs, party-army relations, C4ISR, and nuclear weapons’ doctrine and organizations. He’s a regular commentator on the Chinese military, cyber warfare, and Chinese industrial espionage, all of which we discuss in today’s, hour-long conversation.

 

This episode was prompted by the recent arrest of telecommunications giant Huawei’s CFO Meng Wanzhou during her transit through Vancouver airport on December 1st, 2018. Meng is currently out on bail, awaiting the service of a formal extradition request from the United States on charges related to Huawei’s alleged evasion of Iranian sanctions. James has been investigating and writing about Chinese commercial espionage, and in particular about Huawei, for years, which makes him the ideal person to speak to about this ongoing, diplomatic drama and its implication for US-China trade talks. Will Trump’s hard-nosed, no-holds-barred negotiating style work to level the playing field between these two countries? More importantly, is it time to acknowledge that our multi-decade long effort to integrate China into the neo-liberal world order has failed and that a new strategy must be developed to deal with a more obstinate and adversarial China? Considering the important role played by information technology in the 21st century, any strategy for confronting China must also deal with the country’s cyber capabilities and its use of commercial espionage in the service of champion companies like Huawei. These are just some of the topics we consider in today’s conversation.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

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Episode 43
Featuring Elizabeth C. Economy
Episode 43
Featuring Elizabeth C. Economy

James Mulvenon is currently General Manager of SOS International’s Special Programs Division and was previously Vice-President of Defense Group Inc.’s (DGI) Intelligence Division and Director of DGI’s Center for Intelligence Research and Analysis (CIRA). Dr. Mulvenon is an expert on the Chinese military and Chinese cyber issues, and has published widely on Chinese military affairs, party-army relations, C4ISR (command, control, communications, computers,


intelligence, and reconnaissance), and nuclear weapons doctrine and organizations.
Among his professional affiliations, Dr. Mulvenon is a founding member and current President of the Cyber Conflict Studies Association, is presently a member of the National Committee for U.S.-China Relations, and was a term member of the Council on Foreign Relations between 1999 and 2004. He is a regular commentator on both the Chinese military and cyberwarfare in major U.S. print and TV media.


Dr. Mulvenon's book, Soldiers of Fortune (Sharpe, 2001) details the rise and fall of the Chinese
military's multi-billion dollar international business empire. His more recent publications include Chinese Industrial Espionage: Technology Acquisition and Military Modernization (co-authored with William C. Hannas and Anna B. Puglisi; Routlege, 2013) and “PLA Computer Network Operations: Scenarios, Doctrine, Organizations, and Capability,” (in Roy Kamphausen, et al. Beyond the Strait: PLA Missions Other Than Taiwan, NBR, 2009). Dr. Mulvenon holds a Ph.D. in political science from the University of California, Los Angeles, and attended Fudan University in Shanghai from 1991-1992.


Dr. Mulvenon has testified before the Commission before and is the lead researcher on a forthcoming report sponsored by the Commission on cloud computing in China.

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Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

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Markets
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Episode 68
Featuring David R. Kotok
David Kotok discusses a wide-range of issues currently facing the global economy including trade, the US Dollar, European monetary policy, corporate bonds, as well as what markets he thinks are most at risk from interest rate tightening and as protectionist measures introduce new anomalies into the American economy.

In this week’s episode of Hidden Forces, Demetri Kofinas speaks with David Kotok, co-founder and CIO of Cumberland Advisors. David Kotok’s articles and financial market commentaries have appeared in The New York Times, The Wall Street Journal, Barron’s, and other publications.   

 

This is a fascinating conversation that spans a wide-range of issues currently facing the global economy, as well as subjects and themes stretching as far back as 5th century Athens. Demetri asks David Kotok for his opinion on a series of topics including trade, the US Dollar, European monetary policy, as well as what markets he thinks are most at risk as the Fed continues down its path of tightening and as protectionist trade measures introduce new anomalies into the American economy. Kotok also shares his experience investing during the turbulent years of the 1970s and how the lessons he learned during that decade can be applied today.

 

David also gives his outlook for credit markets, specifically the riskier areas of the corporate bond market that include leveraged loans and middle market lending. Investors will find this conversation helpful, as they adjust their strategies to protect themselves against some of the non-linear impacts of government policies while still positioning themselves and their clients to profit from the rising tide of economic growth.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

David R. Kotok co-founded Cumberland Advisors in 1973 and has been its Chief Investment Officer since inception. He holds a B.S. in economics from The Wharton School of the University of Pennsylvania, an M.S. in organizational dynamics from The School of Arts and Sciences at the University of Pennsylvania, and an M.A. in philosophy from the University of Pennsylvania.

 

Mr. Kotok’s articles and financial market commentaries have appeared in The New York Times, The Wall Street Journal, Barron’s, and other publications. He is a frequent contributor to Bloomberg TV and Bloomberg Radio, Fox Business, and other media.

 

Mr. Kotok has served as Program Chairman and currently serves as a Director of the Global Interdependence Center (GIC), whose mission is to encourage the expansion of global dialogue and free trade in order to improve cooperation and understanding among nation states, with the goal of reducing international conflicts and improving worldwide living standards. Mr. Kotok chaired its Central Banking Series and organized a five-continent dialogue held in Cape Town, Chile, Hong Kong, Hanoi, Milan, Paris, Philadelphia, Prague, Rome, Santiago, Shanghai, Singapore, Tallinn, and Zambia (Livingstone). He has received the Global Citizen Award from GIC for his efforts.

 

Mr. Kotok is a member of the National Business Economics Issues Council (NBEIC), the National Association for Business Economics (NABE) and served on the Research Advisory Board of BCA Research. Mr. Kotok has served as a Commissioner of the Delaware River Port Authority (DRPA) and on the Treasury Transition Teams for New Jersey Governors Kean and Whitman. He has also served as a board member of the New Jersey Economic Development Authority and as Chairman of the New Jersey Casino Reinvestment Development Authority. He has authored or co-authored four books, including the second edition of From Bear to Bull with ETFs and the newest book Adventures in Muniland.

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China
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Episode 65
Featuring Dinny McMahon
It is difficult for Westerners to appreciate the scope of China’s development, and this is because of the way in which the country allocates capital and generates credit. In this conversation, we examine how the Chinese model may be leading to the greatest economic and political crisis in modern history.

In this week’s episode, Demetri Kofinas speaks with China expert Dinny McMahon, who spent ten years as a financial journalist in China, including six years in Beijing at The Wall Street Journal and four years with Dow Jones Newswires in Shanghai. Demetri and Dinny discuss how Chinese malinvestment, massive debt burdens, and a population that is aging faster than anywhere else in the world has created the conditions for the worst economic and political crisis in modern history.

 

It has often been argued that the Chinese economic model may offer the best prototype for how humans should organize politically, in the 21st century. For Westerners, it’s difficult to appreciate the scope of China’s development, and this is because of the way in which the country allocates capital and generates credit.   

 

Unlike western economies, which are built around liberal, democratic norms of free-market capitalism, China’s economy operates more like a one-billion person, multinational conglomerate. This model has allowed the Chinese economy to grow rapidly; it has done this by leveraging massive amounts of capital that it reinvests into real estate projects and spare industrial capacity, with the expectation of ever-increasing economic growth. This leverage can be witnessed, most clearly, in the rapid growth of the country’s private and public debt.

 

Bank liabilities in China have grown at an astonishing rate over the last twenty-five years. From 2009 to 2011 alone, assets in China’s banking system have expanded by 77 percent - a total of 7.6 trillion dollars over just a three-year period. The impact of China’s loan growth can be seen in the sky rocking prices of Chinese real estate, the overcapacity of Chinese factories, and the pollution of China’s once pristine environment. Cognizant of these excesses, Chinese officials have been trying to reform the country, by reigning in investment and stemming corruption. But even the best efforts of Chinese authorities cannot fix the country’s broken demographics. China’s population is aging faster than anywhere else in the world. In 2015, the country had seven and a half working-age adults to support every senior citizen. In fifteen years, that ratio will drop to 4:1 and by 2050, there will be only two adults to support every man and woman in retirement.    

 

It is the fear of Chinese officials that the country will grow old before it grows rich, falling victim to the so-called middle-income trap, mired in debt and saddled with decades of malinvestment, air pollution, idle factories, and broken promises.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

Play
Episode 43
Featuring Elizabeth C. Economy
Episode 43
Featuring Elizabeth C. Economy

Dinny McMahon spent ten years as a financial journalist in China, including six years in Beijing at The Wall Street Journal, and four years with Dow Jones Newswires in Shanghai, where he also contributed to the Far Eastern Economic Review. In 2015, he left China and The Wall Street Journal to take up a fellowship at the Woodrow Wilson International Center for Scholars, a think tank in Washington DC, where he wrote China's Great Wall of Debt. Dinny is an Australian who currently lives in Chicago, where he works at MacroPolo, a think tank focused on Chinese economic issues.

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Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.

Dinny McMahon | Debt, Dysfunction, and the End of the Chinese Miracle
China Politics
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Episode 43
Featuring Elizabeth C. Economy
China Politics
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Episode 43
Featuring Elizabeth C. Economy
In just five years, Xi Jinping has seized all the most important leadership positions in the Chinese government. By centralizing institutional power, he may thrust China into a new imperial age. Here, Elizabeth Economy discusses Xi’s top political, economic, and foreign policies and the impact that this new empire may have on the world.

We may be witnessing the birth of a new imperial China, one that was brought about by the charismatic machinations of the nation’s leader, Xi Jinping. At the present juncture, it’s not exactly clear what Xi’s excessive centralization of power means or how his disruptive new policies will impact the rest of the world, but we can say one thing with certainty — international power dynamics are already starting to shift in response.

 

Xi’s tenure truly began in 2012, when he became the General Secretary for China’s Communist Party, which is the sole governing party in China. Today, he also serves as the head of the state and the head of the military. Taken as a whole, these are all of the most important leadership positions in the Chinese government. If that’s not enough, earlier this year, in a highly controversial move, Xi did away with presidential term limits. So, he may be president for life.

 

Because of the near-total control that Xi wields, he is able to keep both his adversaries in the government and the citizens he presides over on a tight leash.

 

He eliminates his dissenters using divisive anticorruption campaigns, he oversees massive propaganda operations rooted in fabricated news and events, and he denies his people access to information by censuring the internet behind a Great Firewall.

 

Although many Western nations may balk at such practices, they have their benefits. Ultimately, Xi’s illiberal maneuverings often allow China to outcompete nations that cling to liberal values. This fact forces world leaders to contend with a question that cannot be ignored: Can liberal nations keep pace with Xi’s imperial policies and ensure that power structures remain stable?

 

In today’s episode, Elizabeth Economy, author of The Third Revolution: Xi Jinping and the New Chinese State, joins Demetri Kofinas for an extensive exploration of Jinping’s top political, economic, and foreign policy priorities and the impact that his policies will likely have on the rest of the world.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

 

Elizabeth Economy is the C. V. Starr senior fellow and director for Asia studies at the Council on Foreign Relations.

 

Dr. Economy is an acclaimed author and expert on Chinese domestic and foreign policy. Her recently released book, The Third Revolution: Xi Jinping and the New Chinese State, (Oxford University Press, 2018) analyzes the contradictory nature of reform under President Xi Jinping. She is also author of By All Means Necessary: How China's Resource Quest is Changing the World (Oxford University Press, 2014) with Michael Levi, and The River Runs Black: The Environmental Challenge to China's Future (Cornell University Press, 2004; 2nd edition, 2010; Japanese edition, 2005; Chinese edition, 2011). Dr. Economy has published articles in foreign policy and scholarly journals including Foreign Affairs, Foreign Policy, and the Harvard Business Review; and op-eds in the New York Times and Washington Post, among others.

 

Dr. Economy serves on the board of managers of Swarthmore College and the board of trustees of the Asia Foundation. She was also on the advisory council of Network 20/20 and the science advisory council of the Stockholm Environment Forum. She served as a member of the World Economic Forum (WEF)’s Global Agenda Council on the United States from 2014 to 2016 and served as a member and then vice chair of WEF’s Global Agenda Council on the Future of China from 2008 to 2014. She has taught undergraduate and graduate level courses at Columbia University, Johns Hopkins University's Paul H. Nitze School of Advanced International Studies, and the University of Washington's Jackson School of International Studies.

 

Dr. Economy received her BA from Swarthmore College, her AM from Stanford University, and her PhD from the University of Michigan. In 2008, she received an honorary doctor of laws degree from Vermont Law School.

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Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.

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Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.

Chinese Markets
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Chinese Markets
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Episode 16
Featuring Anne Stevenson-Yang
Demetri Kofinas speaks with Anne Stevenson-Yang about the Chinese economy. Total debt in China has surpassed 300% of GDP. In the first 7 years since the financial crisis, bank liabilities in the Chinese financial system grew by nearly $15tn. How long can the country go without a recession? What will the fallout be when it finally does?

In this week’s episode of Hidden Forces, host Demetri Kofinas speaks with Anne Stevenson-Yang. Anne is the co-founder of J Capital Research, which conducts ground-up, primary research for institutional money managers on stocks, the Chinese economy, and the Chinese financial system. She is also the author of the recent book China Alone: China's Emergence and Potential Return to Isolation, in which she sets out her views on the Chinese economy and political system, arguing that China historically repeats a cycle of expansion and retreat.

 

In today’s conversation, we take a trip around the world to the land of China. Our conversation concerns itself with the contemporary changes in Chinese society that came after the death of Chairman Mao. What was life like in China before Nixon and Kissinger made their famous visit in 1971? Why did modernization and reform in China begin after 1978? Who was responsible for the opening in China? What was the role of Deng Xiaoping, and why is he remembered as "the architect” of a new brand of thinking that combined socialist ideology with pragmatic aspects of market economics - a system the Chinese call "Socialism with Chinese Characteristics?”

 

What changes did the Chinese experience between 1979 and 1989, during the implementation of the economic reforms of Deng Xiaoping? How did these reforms culminate into the protests in Tiananmen Square in 1989? What was the Chinese government’s reaction to the uprisings? The Chinese response differed significantly from the Soviet reaction to the fall of the Berlin Wall in the same year. The Chinese government decided to follow a different path after the massacres in Tiananmen Square, by turbocharging economic development. Explicit targets were set for GDP growth. There was selective liberalization of the Chinese economy, particularly in Chinese real estate. China placed a huge emphasis on building its manufacturing industries and on acquiring hard currency through exports. The Chinese financial system remained highly centralized and China's currency, the renminbi, carefully controlled. All this was used towards re-investment with an almost single-minded commitment to hitting the government's GDP targets.

 

Some have called the rise of China in the late 20th century a miracle. It is more appropriate to call it "the Chinese miracle." The size of the Chinese economy has increased more than 25-fold in the last 25 years. Thirty years ago, the Chinese economy measured in at less than 5% of US GDP in exchange terms (perhaps as low as 2%). By 1992, the Chinese economy was only 6% of US GDP. By 2000 China weighed in at roughly 12-15% of US GDP. Today, China boasts a Gross Domestic Product that is roughly 60% that of United States. Loan Growth in the Chinese financial system has averaged 16 percent in the last 20 years. Loan growth in China reached an all-time high of 35% percent of GDP in June of 2009, amidst the greatest economic contraction since the Great Depression. Total debt in China recently surpassed 300% of GDP. This makes the finances of Western nations like the United States, France, and the United Kingdom seem frugal by comparison. In the first 7 years since the financial crisis, bank liabilities in the Chinese financial system grew by nearly $15 trillion dollars. This is the near equivalent of the consolidated size of all US commercial banks. China has used more cement in 3 years of massive overbuilding than the U.S. employed in all of the 20th Century. Hundreds of thousands of meters of unsold residential real estate sit empty around the country. There is a massive amount of industrial overcapacity in China. Chinese ghost cities have become almost as cliche as the fake Paris', Venice, and Dubai's created within mainland China. The Chinese economy is in terrible need of a recession. But the Chinese government cannot afford the recession that it desperately needs. Nevertheless, it cannot avoid the crisis that has been building in the Chinese financial system. How will the citizens of China, its trading partners, emerging markets and developed economies react when the reckoning finally arrives. How much longer can the Chinese government continue to postpone the inevitable?

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation at @hiddenforcespod

 

Play
Episode 43
Featuring Elizabeth C. Economy
Episode 43
Featuring Elizabeth C. Economy

Anne Stevenson-Yang co-founded J Capital Research in late 2007 and is J Capital's Research Director. Her coverage areas include solar, internet, medical devices, property, some consumer and direct-sales names, and China's macro-economy. Anne was formerly co-founder of a group of Online Media Businesses called Blue Bamboo Ventures and also founded and operated a CRM software company, Clarity Data Systems, and a publishing company whose flagship magazine is City Weekend. Over 25 years in China, Anne has also worked as an industry analyst and trade advocate, heading the US Information Technology Office and, 1993 through 1997, the China operations of the US-China Business Council. Anne authored the 2013 monograph China Alone: China's Emergence and Potential Return to Isolation for the National Autonomous University of Mexico. The book set argued that China historically repeats a cycle of expansion and retreat.

 

@doumenzi

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Sed egestas, ante et vulputate volutpat, eros pede semper est, vitae luctus metus libero eu augue. Morbi purus libero, faucibus adipiscing, commodo quis, gravida id, est. Sed lectus. Praesent elementum hendrerit tortor. Sed semper lorem at felis. Vestibulum volutpat, lacus a ultrices sagittis, mi neque euismod dui, eu pulvinar nunc sapien ornare nisl. Phasellus pede arcu, dapibus eu, fermentum et, dapibus sed, urna.

Morbi interdum mollis sapien. Sed ac risus. Phasellus lacinia, magna a ullamcorper laoreet, lectus arcu pulvinar risus, vitae facilisis libero dolor a purus. Sed vel lacus. Mauris nibh felis, adipiscing varius, adipiscing in, lacinia vel, tellus. Suspendisse ac urna. Etiam pellentesque mauris ut lectus. Nunc tellus ante, mattis eget, gravida vitae, ultricies ac, leo. Integer leo pede, ornare a, lacinia eu, vulputate vel, nisl.

Suspendisse mauris. Fusce accumsan mollis eros. Pellentesque a diam sit amet mi ullamcorper vehicula. Integer adipiscing risus a sem. Nullam quis massa sit amet nibh viverra malesuada. Nunc sem lacus, accumsan quis, faucibus non, congue vel, arcu. Ut scelerisque hendrerit tellus. Integer sagittis. Vivamus a mauris eget arcu gravida tristique. Nunc iaculis mi in ante. Vivamus imperdiet nibh feugiat est.

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