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tv   [untitled]    September 12, 2012 9:30pm-10:00pm EDT

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hello and welcome to crossfire a lot of us stopped at the two thousand and twelve meeting. to discuss the future of this organization and particularly the destiny of the chinese economy i'm joined by jim rogers he's author of a gift to my children we also have william powell he's a senior writer at time magazine and david pulling he's editor at the financial times ok to start with you if you look at financial media television and print
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everyone's talking about how will china turn out will be some kind of soft landing or is it in the we don't know area right now the problem is you're watching financial media they don't know we just have to have something to talk about. if you watch you have to read your investors so you know what do you have to understand what he said well i would tell you what's going on in china what's going on in some parts of the chinese are going to have a very hard landing some parts of the chinese are going to continue to boom if you're in property in china you're probably going to suffer badly if you deal with the west you're going to suffer but if your water treatment or agriculture or pollution you're going to boom. i would agree broadly with that i think. consumer goods and the consumer sector is still actually fairly fairly healthy
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because income growth in china is still holding up. fairly well i think i think where where i would. possibly defend financial media is that. i will tell you. one who have been. taken aback a bit by by the death of this love that i didn't expect i thought i thought when they said seven half seven percent that they meant it and had the policy tools to achieve that now i'm not so sure but what does it mean ok we're looking at political implications for the for china itself we are in a leadership change which we'll talk about in a few minutes or for the global economy or for the middle class consumer in china why why the slowdown why people to talking about it so much i mean most countries in the world would love to have seven percent growth well. they were talking about it because the world has now got used to china as a kind of an engine of growth and so if it starts to sputter we get very nervous
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but we should really be surprised i mean as you say the chinese government actually told us that the economy was going to slow and in a sense they've actually engineered a slowdown to some extent which i think is very important is that he says he needed to this isn't just an accident they have. purposely slowed down if you just read the financial terms for the last three years they've china has said over and over we're going to slow things down we've got a property bubble and we have too much inflation they broadcast it very loudly if you didn't know it was coming you haven't been reading the financial. you would have no right what so it's no surprise ok bill but why is it important for the global economy because that's the whole world's talking about it we've got used to the engine china being the manufacturing engine of the world well talk to any iron ore producer in australia and they'll tell you why it's important to the world china had become particularly for for raw materials and energy hello russia part of the reason boiling gasper oil prices in particular have been so high over the last
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decade is because of the voracious demand coming from china demand that is now somewhat tapering but it's. still worth taking china for granted. but well we take choice already has to be we understand you should listen to those government numbers and never pay attention you really believe any government numbers whether it's russia or germany or america or australia i think all of us i guess you have to as an investor you take it but there they're all major fault they're made up china has no idea what their economies do and i happen to know it's come i have to tell you it's down in they don't know what you know i know this lot they know how to slow it down yes yes but is it seven and a half or seven point eight who knows who cares i know that china's been growing dramatically in the last thirty years that's all i need to know but china can have recessions why can't i have a recession that's agreed davit do we expect too much from the chinese economy i mean just look at the eurozone look at the dollars alone some economists have have
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learned to rely on the chinese economy i mean look at mongolia on its doorstep and mongolia we were talking about six months ago as ready for this kind of multi-year maybe multi decade boom but that's all based on race is trying to demand believe me i think will come back i mean they're not going to stop i mean this is really all we know are we in a cycle right now is systemic is it structural well i think it's a bit of both i mean i think china has signaled that it wants to slow down from rapid ten percent growth that investment led growth you know has kind of problem side effects and you know kind of a natural end and that they've signaled in part in the press or from the west but they've signaled poly for their own purposes that they want to slowly kind of migrate the economy over to more domestic demand which will be is literally about a timeframe here i mean it's not a growth this year or next year but over the next ten years this is what the chinese looking at is about the next ten years and this is where. this is
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a cyclical slump but it has systemic implications because we're in the midst and we'll get to the transition a bit later but we are in the midst of a once in a. decade leadership transition and what what i have heard from any number of sources in in beijing and foreign c.e.o.'s who meet with high level economic policy makers in beijing is that there is a real. tongue war underway in beijing at the highest levels about what what paulson's kind of time we as an it well or as some people would say a perfect storm well it's it's the inevitable timing because you're going to have a new set of leaders and what they need to figure out is who's going to win the statist stead those who back the status quo who are largely state who i would describe the statist versus those who tend to be a little bit younger who realize that china needs a serious dose of economic reform again and that's the that's the battles argument
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is it about policy it was about politics or all those really toxic mix of both they also know that they have some serious problem overheating they have if they've been capitalist enough to know that overheating is very bad for an economy where there's a property bubble or too much inflation or whatever they knew they had to do something and so they did it they set out to do it this struggle is going on i think in the end it really doesn't matter because in the end mousy tell you it's not coming back to china you can write that down it's not coming back they're not going to be hard to read rich i don't see any more no but that's not what i meant i'm not i'm not making the argument that it's a type of reform you're talking to us and well it's reform versus status quo the status quo with or aligned with the state owned companies exactly as the state owned companies who think looking backward think that's a loser reckon we posted if we're not broken bones not broken by fix it exactly and
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plus to the state we're having a downturn outside the property sector it's for the most part of those four it's the foreign foreigners fault it's it's europe it's the americans these people can't manage their own affairs and we're going to stop them in the second as a right and then yeah right i don't disagree with that which is this really an opportunity to shift gears to look at infrastructure issues inside of china i mean they have a vast domestic market the american. can't get their act together the europeans can't get their act together so want to look inward well that's i think what they're doing i mean they've had their go west policies you've got cities. away from the coast beginning to grow much faster more even growth now across china i mean we've heard about chongqing even before we heard about bush in life because that was a kind of you know a symbol of an inland city that had become to grow because they built you know that railway lines the dog vast road lines of the public. network the still probably
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some way to go and the sewerage there's all sorts that they can build i mean remember what we think we tend to forget is the parallel with japan which i think is quite interesting because in a sense and japan. got to where japan is now which is kind of a wealthy western country became a tourist stagnant you know but if you but i'm looking back in history now it got to where it is before people kind of noticed i mean people sort of noticed japan in the eighty's and it became a threat people notice china when it's at one six it depends how you measure it us g.d.p. per capita not eighty percent of us g.d.p. per capita why because it's huge and that's why so in a sense trying to been found out earlier in the whole kind of holding that i was out earlier well part of your point about what can happen now they have a vast amount of infrastructure they still have to build sewage pollution i mean the pollution investment in their people as well education of clean air is
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investing in people the people like breeding that i would probably live in china if it weren't so polluted they don't like it either they don't like the water problems they don't like any of those crops so this and they've saved a lot of money for a rainy day so when it starts raining they're going to spend that money how much is the economy now driven by expectations. markets you know there have been some good years there we've seen like the brics countries do very well and then they start having a little bit of a slump expectations by home by the west why are you. they do indigenous population they certainly don't want to go back to the old days they want to continue to grow i think the question is better to turn to the political leadership in china it's because of the success over the past thirty years that expectations have been built in which is why i say if they truly screw up on the policy front. the consequences . of their own success their leadership well you could you could put it like that but i mean you know chinese leaders know that one of the two or three and areas the
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biggest mistake that they have is making people better off tomorrow than they were today and as jim says there's more to it than that the chinese people now have shown that they want not just economic growth but they want clean air they want safe friends and they want less corruption maybe they may not hope for no corruption but they certainly won't last very comparing china to the west since two thousand and we've seen the western euro zone the americans they've pretty much cleaned out their tool box in how to fix things what about the chinese what's in their tool box they've got vested in safe savings they've gotten has vast reserves that they save for a rainy day to repeat myself they have plenty of money if the world goes to down the tubes china is going to be the last down the hole because they've got so much money saved up and they're going to spend a lot of analysts the americans totally screwed there are only things they can do of course i mean they can they can play around with interest rates or reserve requirements which they've built up. so they can reverse that and then they will
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let you know more credit out i mean of course there are contradictions within the economy and you know there are no performing loans beginning to emerge from the last great stimulus package and that's i think what they've been a bit cautious about and really ramping up the. contrast that with america has non-performing loans i mean the governments of california is going bankrupt illinois is going bankrupt america you probably and this is this is a key point i think i think we're we're. where particularly consumers of. i would say television financial news media had states my good with the exception of this program of corollary ited states i said. that that you cannot compare. what is happening in china now to what happened to the crisis in the us it's just completely different on so many levels. that. bill hold that thought we're going to go to a short break and after the actual break we'll continue with our discussion on
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china state department. store. if you want to. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize everything you thought you knew you don't know i'm tom harpur welcome to the big picture. wealthy british style. spotlight.
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market why not come to. find out what's really happening to the global economy with my stronger for a no holds barred look at the global financial headlines tune into cars a report on our. i am.
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in. the past to remind you we're talking about the prospects for the chinese economy. jim if i can go to you if we look what's going on in china it's not look at the outside world right now but every economy on this kind of trajectory has extensive growth and in intensive growth it just happens to happen in china. there are so many external factors that just normal and we should get everyone should get used to it. became the most successful country in the twentieth century but in the nineteenth century as we were rising we had
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a horrible civil war we had fifteen pressures with we had very few human rights we had massacres in the streets you could buy and sell congress you could still buy and sell cars as you can. see for the nineteenth century but now america was a mess a huge mess it went bankrupt in two thousand nine hundred seven just on the verge of. china's going to have many problems it's not the end of the world if you see problems in china don't stop getting involved with china get more involved financial journalist what do you think. that i mean i think you know china has now the built and still the big problems or along the way i mean they may have. a civil war in america. so there could be massive political turmoil there could be. defined globalization because i mean there are some scholars will say globalization goes all the way back to the sixteenth century i mean to me and i wanted i want to define it but you know i will remember growing up i think you could probably
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correct me when america sneezes japan gets a cold. is it no when china sneezes everybody else nice is that where we are way to always going way way way you sort of. china's economy is one tenth the size of america and europe and japan one kid china. as you pointed out it's got a lot of money it's got a lot of savings yes but even if they do fantastic jobs they cannot bail out america europe and japan which are more than ten times bigger than china no matter what a good job they do how they're going to save the rest i mean trying to has become an engine of growth but it cannot bell out the rest of the world that's quite correct it's not it's not yet at the china lectured all the time about what it should do with its economy there is there is a tendency in western media to always lecture the chinese i suppose because of the american election cycle in the world in the euro zone ok i wouldn't say that the future of the western media but i think that yeah i mean if there's
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a political component to it that the western media reports but but it is it is also true that. the the argument about the imbalances that exist in china between an investment driven economy versus a consumption driven economy are very very real and legitimate indeed the chinese government itself when job himself has acknowledged that and that is part that is a critical component of this of what the next government needs to do is to reverse these ratios you have basically sixty percent. investment forty percent driven by consumption. and that needs to that needs to start moving in the other direction and to date despite. very good and very strong consistently strong consumption numbers those overall ratios haven't budged so that that does need to change they've when you think about well i basically agree i mean the whole in the run up
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to the financial crisis the lemon shot with all this easy money going around i mean there were two sides of the coin you know the americans are spending too much and the chinese were lending lending the money for them to do it and what were they doing they were buying chinese goods so you had this kind of you know a symbiotic relationship that eventually kind of rolled off a cliff and i mean america and europe more than. china because china is poorer basically and it can kind of withstand more it can dictate terms of certain political system that can take that buffer part of the situation get your earlier point is politicians like to blame foreigners ever hear politicians blaming themselves say oh my gosh we messed up we're going to resign please what are you talking about they blame foreigners talk about the western press lecturing china which is true and in some cases i mean you know if you read the chinese press recently i mean you know a fair bit of that fair look at americans and these guys you know. everybody blames the foreigners because the forests don't vote because the forest have no influence
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they smell bad they have a funny languages they have funny with their food smells. i mean everybody likes to blame the foreigners for everything oh and change gears here as we you know we look at what's going on in china and we look at the was in western economies how much you know our western economy is going to look at china as an equal real equal partner to start driving a global policy of course the americans will never admit that but they have to behind closed doors here we have to say look we have to get through this together because no as you all pointed out china can't carry the water for everybody the americans care the europeans can't but collectively what could happen europeans are already doing that you see the europeans. politicians coming in droves as you know and part of what china's doing is they're buying or helping support some of the european countries even if they lose money even they lose one hundred percent of
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what they invest it doesn't matter they're buying so much goodwill it is really cheap foreign aid but good will kill if there's a payoff well i think particularly if the chinese continue to overpay for overseas assets that that is a form of goodwill and i think and i think that's very old bribe and i think that no no no i'm talking about they're going out and buying assets that they want to cash and and overpaying not quite to the center the japanese did in in the eighty's but there's an element of that and we are on the we are just at the beginning of what is a form of what will be a chinese foreign direct investment boom in both developed europe and the united states and then we shouldn't kid ourselves that i mean you know it countries in the end and governments you know respond to their own needs the national interest and the idea that you know america europe and china are all going to get together to solve the world's problems and the kind of assumes that you know that they all have the same problems they're all going in the same direction the same i mean just
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either they go but their competitors that to some extent you know and my weak currency is that you know your problem you know we currency is my problem i mean you know we. train of that would be in the one nine hundred thirty s. right but that's right you know we haven't seen you know mass protectionism but we had seen you know massive cost of easing i mean they're like you know big banks are great i mean out of the bigger that currency we've seen you know barry which is a lot of we've seen you you cannot expect twenty five or thirty countries all sit around in a room and say ok we're all going to go broke together you know they're not going to say that they're going to say you hope broke it's your fault or you go broke no no there's not it's going to is paper says it's going to be everybody every man for himself you already see protectionism rising in many countries. whether it's in currencies or interest rates or whatever it happens to be no no this is going to be a mess before it's over and that the. fear that that may be right and particularly the the trying to have to make a decision. now as their economy continues to weaken as to whether i mean far from
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far from increasing continuing to increase the value of the renminbi with they're going to start rolling that back and should they do that that is a problem that is going to be a huge political problem in the united states and in europe where the rim and they have the pressure of this year i mean the not already very much but by one percent and that's this is what a thirty percent appreciation i think she says i know is that a political issue is that a real economic issue financial issue the value of the currency because i on this program people have told me that if it was floated it wouldn't generate one american job it's just bluster and that's correct if it were floated it wouldn't generate one american job but it's a whipping boy because it doesn't float it is magic so what happens when it floats but what happened is there's already a jobs it's going to go well it may go down at first but it's going to go up a lot but then the politicians of america going to have to find another whipping boy then they'll blame the russians or something else does somebody i assure you
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somebody i mean the economic answer is i mean if you can divorce it from the politics from the moment the economic answer is if they let if. you agree that if they if they let it float freely it would over time continue to increase in value which over time would reduce these imbalances that everyone's always screaming about but that doesn't mean it would create american jobs it means to create but it means it would create jobs in a lot of other places i have to point out to you that the japanese yen has gone up seven hundred percent or so in the past few decades they still have a balance of trade surplus with the united states because the united states is badly managed you think that if they remain the suddenly goes up. a lot the united states is going to start having big deficits because start educating their children they're going to be in litigation of course not you know it's not a solid of the obvious things that it's seems that you know most people say is the chinese or even though it's slowing it's still growing ok but i forget what was the
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year when when the chinese junks were exploring the world and also decided to turn back and go back to play and you know the blueprints and all and i mean it in a certain political environment in these we see what i call the american empire in decline how much the chinese will say what will will be will be helpful cooperative but we're not going to take the lead because you this is the message you guys made is a kind of a scenario could be played out in the japanese chinese political elites i mean i just don't think the chinese would think about their economy in those terms i mean the communist party thinks about the economy and in terms of saying popular i mean in terms of i think genuine desire to. make people better off and increase the prestige of. china that would make sense whitman to look much more inward would of course because that's what they've been told to do anyway so that's fine. because. they're going to look inward because look outside there's no place to look at all
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you say next was anybody else is in trouble. but i think this point i think in the in the outside world there tends to be. an assumption that the chinese have these grandiose ambitions to take over the world and to extend their influence and power. very rapidly and to try to dominate the i.m.f. and the world bank and. various other international institutions i think they wanted to happen on an incremental basis they are not yet ready to run why because the costs are too high. i mean i mean it makes perfect sense you know you want to fight fight quote terrorism the world that americans pay for them but i'm. i think another in different ways actually i mean let's take the internationalization of the renminbi which everybody's been talking about but if the remedy is really to be internationalized what does it mean that the communist party has to give up has to give up its. allocation of capital the exchange rate that we were talking
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about and that's what would need to happen well that's a very big price to pay a. price to pay these are exactly the debates that i talked about earlier that that are occurring to what extent do you let liberalization on the reform process reach these what some would argue should be the inevitable conclusions in terms of the policy but what they visit exactly right what scares the hell out of the leadership in beijing or the political consequences that they believe would flow from those decisions all right gentlemen we're going to have to end it here with run out of time thank you very much for being with me here in what it was like and thank you the viewer for watching us here and remember topples. and.
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around russia we've got the future covered. more news today violence is once again flared up. and these are the images cobol has been seeing from the streets of canada. china operations are all day.


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