羅家聰博士：拜登警告中國經濟快崩潰 #信燕訪談

Welcome to the live broadcast of The Believer. I'm Lily Zhang from The Believer. Today, we have with us our Hong Kong economist, Dr. Law Ka-chung. Hello, Dr. Law. Hello. President Biden has expressed his views on the continuous decline of the CCP's economic power and global influence. He has proposed that China's economy is on the verge of collapse. What do you think, Dr. Law? You can say it is, or you can say it isn't. The main problem is that real estate and debt are exploding year after year. But in the West, the explosion is due to the collapse of capital markets and bankruptcies. A bankruptcy involves a lot of other businesses, not just real estate, but also other businesses around it. Many companies are affected year after year. A series of bankruptcies occur. Of course, a series of bankruptcies will lead to a collapse. Eventually, it may lead to a systemic collapse of the entire financial system, including the economy. I'm talking about some markets, such as HSBC. But it's not like that. It's not like the West, which allows companies to go bankrupt, violate the contract, and then drag other companies into it. It's not like that. It's always like this. If there is debt, let it be outstanding. If there is a debt, there is no risk. It's not that it doesn't pay off. But it's obvious that it can't pay off. It's obvious that it can't pay off. But it doesn't officially admit that it's a debt. It doesn't officially go bankrupt. It drags other companies into it. It doesn't go bankrupt. For example, the real estate business in Longtao has always been there. It's hard for you to say that you borrowed money from the bank. You can evade it, but it's not dead yet. No one will pay you back. But I don't know when you'll pay me back. So every time the debt is due, it's a so-called delay. Drag and talk. And then keep dragging it down. Of course, if your money is idle or dead, it doesn't matter. Just keep dragging. But if the money is useful, you can't drag it down. Because in the development sector or many investment sectors, you have to pay interest if you borrow money. If you don't pay it back, you have to pay it back. This money may be expanded for investment. Then the production must be sold. If you sell the flower, you will have to add a building. Of course, it drags. Drag and drag. It's not done yet. You have to wait. Tell you to go home and wait. If you don't rush, you can wait. But if you say you pay for the staff to eat, you can't drag it down. There's no way you don't eat. Just wait. When it comes to some places where you really can't drag it down, you're forced to pay. Actually, that number is slowly becoming difficult to pay. Then find another pot to cover it. This company can't do it. Find another one to save him. That bank can't do it. Lend it to him. In short, he went from the central bank to set up a pot. Set up a pot to cover the lid. No matter what, the lid is not enough. More pot. So now he's not saying there's nothing. But he's doing it like this. Everything is under his full control. He doesn't go bankrupt. He doesn't pay back. If he drags it down to the point where you can't eat, he might give you some money to pay for it. Otherwise, the whole line will be cut and everyone will be poor. At this point, there won't be a Western-style collapse. But the most likely scenario is like Japan or some long-term weak economy slowly going down. You can say this is a very bad situation. But in our general understanding, it's a collapse. It's all gone. Then it's different to go bankrupt. There's a difference. The CCP is one of the main competitors in the United States. The two sides are very tense in terms of political and economic relations. This may affect the global economy. What do you think? Ten years ago, one side produced, one side consumed, or one side worked and the other played. The relationship was much stronger. If one side collapses, the impact will be greater. But now, it's more Chinese-like. Of course, it can't go all the way. For example, when China exports to the US and Europe, the number is quite large. The growth rate is much lower, or even less. In recent years, there has been almost no growth. Even if there is no growth, there is no decline. When there is no decline, the amount is still large. In this situation, you can say that one side's consumption or production problems will affect the other side. But the impact will not be reflected by the number. It depends on whether your production or consumption is unique. If you have to buy from it, or it has to sell to you, the impact will be much greater. In fact, many countries in Southeast Asia can do what China is doing now. If you don't do it, others will do it. So, this kind of relationship is not without impact. The problem is that the impact is not continuous. It's not 100% passed on to others. This is one thing. The second thing is that there is a decrease in the price of goods in recent years. The so-called decrease in the price of goods is not so dependent on the mainland. When it is not so dependent on the mainland, the impact of the supply of goods will be gradually reduced. The main impact is that the trade will gradually go into consumption. Of course, the level of import and export is quite high. Then it will go into the level of consumption. This is one thing. But, if you don't count this, the financial impact is actually much smaller. Because, if you look at the stock market, A-shares and Hong Kong stocks have a much lower relationship with the outside world. It's not the same. The reason is that in this era, money is divided into two parts. Some are used, some are not. Of course, a lot of people are rich, but they don't spend a lot of money. The other part is used for investment. That part is another thing. That thing is mainly used in the US dollar market to play with financial products. This thing has a very low relationship with the mainland. Because the mainland itself doesn't have much of this. It rarely interacts with this market. It does, maybe because it holds more than the US dollar. Or because it participates in other commodity markets. But, the financing of the whole market in the mainland, it has funds to participate, but the participation of the country is relatively small. So, the impact in this area is not that big. If you say it affects the world, it depends on how you say it. If you just talk about the impact of commodities, for example, the mainland doesn't produce, of course you can't buy it, you can't consume it. But the problem is when it faces this situation, it won't stop producing, because it has a lot of production. So, the impact of commodities is not that big. If you talk about other things, like the trade war, or the so-called key areas that everyone has to deal with, the impact is small. The number is relatively small. So, I believe the impact of the whole commodity market is limited. But in the financial sector, it's really clear. You see, whether it's the stock market or the debt default, it's been good for a while, but it hasn't spread to the outside world. Even in Hong Kong, the impact is not that big. So, in terms of the outside market, it's your own business. It has little to do with the outside world. In May this year, the mainland's eight real estate companies took the land and the gold price fell by 74%. The decline was increased by 26%. In this situation, what is the problem? You mean the eight real estate companies taking the land and the gold price? Yes. In fact, the developers have to see whether the market is doing well or not. The sales fell by a few percent. If it's more, it's 40-50%. If it's less, I think it's 20-30%. If you can't sell the goods on time, what's the point of taking the land? The developers are taking the land to expand the business. Don't say that the mainland's real estate companies are not doing well. In Hong Kong, the real estate prices are falling and the real estate companies can't sell the real estate. If they can't sell the real estate, what's the point of taking the land? Moreover, they don't have money to invest. Even if they have money and conditions, it doesn't matter whether the market is doing well or not. For example, if you take the land and expand it, in Hong Kong, it will take a few years to expand the land. If the government expands it, it will take 5-7 years. It depends on the market situation but most people can't see it. If you look at 3 years later, many people can't see it. However, the market cycle is not short. If the real estate price falls, it will take 3 years. It depends on where you are. For example, some companies have been expanding for a long time. Some companies have been expanding since 2016-2017. I don't know how it is now. Maybe it fell earlier but it may not fall later. However, it will take 2 years for the whole market to fall. In 2 years, you will attract other real estate companies to fall. Then, they will fall back. Then, it will fall to the point where it is cheap enough. We have discussed whether it is cheap enough or not. Even if it falls, the real estate price may not be cheap enough for many people. If it does not fall to the point where you can afford it, it will be difficult to see the bottom line. At least, from the perspective of the developer, they think they can sell the real estate so that they can make a profit. Even if the real estate price falls, they can sell the real estate so that they can make a profit. Then, they can borrow money from the bank to buy the real estate. Otherwise, the government will force them to sell the real estate. Will the government force them to sell I think it will be difficult. As you can see, the policies are so-called set up. If you don't limit the demand, there will be no problem. But if you don't limit the demand, the demand will not be strong. If you force them to borrow money from the bank to buy the real estate, unless you know the local government will not allow it. If you force them to sell the real estate, the government will force them to sell the real estate. The mainland has introduced various incentives from the first-tier cities such as Shanghai and Guangzhou to the third- and fourth-tier cities. The government has introduced the policy to reduce the lease, reduce the deposit, reduce the mortgage, and so on. Is it useful? No. In the past, regardless of the price of the real estate, the government will do something. But the effect is not so great. Because the demand of the real estate depends on whether people want to live there or not. there is no problem unless a lot of people sleep on the street. Otherwise, the demand is mostly in the investment or investment sector. If you want the price to go up, you have to rely on investment or investment to raise the price. When the price is going down, it is very difficult to happen. The buyer will not suddenly buy it. Usually, it is the users who buy it. But the users are not afraid when they see the market go down. For real estate, there is a situation where you buy when the price is going down. Because everyone expects the price to go down tomorrow. It's not the first time. It's been two years. In the past two years, there have been policies and measures. Every time I talk about it, I hope the price will go down. But if you find that the price is going down three or four times, it's like what happened in Hong Kong. The stock market has fallen for so many years. Every time it goes down, the more you buy, the cheaper it is. The problem is that when you buy a stock, you can buy a lot of rounds. But when you buy a house, there are not many people who have so much money to buy so many rounds. If you buy it all at once, the effect is very serious. So people who buy houses are relatively cautious. There is one more thing. Even if the price goes down now, a lot of people can't afford it. If the price goes down, a lot of people can't afford it, unless your policy can change the opinion generally, they will be cautious. They will also look at the basic things. They will know whether the stock has been completed or not. If the stock is not completed, they won't rush into it. Of course, So why is it that after you cut it off, you don't use it right away. Many times, the government will take action on any downfall, and after the action is taken, the result is no use. That's the reason. Thank you, Professor. See you next time.