In a recent SCMP article, Dr Andy Xie explained why he believed that stimulus right after a deflated bubble risks a debt mire.
Here are some highlights:
The green transition is China’s greatest opportunity. It can show the world how to meet climate challenges economically, expanding market opportunities for the country and enhancing its global standing.
China also has a security imperative to cut its oil dependency. As the Middle East becomes less stable, regional war could make supply uncertain and send prices sky high. It’s a matter of time before Beijing has to accelerate the country’s green transition to boost its economy, support cutting-edge technology and enhance national security.
For that, it needs to attract the best global talent to help it on its journey towards technological self-reliance. As the Chinese saying goes, pay enough and even a ghost will work your mill for you.
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Beijing is probably ignoring the IMF’s advice because the US’ containment policy is defining its priorities. With the US waging a tech war against China, spending a trillion dollars on an overextended property sector surely comes across as a ridiculous idea to Beijing policymakers. The same consideration was probably behind the government’s willingness to allow the property bubble to deflate in 2022. Thanks to the US containment policy, China is making all the right economic choices.
Dr Andy Xie 謝國忠, is an independent economist, director of Rosetta Stone Advisors and is one of the few economists who has accurately predicted economic bubbles including the 1997 Asian Financial Crisis and the more recent subprime meltdown in the United States.
He was a part of Morgan Stanley in 1997 and the Managing Director and Head of the firm’s Asia/Pacific economics team until 2006. He also spent two years with Macquarie Bank in Singapore, an associate director in corporate finance and five years as an economist with the World Bank.
Dr. Xie earned a PhD in economics in 1990 and an MS in civil engineering in 1987 from the Massachusetts Institute of Technology.
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