Dr Andy Xie SCMP Article: A booming US economy and a Chinese crash? Think again

Dr Andy Xie

In his recent SCMP article, Dr Andy Xie opined that China is using its downturn to deflate bubbles and raise productivity while the US is doing the opposite – feeding the Bernanke bubble and hoping for an AI cure for falling productivity. Therefore, China’s economy is more sustainable than commonly believed.

China’s economy has been plagued by “twin cancers”: a property bubble and shadow banking system rife with Ponzi schemes. A bunch of very destructive people screamed “GDP!” and “jobs!” to get the government to print money. China was marching to the cliff. But the government stopped feeding the beasts two years ago.

But as the bubbles deflate, Chinese businesses are focusing more on productive, but less glamorous, activities such as becoming better at making things. The breakout success of China’s electric vehicle sector is probably the most important one. The automobile sector is a major chunk of global manufacturing and much bigger than the smartphone market. China’s transition towards electric vehicles was inevitable.

Chinese companies are not just leading, they are also innovating faster than their competitors and can dominate the global auto sector in the coming decade. Countries competitive in automotive-making have traditionally become high-income economies. China may well go down that path.

Dr Andy XieDr 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.

Contact us today to engage Andy Xie to share his insights at your next conference.