During the boom years, analysts just had to guess whether the Chinese economy would be growing at 10 percent or 12 percent. As more details about China’s chronic debt addiction emerged at the start of this decade, however, some analysts began predicting a full-blown financial crisis and more recently a sharp devaluation of the Chinese currency.
One China expert, Fraser Howie, was never a fan of the Chinese regime or its credit-driven growth model. But he understands that China has many tools at its disposal to avoid a Lehman Brothers-style crisis and therefore has a more nuanced view of the Chinese economy, which is somewhere between boom and bust—a muddle-along scenario.
He is the co-author of three books on the Chinese financial system, including “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise,” named a Book of the Year in 2011 by The Economist magazine. Over 20 years of living in Asia, he has been trading, analyzing, and writing about Asian financial markets.
Epoch Times spoke to Howie about a China that will look more like Japan in the 1990s than the United States in 2008.
Epoch Times: Is a Chinese financial crisis imminent?
Fraser Howie: Some people ask themselves why it hasn’t collapsed yet. It’s been bad for a while. But it can be bad for a long time without collapsing. The ability of the [regime] to pull accounting tricks and move money around from the left pocket to the right pocket—that can go on for a long time.
First of all, there isn’t much happening on the good side. There is no evidence of any reform coming through. There is no evidence of embracing the market; there is no indication of the [regime] reducing their economic involvement.
