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Magnus On China: You Can't Use Your Spreadsheets Anymore | Expert View | Real Vision™

2,346 views · Published 3 October 2018 · 2:41 · Indexed 4 October 2026

Channel: Real Vision Presents · 2018 · News & Politics

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George Magnus, former Chief Economist at UBS and author of the recently published “Red Flags: Why Xi’s China Is in Jeopardy,” discusses the panoply of political and economic risks arrayed against China and its leader Xi Jinping: Ballooning debt, political instability, a demographic time-bomb, and the ever-looming threat of declining growth and a weakening currency. Filmed on September 27th, 2018 in London.
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Magnus On China: You Can't Use Your Spreadsheets Anymore | Expert View | Real Vision™
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Transcript: 
Well, China's been through three remarkable transformations during the last 30 or 40 years. The first, really, was from being a very willing customer in the global economy to becoming a very feisty competitor-- initially in low value goods, but now in much higher value tech goods and intermediate goods. To now, becoming an adversary of the United States and, indeed, of the Western world in matters of trade, investment, foreign policy, and so on-- technology. This is kind of defining our new relationship with China. 
The second transformation was from being a very backward economy under Mao Zedong, which grew quite quickly but actually was still very backward and very reliant on heavy industry to a new era, really, that started with Deng Xiaoping and the reform and opening up motif, really, that he coined and which became the guiding principle of Chinese economic policy for an awfully long time. 
So from Deng Xiaoping onwards and under subsequent economic leaders, China's economic eruption happened. Lots of things they did, which you can only do once-- education, putting all your kids into secondary school, labor transfer from the countryside to the towns and so on, so forth, joining the World Trade Organization. But I think that China has now reached a point that I call the end of extrapolation. And people don't have to take my word for it because even before he stepped down from office, premier Wen Jiabao famously said in 2007 and in 2011 that China had become unbalanced, uncoordinated, unsustainable. That the economy needed a makeover, a rebalance, as they call it. 
And as recently as last year, the Communist Party Congress which almost deified presidents Xi Jinping-- He himself embraced a change in the so-called central contradiction of the party which describes the economy as being unbalanced and inadequate to meet the people's needs for a better quality of life. So we all agree that China's economy needs a makeover. You can't use your spreadsheets anymore to predict what's going to happen.

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