Fears About China's Economy Fester at Davos

choi

Alexandra Stevenson, Fears About China's Economy Fester at Davos; A more complex picture is emerging as China's supporters speak out. New York Times, Jan 23, 2016.
http://www.nytimes.com/2016/01/2 ... ester-at-davos.html

Quote:

(a) "The financier George Soros said at a dinner on Wednesday night that a 'hard landing is practically unavoidable,' adding that China is the root of the current financial crisis.

(b) "those who have lived or worked in China [beg to differ.]  Melissa Ma 马显丽 [创始合伙人兼管理合伙人 co-founder and managing partner (both from English- and Chinese-language pages of the company website)], the founder of the $6.8 billion private equity firm Asia Alternatives [no Chinese name], is one of them. 'In Davos, there is a gap between perception and reality. If you’re on the ground in China, you’re not worried,' Ms Ma said. Asia Alternatives, which is based in Beijing, invests across Asia, with about half of its portfolio in China.

(c) "Speaking at the same event [panel discussion], Fang Xinghai, the vice chairman of the China Securities Regulatory Commission, told a packed room, 'We are learning. We are doing it [communication]. We should do a better job.'

"This message, however, was still lost on some of the more cynical China watchers.

"Kenneth Rogoff, a Harvard economist who has long warned of a potential financial crisis in China, remained skeptical. 'There is a big propaganda push to say everything is good, everything is fine.'

"Earlier in the week he told attendees at the forum that China’s large accumulation of government debt would one day be a shock to a financial system that 'amplifies shocks.'

"Others with bearish views on China have kept their claws out [ready to pounce]. Jim S Chanos, who once said China was 'on a treadmill to hell,' said he remained deeply concerned. His hedge fund, Kynikos Associates [based in Manhattan], estimated that China’s nominal gross domestic growth in 2015 was 5 percent [officially: 7.9%] compared with 15 percent just five years earlier.

" 'China’s debt problems still lie ahead of it,' Mr Chanos said on Thursday, referring to concerns about the extent to which China’s seeming economic growth is actually fueled by borrowing.

"As for Mr Soros, he told an audience at the Panorama Restaurant in the Seehof Hotel in Davos this year that the Chinese had waited too long to properly address the transition of its growth model. Asked by a Bloomberg reporter if there was a risk of repeating 2008, Mr Soros said the market was in a similar time of financial crisis.

" 'But the source of the disequilibrium is different,' Mr Soros said, adding that in 2008, the main cause was the United States subprime crisis. 'Now,' he said, 'the root cause is basically China.'

My comment:
(a) There is no need to read the rest. This is the first NYT report on WEF at Davos with the China theme. Thus it recaps for American audiences who knows nothing about the concave.
(b) "Some have defended China’s potential for growth as Western participants voiced concerns and doubts. Neil Shen 沈南鹏 [founder of Sequoia Capital China 红杉资本中国基金 -- the Beijing office of Sequoia Capital headquartered in California], a veteran venture capitalist and one of China’s most successful entrepreneurs, told one panel discussion about the evolution of Chinese industry, that Chinese companies were already competing in their own right in industries like smartphone manufacturing."
(c) Soros: China Hard Landing Is Practically Unavoidable. Bloomberg, Jan 21, 2016 (video).
http://www.bloomberg.com/news/vi ... tically-unavoidable
("Billionaire investor George Soros comments on China's economic downturn during an interview with Bloomberg's Francine Lacqua at the World Economic Forum in Davos. (Source: Bloomberg)"