Above is an extract of a video interview on the Daily Ticker with Michael Pettis, professor of finance at Peking University in Beijing, talking about the outlook for the Chinese economy.
In the interview, Professor Pettis argues that China’s economy is neither “averting a disaster or heading for one“. Rather, China will have a “decade or more of much, much lower growth” as the economy rebalances away from unsustainable levels of government investment and exports towards greater reliance on internal consumption.
The key thing that Pettis is watching with the Chinese economy is the growth rate of debt, which he notes reached its fastest ever level in late-2012 and early 2013. “When credit is growing very quickly you’ll get more GDP growth and when it’s slowing down you’ll get less”.
Elsewhere in the interview (not shown in the above extract), Pettis states that he is not concerned about the recent reported outbreak of bird flu in China, noting there’s a better chance of dying of pneumonia in New York than of SARS in China. He also describes pollution in China as “absolutely terrible“, but that “every country, including the US goes through this process of very, very rapid investment-driven growth”.
The full HD interview can be watched here.
