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Leland Miller

lines on the record: 41
first: 2020-04-17
most recent: 2020-04-17
sittings or episodes: 1
sources: podcast

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“Certainly China Bejebrook on Twitter. We're very active on LinkedIn as well. Let's just say that early going, you spent a lot of time working underneath the radar, buying firms on how to operate, explaining to everyone. Here's what you need to know about China. Here's what we're seeing in China. And here's how to stay at a big time danger.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“the directionality of the A share market more than any other factor in the entire universe. So there are ways of figuring out where to invest based on the right factors, which are where government is looking, where government is suggesting people look. However, it's very difficult to get ahead of the curve on this if you're not a very connected Chinese firm with very good governmental connections. So absolutely, there are ways to make money in Chinese stock market.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, look, there are hedge funds that do very, very well investing in the Chinese marketplace. Most of them are Chinese and have an advantage, an informational advantage for one way or another. But if you think you're one of them, you better be sure you're one of them because it's very hard to get true insights into what the government's thinking. And the reality is that the A-share market is guided not by fundamentals, not even by macro factors, but based on what government policy is at any given time or what the government wants to signal. There are not that many things you can invest in in China. You can invest in equities. You can invest in bonds. You can invest in property. You can invest in commodities or commodity futures. You can put your money under your bed, but there are not that many options. When government signals that it wants to either steer capital towards a particular area, say the bond market or equities or property or pull money away from an overheated property sector, that will guide.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Message because they have a vested interest in selling the stability narrative. And as a result, people miss out on the upside. They miss out on the downside. That's a real problem that people don't trust the data inside China. They don't trust Beijing's pronouncements. And as a result, you've often seen financial actors just scrambling to figure out what's going on.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“our data. Well, in 2015, it was actually the opposite problem. Markets were scared to death that something terrible was happening in China. We were actually cracking open our data, not just for that month, not just for that week, but day by day. And we were seeing numbers that came in that weren't problematic. The economy was slowing a bit, but it was slowing very similarly to what it did the quarter before and the quarter before that. And so what was very interesting is that reliance on trust in the Chinese government message had fallen to such a low point that people were trusting these anecdotal evidence of problems, stock market problems or manufacturing index low or what they thought was a currency devaluation, rather than any data in China. And as a result, markets went down 20-30%. We called it one of the best buying opportunities we've seen in the last 10 years. And the problem is this, that China's this wonderful opportunity, but again, very difficult to trust.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I would say don't believe everything you're told. I'm beating this drum a lot and I'm going to continue to beat it sometimes. Conditions are much worse than what's announced. But on the other hand, you've got the opposite problem too, because nobody trusts what's happening inside the Chinese economy in terms of data, and they don't trust Beijing's pronouncements, that sometimes you have overreactions. If you look back at the summer 2015, it was one of the most interesting because we watched the market get increasingly frazzled over developments. First, the Chinese stock market crashed. Second, manufacturing index crashed and strike three later the summer was when their Chinese depreciated the currency just a bit and everyone thought this was the beginning of currency wars and a major devaluation. Strike one, strike two, strike three, everyone went into a panic. People got defensive. They started pulling their money from China. Had one of the more serious crises in the last decade inside the Chinese economy. What was so interesting then was that we weren't seeing any of it.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“don't know it's going to be not going to be disadvantaged against domestic actors. And as a result, you have this very murky prognosis on the future of investment in China. Every financial firm is At the same time, they realized that without the rules changing and Beijing's position changing on some of these things, it's going to be a losing proposition.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“China's this land of opportunity, but it's also the land of missed opportunity. We're in a low-rate world. It's getting lower and lower and lower and lower. And the attractiveness even of risky Chinese investments will increase if you've got yielding investments in China that relatively strong yields compared to the rest of the world. So there's this wonderful opportunity that China has to reinvigorate its financial system by opening up and allowing foreign capital in and not having to pay too high rates for it because the rest of the world's close to zero or at zero, below zero. So on the one hand, you've got this enormous opportunity and financial firms are just trying to get into China and take advantage relatively on tap market. On the other hand, you've got a political system that doesn't want to relinquish control. And as a result, the idea of throwing billions or tens of billions or hundreds of billions into Chinese markets is a very risky proposition because you don't know where you can get your money out. You don't know whether it's going to be treated fairly while you're there.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Reasons might have been that all the high ranking officials, including Xi Jinping and China, for the preceding several years, had talked about how they had wiped away shadow banking. And so it may have been very politically difficult to announce that, hey, now we're suddenly relying on it. In any case, we saw this resurgence of shadow banking. It did boost the numbers, growth numbers and other numbers across the economy more than we expected. But the downside of that is by the end of the year, even with the surge in loans from the banking system and even with the resurgence of shadow finance and even with historically high bond issuance, the economy was still slowing down. So even though 2019 saw a dramatic increase in credit provision across the economy, most of this unannounced still saw the economy not able to stabilize but continuing to slow. And that was a big worry. It's one of the reasons the Chinese came back to the negotiating table in the trade war. And it's one of the reasons why there's more concerted”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“So it was not seen in official data, at least until the very end of the year. But the most interesting facet of this, what popped up? What we started seeing in the middle of 2019 was a rise of something called the government-owned shadow banking, which became these credit appendages. So for instance, you'd see shadow banks serve as an intermediary function between formal banks and small, medium-sized enterprises, capturing the marginal on the way. saw shadow banks being used not just by the private sector, but by the government in order to steer capital inside China's banking system and financial system. This is not ideal. It's rather wasteful, but it shows the extent to which there are real worries about how to get certain firms' capital that the banking system can't solve these problems. And as a result, the government often gets very creative. Now, why did you not see an uptick in the numbers for shadow banking? Well, that's a good question.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Leveraging and reform going forward, or do we batten down the hatches and protect ourselves against a slowing global economy and President Trump's trade war? And what you saw was explosion of bank lending beginning of 2019, not just jump in loans to the normal firms, but a much broader distribution of credit provision to funds that don't typically get the type of capital they need. Again, small, medium-sized enterprises, private firms, and others, disadvantaged firms start getting better access to capital. This is the type of stimulus we saw in 2019 instead of infrastructure investment. As the year went along, it soon became clear that one, banks were resistant to keep sending their funds to small, medium-sized enterprises and private firms because they were riskier. As a result, you saw a resurgence of shadow finance as 2019 gained steam. The most interesting part of this resurgence of shadow finance, which again did not manifest itself in total social finance data,”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“coronavirus may change some of the landscape simply because firms without revenues as a demand shock there's a supply shock there's a global demand shock there's an oil shock the landscape of shadow banking may therefore change in 2020 because of the dire needs of the economy but i can outline what we've seen over the past year and it's been a very different story than what you're hearing about even from our international institutions like the imf or the world bank who simply take Beijing's official numbers and extrapolate from there. We've seen a dramatic rise in shadow banking over the course of 2019. In order to understand this, you go back to fourth quarter of 2018. The economy saw some of the worst results. We saw every sector was weaker. Every region was weaker. Every headline metric was down. And something happened in Beijing to change economic policymaking going forward. There was some sort of equivocation. Do we focus on restructuring?”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“To doubt 2% loans, banks are left with the difficult problem of do we give it to state-owned enterprises, which are politically back? Do we take a risk on some of these smaller firms that might go put? And of course, it's very natural that the state banking system has gravitated to larger firms, which are bigger bets, which are more politically connected. But as a result, huge chunks of the economy have not been able to remain capitalized without some sort of outside intervention. And that outside intervention has been shadow banking. Shadow banking has been a way of working outside the banking system to provide capital and without shadow banking, China wouldn't be where it is right now, both on the good side and on the bad side.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“How much of China's financial intermediation is shadow banking? How much of the economy is fueled by shadow banking versus bank lending? Now, shadow banking has gotten a bad name in China and elsewhere because it's seen as the wild, wild west. That's fair. A lot of shadow banking in China, Ponzi schemes, non-transparent instruments. There's a lot of garbage out there. It's very, very dangerous to households and the Chinese financial system. But part of shadow banking is also very, very necessary and natural. And it was a result of the fact that the Chinese banking system is geared towards providing cheap or no-cost capital to state enterprises and massively disadvantaging other types of entities, small, medium-sized firms, private firms, others, because state firms have historically been restricted from offering pricing risk. So from offering capital at what it should be costing. So if you're only able to...”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Any type of financial institution or instrument that provides capital outside the banking system is a non-bank and therefore should be considered a shadow bank. So the simplest way of looking at this is anytime that money is being handed out in the economy and it's not from a bank, it's from a shadow bank. It's a very broad definition. Now this gets tricky very, very fast. And one of the reasons it gets”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“The long run as debt wildly outgrows growth. And this is the problem going forward. The non-commercial financial system that China utilizes has enormous advantages in terms of maintaining stability in the short and medium term, but there are significant long-term costs, and that is not understood by even some of the more sophisticated people.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“sketchy Chinese government official numbers to start with. And one of the rules that we try to explain to people is that the first and second derivative of trash is trash. So most of the instruments being used outside of China to evaluate the Chinese economy are just not worth looking at. Something I think people are understanding more and more now that instability in the Chinese economy is not being signaled when it should be based on these instruments. The last I would say is no matter how many times we talk about it, no matter how many times traders lose, there's not a widespread understanding that China does not have a commercial financial system. China's financial system is strictly non-commercial. It allows them to do amazing things in terms of avoiding these acute crises we talked about earlier. They're able to avoid significant problems. They're able to avoid this hard landing scenario, but it causes lack of growth.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“because the Chinese want these numbers to be political. They want them to signal stability. And if they're not signaling that, then they're a problem. The second, I would say, is related to that, the idea that the West does independent China analysis. The state of the industry I'm in is not good. The people that are in it are very smart. The type of assessments that are being done on the Chinese economy right now, however, are very, very poor. We've been making fun of these Reuters polls that come out with just greatest contra-indicator ever is whatever economists in the Reuters poll think about the economy. During the early days of coronavirus, they were predicting 4%, 5% growth in Q1. Prognostications have gotten worse from there. What you usually see if you dig deep enough into the Western analysts of China, they're typically either opining based on Chinese data or they're creating some sort of leading indicator that's a composite of a bunch of different numbers, but those numbers are all”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Number one, there are no truly good, unmanipulated pieces of Chinese data. One of the things you learn when you start doing deep dives into official data in China is it's not a case of one headline number like GDP becoming manipulated. And then if you just dig beneath the surface, you get this goldmine of rich, honest information. The truth is that any number that markets begin to rely on, Chinese go back and manipulate it. For instance, there's been this idea that the Li Kutchang index, which is this mythical beast in which it's electricity consumption and rail cargo and et cetera, is somehow this real way of looking at the economy. Well, as soon as the Lee Kuchiang Index started being used by financial firms around the world, the Chinese started manipulating electricity consumption data. They started offering up some very questionable rail cargo data. I think that one of the takeaways on this is that there simply are no pieces of official data that can be trusted.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Give one example of volatility that we see in the numbers that is never acknowledged by Beijing. The weakest national growth that we've seen in the last 10 years of serving the Chinese economy, the weakest data was fourth quarter 2015. Chinese official GDP growth that quarter, I believe it was 6.8%. The strongest quarter that we've had in the last 10 years was arguably in the run-up to the party congress 2017. China's official GDP growth that quarter, 6.8%. The idea that the strongest performance we've seen in the last decade and the weakest performance both had a 6.8% GDP growth level tells you all you need to know about how accurate these figures are. The GDP figures are meant to signal stability. They're not economic numbers. They're political numbers”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“You to avoid an acute crisis in any particular instant, but it also leads to long-term path towards stagnation. Good money continually chases bad and productivity declines. So the economy works very different than in the United States or in the Western world. But the single most important facet of that is how different China's financial system works.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Return on productivity, and you're essentially you're leading the economy into stagnation. There are advantages, of course, to this approach. One of the questions when coronavirus first hit was what's going to happen to millions of Chinese firms who only have one or two or three months cash flow? Are you going to see a million small, medium-sized enterprises default across the Chinese economy? And the answer was always no. Because as long as it's a policy priority for the Chinese government to not allow this, then it won't happen. Of course, you'll have losers, of course you'll have firms that don't survive. But essentially, the system is state banks loaning to state entities, and state banks loaning the small and medium-sized enterprises. When the state controls all the counterparties, then you're going to have a system that doesn't freeze up the same way. You're not going to have a liquidity crisis because the government is ordering some firms to lend and others to borrow. Now, that allows”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Most important thing to understand about the way that the People's Bank operates inside the Chinese economy is that China is not a commercial financial system. And this is a point that even very sophisticated traders that we work with constantly get wrong. The idea after the financial crisis was, well, the United States had its problems, Europe had its problems, China's next. But the Chinese economy doesn't work their way. Because it's a non-commercial financial system, the government can order capital to be pushed from one side of the system to the other side. So essentially, if a state entity needs capital, then another state entity will provide that capital, and you'll continue to patch holes on this ship. So you never had an acute crisis, but you have a long, long process of the People's Bank and other financial entities in the economy consistently providing capital to firms that need it so they don't fail. But the problem with that is you've got a lower return on investment, you've got a lower return.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Later and say, this is a way for the Chinese economy to develop in a sustainably stronger way rather than rely on artificial levels of growth that run the risk of having a debt crisis or a stagnant economy, which is similarly problematic.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“What people think it means. GDP growth relates to productive growth. So we used to joke that if China wanted 7% or 8% GDP, all you have to do is build a bridge, tear it down, build the same bridge again, tear it down, build it, tear it down, and keep going until you hit 7% GDP. You'll hit the number because this is a mathematical construct, but you'll have a thoroughly unproductive use of those funds. That's what China has been doing to some degree for many years now. So getting away from a reliance on infrastructure investing has been positive. But what Beijing has to do is change the conversation from being all about growth to being all about strengthening the economy for the long haul, getting away from the idea they can grow at 6% growth. Because what we have been saying for many years now is that within the next decade, possibly much sooner, China will be growing at 1 to 2% growth at most. And that's where we're headed. And what Beijing is well advised to do is tell people about this earlier rather than”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“To get Beijing credit, they have been moving in that direction to some degree. What you saw in 2016, the economy was recovering from the early markets panic of January, February 2016, was old through infrastructure stimulus. It was back to the old ways of China's heavy investment. You have not seen that the year since. You have not seen that economy weakened in 2018 and 2019. You did see stimulus, you saw very directed stimulus to provide capital to small and medium-sized enterprises, for instance, and private firms. But you did not see the build, build, build type of programs that you saw in the past. And that's very positive because it means the Chinese government is understanding that there are limits to the old model and they're trying to transition it. Now, our advice for a long time has been stop focusing on GDP growth. Do away immediately with the GDP growth target because it means nothing. One, the number is manipulated. But even if the number were not manipulated, GDP growth doesn't”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Under or you see financial products defaulting, you see risk injecting the economy, that means there'll be failure. And if there's failure, that means there's economic losses and there's job losses. And these are very difficult concepts for the party to digest because for a long time there haven't been any. So this is a very critical time for the Chinese officials, for Chinese economic policymakers. How do they transition to a risk-based economy that allows the government to not have to backstop everything explicitly or implicitly because they can't in reality do that? How do you translate the old system into the new system without causing problems that could threaten the party's existence? That is the story of current-day China.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“that the return on investment of projects, of companies inside the economy have slowed down. And as a result, you're going to have much slower growth going forward, no matter how well the economic officials in Beijing operate going forward. So you're going to have to manage the economy in a very different way. I think there's a sense of urgency in Beijing about managing the economy in a different way. The question is, what type of problems are you willing to deal with along the way that won't make you turn back and run scared back to the old method? What type of economic dislocations are acceptable and which ones are not? And I think where this gets into particular problems is when you start talking about the jobs market, you start talking about potential layoffs, it's one thing to talk about how you're going to restructure the economy to allow zombie firms to fail and allow state firms to stand on their own two feet and compete with private firms. But if you see firms going”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Many of these development programs are non-productive. And as a result, they're spending an enormous amount of capital on programs that are not adding to productivity in the economy. Now, this has been okay for a long time because even though China has built up an enormous amount of non-performing loans from some of these projects that just aren't returning any investment, the country's got richer, people have gotten richer, and growth has been fast enough to either keep pace with debt. That's no longer true, but it's going fast enough that there hasn't been a problem. We're entering a new era. And so there's a lot of fear on the part of the Chinese government that the old method of continuing to just spend, spend, spend is not going to work as China's debt flow gets too critical. And as the economy slows down, and it doesn't slow down because of mismanagement.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Chinese growth rate, even though it's nowhere near 6% in reality, has been much stronger than the United States for many, many years now. And part of that's because China in many ways is a developing economy and not a developed economy. The incomes of the average Chinese are tiny fraction of what they are in the Western democracies. So China has this big, powerful economy, the second largest in the world, but also is developing in that it's not rich. Its people are not rich. And so it has very interesting facets of both the developed economy and the developing economy. The historical reliance on growth for China has been based around investment. And what that essentially means is that when the Chinese government wants to spur growth, the government steps in, it builds. It's usually a heavy transportation, heavy infrastructure, and it creates growth that way. Now, the problem with this, of course, is that”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“bad for their health to itself identify. But certainly there's a very diverse discussion behind the scenes. It's just not always easy to figure this out. We do know, as certainly, the PBOC has its own vested interests. The NDRC has its own vested interests, certainly very ultra-rich Chinese have their own vested interests. And so there's a diversity of opinion that's not always transparent who's holding what view at any given time.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“There certainly are these different players with different vested interests. The difficulty is saying anything and knowing you're right. There's very little visibility into how some of these political battles are waged. So it would be a mistake, as you suggested, to think that Xi Jinping runs monolithic China, what he says goes, and China has one opinion about reform or restructuring or trade deals or the state of the currency or GDP targets or any of the core issues. The problem is that it's not always obvious who's pushing back, especially the senior levels of the party. Certainly, during the US-China trade war, President Xi was getting enormous pushback domestically on some of the things that he was offering up. There were suggestions in the media. There were suggestions by public intellectuals. There was discussion certainly on the online blogs about how China wasn't taking a tough enough stance, et cetera. It's hard to pinpoint who some of these actors are.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“sectors. And one of the frustrations that many people have, including myself, is that as you work through what we just did in phase one, this wasn't about curing any of those structural woes. As a matter of fact, Maiden China 2025 got taken off the agenda very, very early on in the process. This was purely about purchases. This was purely about managing the bilateral trade deficit. And as a result, if this is all we get, if phase one isn't phase one, but phase one is the US-China trade deal, then we've given up a spectacular opportunity and an enormous amount of leverage to effectuate real change in return for some very transient commodities purchases that may actually work against us in a few years when U.S. farmers, for instance, become more dependent on Chinese markets, giving Beijing more leverage over US economies.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think what's misunderstood is what it's about. I think people are starting to get this idea, but it's not widely understood enough. When the United States start, what is now seen as this U.S.-China trade war, it was about bilateral trade deficits. It started with Section 301 investigation, which again focused on problems the United States has historically had with the Chinese government in terms of restricting market access, technology transfer, IP infringement, core structural issues. It also had to do with something called Made in China 2025, which is the fact that the Chinese government had a very high-powered program to supercharge its advanced manufacturing, whether that's 5G or quantum computing or artificial intelligence, et cetera, and do that with a heavy state hand with the attempt, and this was explicit, to run the rest of the world out of advanced manufacturing, become the world leader in all these cores.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Very difficult to come anywhere close to hitting the targets that Beijing has agreed to, particularly without violating obligations and without interfering in other trade relationships that Beijing has. So the first year of the deal is seen as being relatively fluid in terms of maintain the peace and particularly with the coronavirus hitting. The second is going to be a”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Makes Trump tick. And what he's focused on is the bilateral trade deficit. And as a result, as long as phase one looks like it's solving at least temporarily some of the woes of the bilateral trade deficit, his administration has been focused on playing the trade war down, particularly through the election, and not focusing on any of the other big issues. So as long as the Beijing president happy on purchases, then you have trade peace through the 2020 election. The one issue here is that this should not be looked at as a two-year deal. It should more fairly be looked at as two one-year deals, because both sides are very incentivized to keep the peace through the first year. President Trump hopes it gets him re-elected. Beijing hopes it buys them some time to focus inward. Second year is going to be trickier because the numbers are so high. That's even before a coronavirus hit, that it will be very...”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Trade war is on an indefinite hiatus. And what that means is that President Trump got commitments for large-scale purchases through the election and beyond. And if the Chinese come close, either adhere to those commitments, which is highly unlikely, it's not going to happen actually, or they come close or they look like they're giving their best efforts, then you may see complete trade peace for the remainder of this year through the election because it's in the Chinese government's interest to focus inward. And if they can take care of the trade tensions with some promised buys, it's not comfortable for them, but it's better than the alternative. And for President Trump, there are a lot of elements that this U.S.-China trade war has been supposedly about. There's been forced technology transfer. You're talking about IP overall. You're talking about market access for foreign companies. But what really...”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Well, rather than saying it's a particular percentage or number, I would say it's whatever fluctuations don't bother the rest of the world. Don't make them think that there's instability in the currency. The reason that this window management has broadened over the course of the past several years has been that people have been more confident in the Chinese government's ability to manage that ban. 2016 was a horror story for the Chinese government. They've learned some of their lessons from that. They realize that markets don't take well to baby depreciations because they think they usher in large devaluations. So the Chinese government's learned lessons. And again, there isn't a specific number here. It's just whatever band the market feels comfortable and not thinking that there's panic by the government or inside the Chinese economy.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“In a major devaluation, again, what they want is stability, a bias towards strength, and in anything other than an extremely supercharged dollar world that should be manageable going forward as long as the domestic economy itself remains stable.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Economy will shift gradually to more of a consumption culture. In the past, seeing the currency move, and certainly if the Chinese economy is under great stress for trade war or during an outflow crisis or because of some other dynamic, then you'll have a lot of pressure on the PBOC to allow greater depreciation. But as we all know, the PBOC's role has essentially been to step in and strengthen the currency when market forces have been pushing it downward. So the PBOC has had mostly a stabilizing, strengthening for years now. And that's the way the Chinese government would like to keep it, the idea that there's a big devaluation in the wings the next time there's a downturn the Chinese economy is very, very unlikely. The way we describe this is breaking the glass type of emergency mechanism. It's there. They could devalue if they absolutely have to, but it would reverse everything else they're trying to do. So there's no real interest.”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“In general, the goal of the Chinese government going forward is to keep the currency stable with probably an upward appreciation bias. And the reason for that is that the dollar is a stabilizing factor on the yuan. And the goal of the Chinese government right now is to push the country more towards consumption. And one of the easier ways of doing it, not easier but easier than some of the other ways, is to empower households to purchase more. And one way you empower households to purchase more is to put more purchasing power in their pockets and a stronger currency will do that. So the bias of the Chinese government in a non-volatile economic scenario is to keep the currency stable, keep it relatively strong, particularly the rest of the world, to empower Chinese households going forward and to empower this rebalancing idea with”
2020-04-17 · We Study Billionaires · TIP292: Understanding the Chinese Economy w/ Leland Miller (Business Podcast) · IDENTIFIED FROM THE TRANSCRIPT