Let's start off with a look at one comment that you made saying I have been an unflinching optimist on the Chinese economy for
25 years. I'm not now more concerned than at any point in my career as a China watcher.
What makes you so worried in particular. Well I think the biggest thing Rishaad Salamat my optimism for 25 years has been
based largely on an analytical analytically sound case for economic development and rebalancing.
And under Xi Jinping the approach has shifted away from the analytics of consumer led services land rebalancing to more of
an ideological approach that's wrapped around the strength of his personality. And that's a very different development
philosophy than the one that has been so successful in delivering 40 years of spectacular growth in the Chinese
economy. And there's a number of specific headwinds whether they're demographic deleveraging property the regulatory
pressures on the private sector Internet platform companies common prosperity the whole productivity issue in China that
didn't make this new approach far more problematic than anything that led me to conclude that China was unstoppable in the past.
So yeah I'm worried. And it seems like it's almost to certain types of policies that
are kind of butting heads as it's called a zero and reaching of around five and a half percent growth target when you see
economies continuing to slash their forecast left and right. If in fact China cannot reach that growth target or at least
abandon it. Is this a sign that Xi Jinping is losing his grip on power in some way politically. Was this mean for him.
Well look he's got a strong grip on power. We all know that there's a lot of speculation in the West without any real
concrete evidence to support it that you know he's in trouble going into the 20th party Congress.
But you know the growth target for this year five and a half percent forget it. I mean it'll be a miracle if China hits 4.
And there are many forecasters that I've seen that are now flirting with cutting their numbers below 3.
And so the Covid zero policy is not appropriate. When you have a highly transmissible variant as we see now with
various signs of macron spreading in Europe once again we're having another wave in the United States.
Shanghai is not Wuhan. And the Wuhan model works because it was a totally different variant. And you know with spillover effects
evident in Beijing and most likely in other large cities China is just going to go from 1 0 Covid induced lockdown to another.
And you know this is an unsustainable approach to managing a public health crisis in any country.
Steve if we if we look at the implode today's PMI numbers which again showed this contraction in both of these services and the
manufacturing side and you delve into it you look at the employment component that read save more depressing reading and
that that's very important given what's going on because of Covid 0 and its repercussions it must be hugely worrisome for
China as social stability. And there are other reasons to be worried that as well.
Well good point. Rishaad Salamat. Well one of the first things I learned you know in my early days as a China watchers is social
stability is everything. And when you have an employment problem that's what shapes and drives Chinese economic policy above
anything else. And unemployment's on the rise. It's on the rise for migrant
workers due to lock down related. Pressures in supply chains.
And it's it's up for significantly for college graduates due to these regulatory pressures bearing down on China's most dynamic
private sector companies. So you know this is a serious problem.
And I want to get to your book as well. Accidental conflict when it comes the relationship between U.S. and China. So why is it
accidental you say. And do you think with China warming up with ties with Russia. How big of a risk is that geopolitically.
It's an accidental conflict because it's based on a clash of false narratives that both nations have. With respect
to to each other the United States blames China for its trade deficit for when
its savings problem gives it trade deficits with a hundred and six countries.
China blames America for containing its growth and limiting its rebalancing when it's
afraid to take the tough steps it needs to take to rebalance its economy. So these false impressions collide with one another and
they create a conflict that in many respects is based on false premises and did not
have to happen. Interesting to see the leading Chinese official saying that
China can't afford to see the U.S. relationship deteriorate any further. And yet as you just said here is China with a now
unlimited new partnership with a pariah state. The Russian Federation.