On September 8, an audio recording discussing Beijing’s handling of the U.S.-China trade war was posted on YouTube.
It is not clear who made the speech. The tone indicated it was from an official with some insider information. The time may have been in May of this year, after President Trump announced a 25 percent tariff on US$200 billion worth of goods imported from China and before he announced a tariff on the remaining US$325 billion in goods. Despite the time, the points in the speech are still relevant.
Tariffs
“When the U.S. imposes tariffs, we have many ways to balance it out, such as printing more money or reimbursing the tariff to the exporting companies. However, the biggest problem is that the foreign companies will no longer stay in China. They will move to Vietnam, Thailand, or other countries to maximize their profits.
“The foreign companies’ departure will leave 45 million Chinese who work there jobless. The state-owned enterprises cannot absorb such a big population. Chinese export companies will also be finished. A total of 80 million people will have no jobs. They all have mortgages. What kind of problem will that bring to China?
“The employment problem is tied to the financial crisis and the real estate crisis. These two crises are the ruling party’s ruling crisis. An economic hard landing will bring a dramatic impact to China.”
Economic Structure
“Liu Shiyu, former head of the Securities Regulatory Commission, is the head of the All China Federation of Supply and Marketing Cooperatives. He is setting up Supply and Marketing Cooperatives (SMCs) in each province. SMCs (were popular during the planned economy and) disappeared after the reform and opening up, but they are coming back. The goal of setting up SMCs is to let the government conduct unified purchases and unified sales.
“The higher levels have already arranged to use the planned economy to manage China’s weakening and hard-landing economy. The economic structure will go back to being a planned economy. There will be no way to start a private business.”
New Currency
“Another way is to print new money and recycle the old currency. This will force people who hide money under their mattresses to bring their money out for exchange.
“There are two concepts: One is that the renminbi is just a piece of paper, not real wealth. The other one is that people’s wealth (in banks) is the government’s liability. If the government wants to reduce its debt, it can evaporate the stock market or evaporate the real estate market.”
High-Level Fighting
“Whatever we do will not change the fundamental situation in China because the high-levels are conducting fierce in-fighting. There are three forces fighting each other. Among them, one group opposes the planned economy, but whether it can win out is not clear.”
Trade Negotiations
“Many of the (new) opening measures are just to fool the Americans in China’s trade negotiations. Actually, even if the negotiations reach agreement, (China) may not honor these measures. When have the Chinese honored their words? You think that the government issues an order then it becomes effective? No way…”
Source: YouTube, September 8, 2019