Chinese regime is already bankrupt according to a professor at Chinese University of Hong Kong
Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, delivered a lecture to his students where he described the real state of Chinese debts. He asked not to do any recording, audio or video, of the lecture in any way and asked students not to speak about it outside the classroom as speaking anything against the regime is strictly forbidden in China. He told students how the data about the economy are manipulated and truth is kept away from the world.
One of the student did the audio recording of the lecture and now it is on the Internet.
Here are the some of the important facts about the Chinese Economy he explained in his lecture:
Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.
Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.
Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.
Fourthly, that the regime’s officially published GDP of 9 percent is also fabricated. According to Lang’s data, China’s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in infrastructure construction, including real estate development, railways, and highways each year (accounting for up to 70 percent of GDP in 2010).
Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said.
Once the “economic tsunami” starts, the regime will lose credibility and China will become the poorest country in the world, Lang said.
Many Economist around the world agree with the Lang’s analysis. Academicians in China are not allowed to speak against the regime but Lang did it, may be because he is a professor in Hong Kong or may be he never thought contents of his lecture can go out of the closed-doors.