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- Is China's Economy Collapsing? Expert Analysis with Kyle Bass (TIP611)
Is China's Economy Collapsing? Expert Analysis with Kyle Bass (TIP611)
Delve into the truth behind China's economy with expert Kyle Bass. Discover the potential risks, market trends, and motivations driving China's economic landscape. Gain insights on the impacts of recent developments on investments and the global economy.
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Video Transcript
the beatings will continue until you actually figure out that investing in communism never
works. It never works. Now, it might work for a short period of time because they're
trying to juice this market or stop short selling or this or that. But over a 15-year
period, if you invested in China 15 years ago in their biggest index, the Shanghai Shenzhen
300, GDP is up 500% and you've lost a third of your money.
So one of the hot topics of the past few years especially has been China. And I thought there
was no better person to invite on the show to chat about this than you.
China's major indices over the past year are down north of 20% over the past year and down
over 40% in the past five years. And additionally, many people are concerned about the potential
spillover effects of, you know, downfall of Evergrande back in 2021 and a potential collapse
of their real estate market. But I wanted to start with the potential of a Chinese invasion
of Taiwan. You recently gave this presentation that I found to be quite fascinating, but
also pretty alarming. So how about we get started with what is the primary motivation
for China to want to invade Taiwan in the first place?
Yeah, it's a great question. I think when you look at the world today, there are people,
first of all, the prognosticators, and especially Wall Street, like to think about everything
in terms of logic, efficient market analysis, the random walk, all of the things that you
and I have grown up on, kind of framing how we think about investment, how we think about
rational actors, and that rational actors will always choose the most positive economic
outcome.
Well, Putin's invasion of Ukraine was anything but a rational economic decision.
And so I think, number one, the point we must make before we even dive in here is there
are leaders in this world of totalitarian, genocidal killers that are running some of
the largest, most dangerous countries in the world, they are not acting under a set of
rational expectations or rational thought as they move forward.
And so I think that's important to just identify right on the outset here.
If Putin were a rational actor and he was a rational economic actor, he would have never
invaded Ukraine in 2022.
So when we think about what the rationale is
for Xi Jinping and his intense desire to,
as he puts it, reunify Taiwan,
or actually he says to create,
or I guess put together the rejuvenation
of the great Chinese race,
which is another way of saying we'd like Taiwan back.
When you understand what his motivations are,
and you listen to his speeches or read his speeches from,
I've carefully looked at him from 2017 on,
he tells you in every speech that they will take Taiwan,
whether it's peacefully or not so peacefully,
that they will get this wayward province back in line.
And you know, that is not the way the people of Taiwan have thought about things since 1949.
And in fact, the new election that they just had, you know, essentially everyone in Taiwan is ethnic Chinese.
And Xi Jinping claims sovereignty over anyone that's ethnic Chinese, and they just shunned Xi Jinping and voted for
William Lai, who is their candidate, and not China's favorite candidate.
And even though William Lonely won by seven points,
he still won.
And China had spent billions of dollars
and has so many operatives in Taiwan
trying to make that a reality for China.
