???? How the CCP Is Manipulating the Chinese Economy & Their Country (w/ Guo Wengui and Kyle Bass)
KYLE BASS: So I'd love to ask you a couple of questions about that. Even Premier Li has stated that Chinese economic statistics are unreliable. What do you think the real economic statistics are, as far as GDP growth. And I know you and I have had several conversations about the FX reserves. How do you think about the numbers that are reported for GDP growth versus what they really are, and the FX reserve number versus what it really is? I know that's a specific question, but we'll move on from there. MILES KWOK: Yeah, thank you, sir. It's a good question. We need look for China economy, you need to look at four points. KB: Four points, yeah? MK: One is the M2. M2, how much? KB: Yes, basically cash in circulation, right? For those that aren't economists. MK: Yes. $29 trillion, China printer, RMB. We CCP currency. KB: Yes. MK: Secondly, you need to look for about China is the personal interest groups. Right? KB: Yes. MK: No, 29 trillion. This-- no group's-- too much. Three, you need to look for bank, the bad bank. KB: The bad bank. MK: Bad bank. KB: Yes. MK: 45%. KB: 45% of the loans are bad. MK: More, I think. Far more. Four, it's very important, you see foreign exchange. KB: Yes. MK: Currency. KB: Currency exchange. MK: Exchange. KB: Yes. MK: Up, down, down. You look at Hong Kong, the dollars. Where's the dollars? RMB where's the dollars. Nobody, no Chinese, no also American company in China can move pure, clean money go to outside. KB: Correct. Correct. MK: Even you earn the money. Cannot move it outside, why? So this is the four points. I give you answer. Nobody can give China economy go to stable, reliable. Impossible. They know to jump in. They cheated the world. They make a fake economy. KB: They have made a fake economy. MK: This is the printer of the currency. You looking true, the currency move to outside. KB: Yes. So you've taken us to the place that brought you and I together. MK: Yes. This is correct. KB: You came to this conclusion long ago, and you're right. I think you're right, of course, because you agree with me. MK: You counting the money. KB: So this concept of two currency worlds is one that is lost on many people. MK: Yeah, all of them. KB: The RMB economy of China is internal. And the economy of China in dollars is external. And they are desperately in need of dollars because that's how they trade with the rest of the world. What was so compelling when I met you, the most compelling thing that you showed me was the chart of Chinese M2, the moving graphic. MK: Yes. KB: And we'll provide that moving graphic to the Real Vision audience, separately in this video. But more importantly, Chinese M2 has grown from $1 trillion worth of RMB to, as you say, $30 trillion, on an economy of 12. MK: Yes. KB: They've printed more money internally than any one country in the history of the world. As a percentage of GDP and as, call it, M2 growth versus GDP growth, nothing has ever come that close. So they've created a false economy of RMB and the exchange rate in dollars. So you took us to another place. You took us to Hong Kong for a minute. Why does Xi's little colony of Hong Kong still peg to the dollar if China's economic model is so great? Why is that? MK: Very easy, the answer. Kyle, Hong Kong dollars-- it's the dollars, Hong Kong dollar with American dollars, US dollars is a— KB: Is a peg. MK: The peg. KB: Yes. MK: You know bank retrieve, China retrieve. They serve China. KB: Yes, the PBOC? MK: PBOC. And Hong Kong bank retrieve. KB: Yes. MK: Receive. KB: Norman Chan. The HKMA. Yes. MK: This fake. This true. How can you handle this? KB: Right. Bank of China Hong Kong handles it. MK: But they're the same. KB: Yeah. MK: Same. This is the mafia group. Same. Bank of China laundering money station. KB: Yes. Your allegation is that the Bank of China Hong Kong launders money for all of the Chinese leaders. MK: Yeah, always. You go to New York. You'll see Bank of China, the building. KB: The Bank of China's building. MK: Small building, all of the windows are blocked. Always. KB: Really? MK: 365 days. KB: I didn't know that. MK: You go to see. So I talk all over, American friend. You say, go see Bank of China never open the windows. But the small the building. Why is it that more than 2,000 employees work here? How can put 2,000 employees there? Why? This is spy system. Laundering system. It's mafia group works there. They are not really bank. KB: So the Bank of China, the Bank of China in New York— MK: All the world. KB: --has 2,000 employees. And you're saying, they're doing everything from being spies, to being mafia, to money laundering. MK: Yes, this is for sure. So third, this is why I give you the answer very easy. Hong Kong, the dollars now because China, all the propaganda, clean all the Hong Kong people, the head, one that you trust. We can help you. You can push stronger Hong Kong Dollars. But what this do is so that come true that foreign currency go outside, but now it's a big trouble. KB: Big trouble. MK: Because President Trump threatening the world-- say no US. They're threatening war, put the economy down. KB: Well, the economy was already slowing— MK: Yeah, very slowing. KB: --before we went into-- trying to put together a border-adjustable tax or a tariff has just made it a little worse. The timing of the Trump administration's tariffs is not good for China. I don't know if it was intentional or not. MK: Very bad. KB: Right, but it's very bad. But when you go back to Hong Kong, Norman Chan and the HKMA, they've spent 78% of their excess reserves fighting the peg. This peg's been in place for more than 30 years. And now Hong Kong imports US monetary policy, so they're having to raise rates, while China's economy slows down. This could be a very big problem for Hong Kong, yeah? MK: I think this is not a big problem. I want to go back and say this. Because America with China threatening the war, China now economy no good. It's going to drop. KB: OK, So you're saying that the trade war is going to cause Chinese economy to drop? MK: Yeah. KB: Which was already dropping before the trade war. MK: Yes, it's dropping. This is why Hong Kong, the bank now is very big. They have two choice. Make a fake economy, same China mainland. KB: Yes. MK: Second is open the close. We are dying. We no more dollars. Foreign— KB: You mean you basically liberalize the RMB. MK: Yeah, yeah, yeah. KB: Let it free. MK: Yeah. So this is why Hong Kong dollars, it look lasted that much. Down, down, China mainland CCP is try hope, by hope, but nobody can rescue the Hong Kong dollars from that drop. One day, CCP find out the solution. No Hong Kong dollars. KB: No Hong Kong-- your assertion is that at some point in time, China will just take over Hong Kong. MK: This isn't good. KB: Yes. MK: This isn't good. They want to try disappear Hong Kong dollar. Then RMB turn to American dollars. KB: Right. MK: This finally made to the reason. Don't talk to me about to the South China Sea war. Or don't talk to me that how you the business, say no US. The treaty no important. The one goal-- challenger American dollar, disappear Hong Kong dollars. KB: OK. They want to challenge the supremacy of the US dollar. MK: Yeah, this is why. This first is the one, disappear Hong Kong dollar, then change to American dollars. KB: So at the last Party Congress, basically, there were far few chairmans of companies added to the standing committee in the committee of the Politburo. Less corporate interest. Whether they were heads of SOEs or heads of quasi-private companies, much less business people on the standing committee in the Politburo. Is Xi trying to send a signal? Is he trying to change the structure of the standing committee and the Politburo himself and take out business interests and make it more the thought of Xi? How do you think about what happened there at the Party Congress? MK: So OK, I want you to clarify. I need a translate. KB: OK. MK: I pay him too much translating fee. KB: Sure, sure. MK: Sorry. Translator: [speaking in Chinese] MK: So I want pay the guy too much translating fee. I want him to help me translating English. KB: That's perfect. MK: So this is for sure. This is happening. Here today, I have the YouTube. Now it's the man talk. China CCP Central Government last the three months. They, one by one, talk-- not talk, threaten-- 68 privacy entrepreneurs. KB: Say that again. MK: The CCP, Wang Qishan, and another leader, I don't want to say name, including Jack Ma. The last three months, June, July, August. September, he talk to the entrepreneur. Come here. KB: You talked to the entrepreneurs. MK: Yeah, example, Jack Ma. Now I want you to love the country. Love the country. KB: Got it. MK: I want your contribution to the country. Give me all the shares and control the power. KB: Basically, give us all your wealth. MK: Yeah. This is way you see that Jack Ma, he gave up all of this. Came to the power, gave to the government. They call five people team. KB: Unnamed. MK: None! This is happening now. KB: So what you're referring to now is just two days ago, it was reported in China that Jack Ma had to sign over ownership— MK: July. This is July. KB: --in some of his ownership in VIE Alibaba to five unnamed individuals, which is a very strange thing to happen for one of the most po werful chairmen and CEOs in China, who is now immediately retired. And we don't know-- we still don't want your prediction yet as to what's going to happen. So please hold that back. I have a few more questions that I really want to ask you. Given the fact that the Chinese banking system is now, call it, 400% of GDP, and you say that 45% of all loans in China might be bad— MK: More, maybe. KB: --what we say in the US as a funny saying we have. A rolling loan gathers no loss. MK: Yeah, I like this. KB: So if you have 45% of your loans that are bad, and your banks are four times your GDP, you're insolvent. Which major Chinese bank in your mind is at the highest risk of failure? MK: I think all the China and the bank. KB: All of them? All the SOE banks? All the joint stock banks? MK: Yeah. But number one is the Bank of China. KB: Bank of China, OK. MK: Number two, Minsheng Bank. KB: Minsheng Bank, yeah. MK: Number three is called China Development Bank. You know, Development Bank is family leader, laundering the money. They don't give you any information. They can trillion, billion give. So all the China Bank, same problem. Same, but number one, Bank of China. Number two, Minsheng Bank. Because Minsheng Bank, all the leaders from leader families, they, you know. KB: I see. So you're saying that many of these banks work with the leadership in enriching them? MK: Yeah. Also three is the Development Bank. Development Bank is what gives to to South Africa, Pakistan. KB: Oh, right. MK: So we find out the reason because we help the poor country. No, this launders the money. KB: Yep. So during the failures in the past of Hainan Development Bank, Guangdong International Trust, and Investment Corporation, CITIC, and the P2P platforms that are failing today-- there, we've had 200 P2P platforms fail in the last couple of months. Do you think the government will make investors whole? Or do you think the government will allow losses to happen in China? MK: No. They every year change the solution, but same goal. Take the money from poor people back. They cheating you. You look at China has a finance group many years ago. This is the hundreds of billions of the money is investments. And then the guy is wronged. The guy, this is the work of Mu Xiang Gu, the far political of the bureau. Lu of the political secretary, Mu Xiang Gu. Their family owned. They find a solution, finance a [INADUIBLE] group. Hundreds of billions RMB. They're wronged. Then again, P2P. Then again. Just the Communist Party highlight all the corruption people. They cheating you the solution. Never give you pay back. KB: I see. So investors in China are the ones that lose their money? MK: This is for sure. KB: And the leadership gives a solution where they take what's left? MK: Yes. KB: And the institutions fail. MK: Yes, this is sure. Yes, definitely. This is why you can see the P2P. KB: So if that happens, how does the leadership control the population from revolting? How does a revolution not happen? In a big-- let's say a lot of banks fail. MK: Yeah. This is why you see the last five years what has happened. Cyber control. In the world, more you know better to know than to North Korea. China cyber controls five years. KB: Cyber control. MK: Cyber. Control Why? What do you fear? Why don't want the people free to talk? KB: They fear a revolution. MK: Afraid of revolution! KB: Yes. MK: This is reason. And [INAUDIBLE] talk the [INAUDIBLE]. This scandal is sexy. Steal the money. Just this. KB: It's why we're in an airplane hangar, right? We can't be out in the public because God knows what would happen to you. MK: Yeah, yeah. So this is [INAUDIBILE] why this is why China how can control the revolution. Cyber control first. Second, you look the GDP. They how much pay? Called insider security control. How much? You see this. Hundred billion dollars. This is from GDP. It's control all the poor people, normal people. P2P. The people, they don't arrest any leader family. All the arrests are the good people. Send good people to jail. This is why CCP in the world is the mafia group. KB: And the way that they've been able-- so what's fascinating about this big financial experiment that the Communist Party has engaged in, they control the narrative. They control the press. They control the people. They control the price level of various things in China. They control food prices. They control energy prices. And in the end, that's how they control the economy and control the people from revolting. And what you're saying is if the economic gravity hits China, which it looks like it's hitting now, given the fact that they're now running a current account deficit, and things are slowing down very quickly, that you think that they won't be able to control all of these things. Is that correct? MK: Yes, correct. So you know, Communist Party not only control this. They control everything, including sex. KB: Including what? MK: Sex. Sex, sex, sex. Translator: Sex. KB: Sex. OK, right. MK: China philosophy is the last four years. Three. KB: Three things. MK: One, everything in the country, everything belong to Party. KB: They belong to the party. MK: Two, three belong to country. Everything belong to Party. KB: OK. MK: Everything listen to Party. Everything listen is the Party give you. So you need permission. Three, even your father and your mother are not better than Party. Everywhere China. KB: I see. MK: So they control what your father and mother. You cannot love your father and mother love you. Why? You need to love the Party. KB: Love your Party more than your family. MK: Yeah. Then it's just, who give you everything? The Party. What do you 100% listen? Party. This is ridiculous! Why American, all the media, rest of the world, stabilize the world, no one media talk the solution? In China everywhere, you ask all the people, do you can trust the one Party? Better than your father and your mother? KB: Right. Well, no. MK: No. Why is everything you backed Party give you impossible to do?