‘Every province in China is Greece’

A file photo of Taiwan-born finance professor Larry Lang Hsien-ping (Reuters) Chinese academics hardly ever make any negative references when they speak publicly about the state of the Chinese economy.   In this context, the recent public lecture of Professor Larry Lang, who reportedly said that the country’s GDP is going in reverse, is remarkable.   According to the Epoch Times, Lang, who holds the chair of finance at the Chinese University of Hong Kong, said in a lecture that he did not think was being recorded that China faces a serious economic crisis and is on the brink of bankruptcy.   Indeed, he even claimed that “In China, every province is a Greece”.   The restrictions Lang placed on the October 22 speech, given in Shenyang City in the northern province of Liaoning, included no audio or video recording, and no media.   But in an audio recording that has been uploaded to YouTube, he can be heard saying that people should not post his speech online or “everyone will look bad”.   In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures.   “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.   Despite Lang’s polished appearance on his high-profile TV shows, he said: “Don’t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it.”   He said that the regime doesn’t listen to experts, and that Chinese Communist Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said.   The Epoch Times, a multilanguage, international media organisation, has been publishing in Chinese since May 2000. The newspaper is heavily critical of the Communist Party and policies of the Chinese government, which blocks mainland Chinese from accessing the organisation’s website.   The Epoch Times reports that Lang mentioned the following five reasons for his assessment of the Chinese economy:  The regime’s debt sits at about 36 trillion yuan (4.3tr euros). This calculation is arrived at by adding up Chinese local government debt (between 16 and 19.5tr yuan), and the debt owed by state-owned enterprises (another 16tr, he said). But with interest of two trillion per year, he thinks things will unravel quickly. The regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.  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.  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).  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 51.6 percent, Lang said.