#175 Yan Liang: China, Trade & Reforming The System
https://www.youtube.com/watch?v=oYwC2FuSUkI
2023(e)ko uzt. 5(a)
Patricia & Christian talk to Kremer Endowed Chair of Economics at Willamette University, Professor Yan Liang about China’s economy, international trade, sovereign wealth funds, de-dollarisation, and more.
Transkripzioa:
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you could always create jobs domestically you don’t need to be a net exporter in order to create jobs we have
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a very dysfunctional International Financial system which creates all these Financial crises where the debtors are
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responsible for making the adjustments and therefore they have to try and protect themselves by trying to be an
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exporters and trying to accumulate foreign exchange reserves so right now there are a lot of debates about the dollarization how Chinese U.N May in
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some ways replace the Dollar’s hegemonic status but I think the real question is Deutsche simply wanted to replace one
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currency with the other or do we want to reform the system so that we don’t have the perceived need to accumulate
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reserves as a deficit or that a country because now all this version of adjustment is imposed on the deficit
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countries the International Financial system is failing them
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this is the mmt podcast with Patricia Pino and Christian Riley
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hi I’m Christian Reilly and welcome to the modern monetary Theory podcast you
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let’s dive in welcome one and all to the mmt podcast I’m Christian Riley and I’m
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Patricia Pino and we are delighted to be joined today by the crema endowed chair of Economics at Willamette University
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Professor Yan Liang thanks so much for joining us today yeah thank you for having me I have been a big fan of your
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podcast was always great to be on this time and share my thoughts so thank you for providing the opportunity oh well
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we’re so excited to talk to you about international trade and the economy of China but because it’s our first time
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talking can you tell us how you first came to mmt because some people we ask this question to they’ve had to learn
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neoclassical economics first and then they had a lot of rethinking to do when they got confronted by MMC and it was
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quite jarring but was it like that for you actually it was quite a well-planned
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process I mean my journey really started when I was in undergraduate in Junction University in China and then we had a
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Fulbright scholar of Charles Whalen if you don’t know he is a academic historian a labor Economist who was with
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Cornell at that time so he came as a Fulbright scholar and he taught us as a history of the U.S economy From
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moonsky’s perspective right from Minsky’s approach I just fell in love with that analysis and so I indicated to
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him that I wanted to come to stay and I want to learn more I want to learn more about Minsky I’m going to learn more about money I was in the Public Finance
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and Taxation major at that time in China so he introduced me to render Ray so
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that’s how I ended up at UMKC almost two years later after I graduated because there was a little sort of detour to
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figure out exactly what I wanted to do and so finally I ended up at UMKC I worked with fredly I worked with Rendell
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Ray I worked with cfaps I think Warren at the time was still financing the UMKC
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program so I produced some of the balance report about China’s macro economy for him so that is just a
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natural I think process where I simply just start with the more heterodox
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programs starting Minsky starting with post kingsian institutionalism I shouldn’t forget to mention some of the
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great institutionalists Jim sturgeons and noddies at UMKC so that’s how the journey started and how they proceeded
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and so yeah I think from the very beginning I was more of a tear than
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switching some other sort of approaches great so no reprogramming necessary basically right that’s right so that’s
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how it started and how it’s going is one of the courses you teach at Willamette is international economics and mmt
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proponents are often running into critics with concerns about exchange rates and the balance of international
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trade for someone relatively new to the topic what might be a good jumping off point for thinking about International
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Trade through an mmt lens right so I think the mmt’s contributions
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to really analyze International Trade I think for one is really to understand that monetary nature of production and
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any sort of economic activities because right now I think a lot of this sort of mainstream theories about international
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trade is always started with content Advantage is all about goods and real
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production and how different countries have different sort of relative efficiency and that’s how drives trade
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and what it leaves out is a lot of sort of at the macro level how your domestic
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investment savings domestic imbalances could lead to external imbalances and
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the domestic Dynamics has a lot to do with your monitoring incentives your monetary Arrangements of production so I
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think that’s number one and the number two is really to think about the impacts of trade right so the mainstream would
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always tell you exports are good for the country and imports are bad but I think
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From mmt’s perspective if exports are a cost are the real cost it could be bad
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it could be good right that really depends on what your country’s priority needs and what your country’s
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circumstances need but I think that it’s a factual statement it’s a normative statement to say that exports are the
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cost because it reduces a real resources that the country’s citizens and residents can enjoy so I think those are
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just very in a very minimal way right it’s at the threshold level how the m t approach will look at trade differently
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now of course there are a lot more extensions from there for example you know how trade may or may not be
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balanced right because major would always tell you trade over the long term right the market is going to make sure
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that we will have a trade balance because if you export too much your currency is going to appreciate and that
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will reduce the exports and so you would eventually return to that balanced trade but again the mmt approach will say
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that’s not necessarily the case because there are a lot of other factors much
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more significant factors that affect exchange rates not just Retreat balance so you could have persistent and large
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trade imbalances and that have different implications and also one last point I
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would say is this idea compare advantage and the benefits of tray are always predicated on this assumption that we
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have full employment right and right there I think mmt departs very radically right that we don’t have for employment
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this is something we want to work on and this is something that mmt would propose and have the right tools reinsured but
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we don’t have for employment to start with when you think about the benefits of trade I guess in the developing world
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the subject of trade is much more sensitive than in the developed world and I think part of the reason why they
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view this focus on exports is a positive rather than Imports it has to do a lot
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with this idea of reducing dependency as well as the helping reducing inputs
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being a means of developing your own Industries and I guess that’s born a little bit out of institutionalism I
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guess I was wondering what were the similarities between institutionalism and mmt and at what point today the part
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do you think I think what institutional was um and mmt have very similar concept
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right and understanding of what money is money is not just a creature that is to
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facilitate changes institutionalism has really rich historical and political and
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cultural and all these understanding of what money is right so from poliani’s work and from godley’s work we all see
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how money is institution it’s not a sort of free market product and so and so
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forth but I think what institutionalism in the sense that really emphasize is that there is no sort of one size
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fits-all Theory right that we need to contextualize all these different theories and I think that is very good
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in a way component to mmt I do think that institutionalism is part of the MNT
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or I should say the other way I think mmt doesn’t stand on the shoulder of many of these great institutionalists
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right to really understand let’s say if I mean if countries wanted to adopt they
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sort of an anti-informed policies then they really need to look at their specific institutions in order to make
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sense of what is the sensible right policy to adopt but I totally agree with
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you when it comes to developing countries because the resources constraints and because they sit so low
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in the international currency hierarchy they are in very many sense are constrained they are monitor sovereignty
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right is very much truncated in mmt theorists definitely are aware of that
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so we have you know fadal has been really advocating how we can try to relax that resource of constraints by
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achieving food and energy and technological sovereignty and my own work has been looking at development
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Finance because there’s always this argument women that developing countries have to trade their Commodities and
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their raw materials in order to get that exchanges in order to purchase the necessary goods from the rest of the
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world but two things I think one thing is develop development Finance needs to primarily domestic oriented there are a
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lot of resources that developing countries can mobilize collectively or individually and so we really need to
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think about Finance needs to be domestic in the first Resort and then second is a
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lot of times we think that developing countries are exporting or getting those preachers foreign exchanges in order to
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buy the live supporting right food or energies but the reality is far from I
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mean that’s far from the truth when you just look at very recently I just read this report about Nigeria for example
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their debt management agency reported that 96.3 percent of the government revenues
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in 2022 were spent and on debt servicing okay 96 percent I mean this is just
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mind-boggling right when you say oh countries have to get the reserves in order I mean get the foreign exchanges
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to get their essential Goods that is not the case right many of different countries are exporting getting the
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foreign serves simply to repay their foreign debt has nothing to do with get the economy going get their people’s
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lives better so I think that is a very important issue to look into and just in
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case anybody newer to this stuff is listening when we say that exports are a
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material cost to a country an Imports or a material benefit to the country that’s
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importing them we’re not ascribing any moral value we’re not saying exports are therefore bad and imports are therefore
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good there’s no moral of it we’re just saying it’s the exports are what your country is paying if you like for what
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it Imports what it’s sending to the rest of the world in return for what it’s getting from the rest of the world and
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that’s something that trips a lot of people up I think yeah we’re definitely not saying everybody should be an
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importer right you can’t have everybody be an exporter you can’t have everybody being imported
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it’s just logically impossible right well what I find useful about it is that once you see it that way so saying
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inputs are a benefit and exports are a cost it’s looking at it from the risk resource perspective absolutely and it
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makes evident who’s benefiting at the moment in the world and from what and it just adds another layer of understanding
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of that I think so it’s useful for that I wouldn’t say that we should be
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advocating for every country to become an important so regarding the exchange rates yeah and so through the mmt lens
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the money story it starts with the government needing to provision itself and it lays on a tax into something only
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it could create we call those things pounds here in the UK the government spends them into existence when it pays
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for things either directly or through its agents and because the government is the Monopoly issuer of pounds in this
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country the government determines what those pounds are going to be worth in terms of other things other goods and
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services when it chooses the price it pays for those goods and services as Warren Mosley puts it prices paid by
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government are the source of the price level but how should we think about pricing in international trade is it a
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case of as Warren has said in the past well so many Japanese TVs are going to
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exchange for so many tons of Australian coal and what’s going on with exchange rates doesn’t really impact that I know
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Warren would say something like the key thing is for a nation to optimize its real terms of trade but I just wonder
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what your thoughts were on that if you’re thinking about International sort of terms of trade then yes I think is it
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is a sort of extension right of what your domestic price level is and then that relative prices right on those
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various treatable goods and services so in that sense I mean to some degree I
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think Warren is right in pointing out because the government is for most of
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the countries like a big employer they patriarchy the wages of the workers that
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they hire and so that could set the anchor government also directly purchased a lot of goods and services so
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that could be also the anchor but you know I think there are still some room for you know some kind of exchanges
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between the products the government directly purchase and the products the government may not directly purchase
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right but they’re I think Stu maybe complicated ratios and processes that
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these ratios could be worked out so I would say on the one hand when you
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really just think about in terms of the terms of trade between different countries then that price ratio the
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relative prices domestically and internationally or a different country could to some degree shape that terms of
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trade but when it comes to exchange rate though in terms of the relative value of
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your currencies a lot of those are really determined by assets prices right
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it’s not just the puts the bis the band of international settlements always have
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their surveys of uh you know how much we have in terms of the Foreign Exchange Market transactions and then compare
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that if you look at trade we could seem really just a very small fraction of
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that for exchange transactions are to support trade right when I looked at 2019’s data about 1.5 percent of the
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global Foreign Exchange Market activities only 1.5 percent of that that is really to facilitate trading goods
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and services so just 1.5 it’s a very small fraction so in other words the exchange rates are to a much greater
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degree determined not by trading Goods services but by these kinds of Foreign
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Exchange transactions so purchasing different currencies purchasing
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different currency denominated Financial assets pay bonds stocks or derivatives right so those are much more significant
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in determining the so-called Supply and Demian for certain foreign exchanges and
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I think most of it would definitely say because the government determines the policy rate in the short term that
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definitely to a great extent shapes the financial assets values in respective countries and that in turn would then
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affect this country’s current currency exchange rates but again I think what
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Warren has been saying is that the government chooses to allow the market to play some role right AI so for
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example the United States government in normal times quote-unquote right they don’t necessarily control the new curve
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where the Japanese government has just done it so that really is a policy I think discretion so if the government
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wants to do that they could really to a great extent shape varieties of
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financial assets right across different time spectrum and risk spectrum that
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will leave very little sort of room for the market to determine the asset prices and therefore exchange rates but that’s
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not the world we’ve lived in right now I feel like I know very little about China even though it’s on the news a lot
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because I don’t know what I can trust about what is being said and what I can’t but to what extent does China look
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to the West for economics advice or do they just simply do their own thing they
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have their own kind of school of thought completely separate from ours well this is a great question I think there’s a
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lot of misconceptions or just a lack of information about China and I think that
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it’s a manufactured right I think the in the west a lot of narratives that are very negative and biased on China but
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the Chinese media doesn’t necessarily help to provide a very objective picture
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and so it is a complicated country and it’s a very complicated media landscape
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and so it’s difficult to know China right but in terms of China learning
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from the United States or other countries I think that is very interesting and that has been really evolving I remember when I went to
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college in late 1990s it’s very interesting we learn about we have
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classes right that are the sort of required classes that are called Western economics and that’s basically the
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required course and it’s mostly Samuel say principal economics micro macro the
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standard staff and then we turn around there’s another required course on political economy and we study Martian
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right it’s very torn but these days right I think with 40 Years of pretty
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remarkable growth I think that really boasts to China’s policy makers confidence they felt that we have
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different models right that we do things differently than the West so some of the examples is the China definitely does
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not agree with some of the multilateral banks like the IMF right to impose austerities or so-called physical
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consolidations in other countries in the borrowing countries and China has been
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opposing that for really good reasons as we all know so in that sense I do think
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that China is not simply copying so to speak right the Western sort of economic
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thoughts and so on but at the same time when you look at China’s policy making
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Circle they also debate a lot about mmt insights right so for example they still
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believe that government could overspend governments should be constrained by some kinds of budget
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during discipline they also think that in some ways the government or the central bank can control money supply as
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due to this day right they’re still talking about how we should control to some degree the M2 and so forth that was
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going to be a question I was going to ask you is like in terms of monetary policy is the Central Bank pretty much
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implementing what I’d call traditional monetary policies the mainstream economists understanding they lower
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rates when they want to stimulate and they raise rates when they want to cool it down absolutely absolutely so you saw
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that the Central Bank just lowered the seven day repo rate and trying to stimulate the economy so yes absolutely
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they are still in that kind of uh tradition but they do have different policy tools and some of the nuanced
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differences and so on and so forth but so go back to your question I think Patricia it’s a mixed picture and I do
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think that China’s do very open in terms of getting some of these Western economic thought and there has been a
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rich sort of exchanges right so I just discovered recently I’ve been reading some of the history of thought and also
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I think Bella Weber has this wonderful book that really talked about how China I mean its transition in the late 70s
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early 80s has been getting some of these ideas from The Westerns and they’re
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doing it in a very interesting way in the sense that they’re not just listening to One schools of thought right they welcome some of the Keynesian
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economics but they are also look at austrians they’re also looking at monetarism so I think today in China
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still they’re all these rich debates and vibrant debates there’s some welcoming receptions of Keynesian economics or
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monetarism for that matter but then I think many of the Chinese Scholars are really trying to see how to
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contextualize some of these Western thoughts and not to accept them in a wholesale basis but they are not going
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to reject them all together either so some true pluralism going on in there which is a positive thing I think that
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would be a good way to label it that problem still is not on equal footing right so I would say still monetarism a
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new classical and all these are still taking a much more prominent role here to mean just similar right in in the
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states and elsewhere yeah and so as you just said they’re lowering some of their key rates over there the central bank or
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in China and on that topic why would you say China’s inflation rate is low
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compared to the US the UK and Europe as you see it China’s inflation rate is very low right so it’s one percent two
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percent it’s mostly one percentage right and depending on you’re looking at what kinds of indicators if you’re looking at
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core CPI or just general CPI or the equivalent to the Consumer Price sort of
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index so I think China has a different sort of issue right its issue is demand is the
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demand insufficiency because of a covet China had really dragonians or lockdown
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policies for pretty much the past three years right it just reopened by the end of last year so they had a different
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problem they had really trying to maintain the same kind of supply chain supply system when they did the lockdown
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so they have this close loop factory production system so even though there’s
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a lockdown a lot of the factory workers they’re in this closed loop situation they basically live on their campus they
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work they go back to the dorms they’re very much in sort of a close to Loop and
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they’re very heavily sort of monitored and make sure the production can continue with multiple shifts and so
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forth so they have very I wouldn’t say little but they have much less supply side disruption compared to the
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US and UK or other Western European countries so the supply constraint is
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less prominent but the demand constraint has been severe right people are locked on back home cannot go out to spend
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their money and so and so forth so they have a different sort of challenge is the demand is too low it’s too weak on
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top of that the export demand has been sliding because the Western economies are not doing well so their export has
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been going down back in may they have a negative growth in their exports so in
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general there’s been a weak demand and so they have deflationary pressure rather than inflationary pressure and so
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that’s what prompt the central bank to lower the Ripple rates and their policy rates and trying to provide more
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liquidity to end credit to the market but as we all know right from the mmt
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community that monetary policy is very ineffective if you lower the rates it’s
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not necessary early that’s gonna from the Palm that people will simply start borrowing and not to mention I think
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China has been trying to deleverage the private debt to GP ratio has been going
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up I mean the total national debt to GB ratio is over 289 percent so the
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government has been trying to deleverage and trying to build up the private sector’s balance sheets so if you lower
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the interest rates there’s a question if they’re going to be more borrowing and if there is right then you start worried
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about the debt problem so I think what really needs to happen of course is on the fiscal side right definitely we want
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to have full employment policies because they use unemployment rate has been so high over 20 percent and the local
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governments that have been really instrumental in supporting local businesses are now in really sort of
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patch strapped situation so there could be a lot of room on the fiscal front to
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help to stimulate the economy obviously it’s a monetarily sovereign central government but the local governments are
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heavily indebted is that right and is that a concern absolutely I think that is a big problem is that mismatched
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spending capacity and their spending through responsibility so the local government has only about 50 percent of
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the fiscal revenues and they’re responsible for over 80 85 percent of the local spending and a lot of these
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are social spendings right so this is a significant problem I think the
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Bloomberg has been always reporting all these hidden debt in the local government’s level and so on their
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balance sheets their debt to GDP ratio is about 30 40 percent but then if you add the hidden debt that could be 50 60
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of the GDP at the local government level so I don’t think this is really a sort
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of bankruptcy problem because I do believe the central government definitely has the will and also the
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means right to to help the local governments but what I really worry is low government starts just hiding their
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belt right and reduce their social spending and there has been evidence of that the social spending at the local
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level has been going down over the years especially in the past few years when they’re really losing a lot of fiscal
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revenues because of the covet and then have to spend a lot right in supporting covet lockdowns and so and so forth so
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that is the big problem there has been Chinese Scholars writing on this problem from an Mt perspective and they
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published a paper in jpke and I’m right now writing another paper exactly on the
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same topic but provide some updates but also looking at more of the sort of text side how to solve this sort of local
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government debt conundrum how to go forward so yes I think that is the problem it’s not that the government
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spending too much or having too much debt is really the central government is not doing enough but the local
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government is inundated with debt and that could have unpleasant right or negative consequences is there scope for
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that to just flip around for the central government to realize that what they are sovereign in their own currency and that
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maybe if it’s for social spending purposes I don’t know how it would work on the ground maybe that they do
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by municipal bonds or something to keep the muni prices up or something like
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that or or do they just take the local government’s debt onto their own balance
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sheet well I think that’s a great question I think there are definitely different ways of doing that and we have
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to differentiate the different kinds of spending at the local level so to me social spending it makes sense for
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example the local education or pensions or health care a lot of these should come from the local government because
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this is a very much tailored spending right different areas have different realities and the local governments
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understand their institutional setups and so they should be responsible for a lot of those spendings but you do need
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some kind of central sort of coordination right you can have the rich area spend a lot more on health care
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where the poorer counties could not have the means to do that I’m taking centrally funded locally administered
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sound familiar right exactly right that is exactly I think that the riot Pro coach right the central government
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should take on some of the spending in terms of financing but let the local government spend exactly how they want
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to spend but then when it comes to for example infrastructure construction then I do think that the central government
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needs to pay the bill a lot more than what it’s doing now right and now in
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China in Chinese I thought many people are saying the central governments are ordered the dishes and the local
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government has to pay the bill and so when you think about infrastructure a lot of times it is not just limited to
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one Province or one city or one County right because if when you’re building a mega project it spans over several local
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jurisdictions and so I think the central government should definitely take on more of the financing and of that now
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there are definitely questions of how the central government does that does it do that through direct spending or does
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this do us through fiscal Central transfer to the local government and there are definitely different
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approaches so I would go into a little bit remove some Nuance in my paper but I
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think just in general as you said right is that the central government needs to take on more of the spending and provide
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more means of financing to the local government so two prompts approach I would say that’s the way to go and so
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how financialized is China’s economy does the government have a favorable view of financialization I mean it’s
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basically the only game in town if you’re in the UK you know that’s what we do here everything’s geared up to make
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the city happy but I just wondered what was the picture in China right so I think in the developing world again the
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mainstream approach is financial deepening right that we need to expand and we need to develop a financial
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system because that facility development but I think there has been a lot of emerging and some more actually well
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established critiques where you know Financial dignity or financialization they have certain limits right that
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there are some sort of diminishing marginal return to continuing Financial deepening which is basically ban your
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financial sector it depends on how you define financialization I think it’s not just the size of the financial sector
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but also the increasing accumulation through financial channels and also the
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increasing for financial motives right dominate over any other sort of motives of any economic activities right so it’s
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all about maximizing shareholder values it’s all about increasing your stock performances at expense of any other
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sort of needs of the stakeholders of Corporations and whatnot so I think in
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China the picture is somewhat mixed the financial sector contributes to about
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only eight percent to China’s GDP I think in the US that’s pretty similar
31:00
right seven or eight percent of the GDP is from the financial services but you
31:05
know in terms of the profits the financial profits account for about only 13 of the total corporate profits in
31:11
China and so the United States is easily twice or three times of that share so in
31:17
that sense China is not as financialized if you are thinking about how much accumulation comes from the financial
31:24
sector the other thing is when you think about corporate interest for China the
31:29
now Finance corporations held about 30 percent of their total assets in
31:34
financial assets so when you look at how much assets they have about 30 percent of them are Financial assets so that’s
31:41
by no means little right I think that is in a way comparable to the United States
31:47
so in that sense a lot of these even non-financial corporations are taking on
31:52
so much Financial assets right and so that kind of divert them from the real sort of businesses right just like in
31:58
the US we say GM is not making money from its own cars they’re making money from selling car loans and then you
32:05
compare you know banking size and you look at the stock market size in China China has very sort of Bank dominated
32:12
Financial system and assets about three times GDP but its capital Market is much
32:18
smaller compared to the United States it’s only half of in terms of stock
32:24
market capitalization to GDP ratio chart at 65 the US is 150 so in that sense if
32:31
you’re looking at the indicators then one could argue China is not as financialized as the us and one last I
32:37
think interesting piece on this is that the Chinese policy makers are all the way up to the President right Xi Jinping
32:44
as early as 2016 he has emphasized in multiple occasions that Finance must
32:49
serve the real economy right and she’s made multiple also announcements that
32:54
housing is to live in it’s not for evacuation right so we could debate about how well these slogans so to speak
33:01
are being implemented on the ground but at least I think at the highest policy
33:06
level right the director level there is the sense that Finance needs to be the servant of the real economy
33:12
instead of the other way around so I wanted to be optimistic I think China is definitely you know they have been
33:18
cracking down the shadow banking system and I have been doing quite a bit of work on that my inet grant was to work
33:25
on China’s Shadow banking system and how we could destabilize the financial system and affect the macroeconomy but
33:33
you know I think I’m happy to report that that shadow banking system has been very much suppressed in the past few
33:39
years but of course the local government debt is still a big problem that is still part of big Shadow banking system
33:47
the way that local government tries to get funding is through the Shadows institutions so that is still a
33:54
remaining I think problem what do we mean by the shadow institutions Shadow banking sounds a little bit different to
34:00
what it actually is as I understand it I mean there are different ways that are maybe less I think the payroll banking
34:08
system and so on so forth right so in the U.S we know a lot of that is manifested in sort of securitization
34:14
right that you’re packing too low and then you size it off you charge it and you sell it that’s the US’s main Shadow
34:20
banking sort of the way it functions in China is less securitized but it does
34:26
include a lot of the off-balance sheets transactions so you could have for example all these the main things for
34:33
example one is on the banking side they sell a lot of things called The Wealth Management funds basically is some of
34:41
these wealth products that are not guaranteed but because they’re issued by Banks it provides appealing yield and so
34:49
a lot of the Savers would purchase these wealth management products and then the funds are raised through this bus
34:55
management products then be invested right in all kinds of sectors real
35:01
estate or infrastructure or Industries many things like that and they’re not on
35:06
the book of the loan portfolios of these various Banks right so in that sense
35:11
it’s a shadow and that is very close to the securitized loans in the U.S the
35:17
Clinton part but on the other hand there’s also many different kinds of Institutions like trusts right so a lot
35:23
of these do one way or the other get their financing get their loans from the banks but then they sell their
35:30
Securities and use the fundings to invest in again areas where the
35:35
government doesn’t necessarily support and that those sectors don’t necessarily get the funding from the formal banking system and therefore these trusts this
35:43
wealth management funds are able to invest in those areas there’s definitely like what you said the back of the alley
35:49
People to People funding and a lot of Internet Finance all of these are kind of as well as is outside of the formal
35:56
banking system and it’s avoiding this kind of Commercial Banking regulations are in this category of shuttle Banks
36:04
and I mentioned the local governments one of the major ways that the local
36:09
governments trying to to the Coffer giving that they’re so cash strapped is
36:15
either they lease the land or they set up this local government financing vehicle so these are shell companies
36:21
that get capitalized by the local governments through their land leasing revenues and these financing vehicles
36:28
that either issue bonds to raise funds or borrow from Banks right so this is
36:34
the part of the shuttle institutions because again they behave like Banks right they behave like Banks they get
36:40
loans from Banks and then lend to the various agencies in the local governments and so on so forth but
36:47
they’re not really being regulated like banks in a way is basically it’s outside of the formal banking sector right
36:54
eventually one way or the other they are getting their sort of sources of funding eventually from Banks that’s why when
37:00
the shuttle banking is in trouble right it could create problems for the thermal
37:06
Banks as well right because they are basically exposed to these shadow lendings we’ll be right back after this
37:13
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38:37
let’s dive back in when I was doing my masters I remember almost half of our
38:42
class of over a hundred students were from China actually oh wow yeah and it was amazing
38:49
and speaking to some of them I asked them about whether they were studying
38:55
because the course had a really strong Finance element to it and whether they were studying economics and finance
39:00
because they wanted to work in a UK bank or in a European Bank like a lot of other students did or whether they
39:07
wanted to apply to China and whether the finance sector was similar in China for
39:13
them to be able to carry on their careers that way what they told me was that most of them wanted to return to
39:19
China but they just had a genuine curiosity for understanding how things were done over here but also suppose that The
39:26
credibility of the courses as well helps them in their careers but they did say the finance sector in China it has some
39:34
similarities but is a lot more restricted in China than it is in the
39:39
west so what are the main restrictions that China imposes on its Finance sector
39:45
compared to here from your perspective right I think there are two aspects of
39:50
it one it’s at the more sort of formal level and then definitely it’s on you
39:56
know in terms of a banking lendings or restrictions and guidelines and things like that but then also at the sort of
40:01
personnel management it’s much more restrictive so let me talk about the first one so yes in terms of Bank
40:09
lending as you probably know a lot of the commercial banks are the top four
40:15
are state-owned commercial Banks right so Bank of China because Bank of China
40:21
Industrial and Commercial Bank of China and I think I’m losing the last one but
40:26
the top four the big four commercial banks are state-owned so they definitely
40:31
are commercial Banks so they have their search engine criterias right so a Project’s bankable if there’s enough
40:37
profits and so on and so forth that would to a great extent determine whether they’re willing to land and how
40:43
much they are willing to land and so and so forth but a lot of times these banks are also implicitly or explicitly
40:50
getting the guidance from either local governments or from their Superior in the higher position to lend for example
40:58
stay-o Enterprises or some strategic industries that the government wants to
41:03
support so there’s definitely these kinds of policy lending directives where
41:09
the banks would have to abide by so I’m not sure if these Chinese students mean restrictive is in the sense that there
41:15
are sectors where they may want to land but you know the government will say try to shied away from those sectors right
41:23
but again A lot of times I think these two are not completely separable right
41:28
so for example now the government said we have a real estate problem right the USS Center has been overheated and it’s
41:34
over constructed so we now need to reduce some of the lendings going into the real estate sector the banks may
41:41
still feel like oh it’s profitable for me at least in the short term to lend to them but they would not want to do that
41:47
in at least open way right they don’t want it to turn against the government’s directives and continue to learn to the
41:53
real estate and also on top of that there are also the restrictions for example you load deposit ratios but I’m
42:00
not sure that is very different from the West right in terms of they do need to make sure that the balance sheet remains
42:06
liquid and they need to make sure that they don’t over land and so forth and then the second I think lag for that is
42:12
the personal kind of level at personal management level so in China if a loan
42:18
goes bad directly the bank Bank staff that is in charge of that loan would
42:23
then take on sometimes personal responsibility not in the sense that would be fined or they’ll be asked to
42:28
pay back the loans but you know their career will be civically negatively affected so in that sense I think they
42:35
might feel the banking practice is more restrictive that they have to be much more careful in exercise due diligence
42:41
and so on so forth but then at the same time need to balance the commercial profitability and the government’s
42:47
policy needs and whatnot and the government and the systems acts as a social Dimension to the whole final
42:54
level right absolutely that’s why I think I presented it this China’s development Finance last time at the mmt
43:01
summer school and I did a similar one was a little bit updated this time again which is I think at least they owned
43:08
commercial Banks or polish banks are really essential because they really allowed the state to mobilize the
43:14
financial power right financing resources to support real investment
43:19
right real investment and that in turn drives economic growth and productivity growth and so I think a lot of the sort
43:27
of discussions or debates about why China has been able to grow so fast I think a very much under appreciated
43:34
aspect is how the states can harness right that sort of public money the financing power to support investment to
43:42
support economic growth and transformation now that I really what you need over there is a gridlocked
43:47
congress I know yeah that’s what Bond markets really love right that’s right but I
43:54
think credit to where it’s owned I think with the pressure of competing with China right that now we have been able
44:00
to pass infrastructure ad and Science and job act and so all these I think are really helpful I do think that we need
44:07
the kind of industrial revitalization but it’s just so bad like you said we
44:12
have this very dysfunctional political system that it always needs to set up a strong man and some kind of external
44:18
threat right for those practicing sort of efforts to go forward so the way I
44:23
see it China’s a net exporter as a consequence it’s built up huge savings
44:28
in US Dollars and like anybody else being offered a risk-free return they’d rather saving interest bearing dollars
44:35
than saving non-interest varied dollars those interest-free dollars are U.S government bonds so China’s saving in
44:41
U.S government bonds is often characterized as the government of China lending money to the US government we
44:48
without which the US wouldn’t be quite so rich and influential and able to be the global hegemon and then at the same
44:55
time you’ve got many Americans who can be convinced to worry that this also
45:00
means that the US is somehow in the pocket of China because China all these dollars now so I just wonder what your
45:07
thoughts were on that whole framing because there’s a lot of confusion out there on this topic right absolutely I
45:13
think that’s why mmters really into the gear up to debunk right all these myth so we definitely understand that the US
45:20
government they don’t have to sell bonds right they’re self-financing they don’t need to sell bonds they sell funds for
45:27
other reasons than trying to get the financing to support the domestic spending so this idea that somehow China
45:34
is the biggest creditor and somehow they can dump all these U.S treasuries and that would kill the dollars and that
45:41
would reduce the the sort of fiscal capacity for the U.S government to spend I think all these are nonsensical right
45:48
and all these are debunked by the mmt community where the US government can
45:53
always decide how much they wanted to spend and how they wanted to finance it
45:58
right is it through quoting quality creation or through selling bonds and
46:03
they also decide on the terms in which these treasuries are sold so definitely
46:09
if China does not buy these treasuries I’m 100 sure right that the US
46:14
government can find other buyers right for its treasuries and if there’s really
46:19
no markets wants to buy the cherries and rather want to take the dollars which is now interest bearing then so be it right
46:26
what is the problem so I don’t think that is really the problem and again going back to this idea that the exports
46:33
are a net cost a resources cost for those net exporters I think China is
46:38
definitely in that scenario and China definitely worries about this large
46:43
amount of Foreign Exchange reserves that are held in dollars or dollar assets right that China right now has about 3
46:50
trillion foreign exchange reserves and at least half of it if not more they’re pretty opaque about it right so we don’t
46:57
necessarily know exactly where the investor for exchange reserves and there are all these arguments about Shadow
47:02
reserves and so forth that I’m not going to go into that right now but but they do see the problem of having too much
47:07
dollar in their foreign exchange reserves and that becomes a problem for them right as you all have probably
47:13
heard this phrase that you owned the bank 100 and you know your problem right
47:18
but if you’re owing 100 million right in this case 3 trillion right then the bank has a problem so I think for China as a
47:25
creditor holding so much dollars in their pockets it becomes a problem if dollar the value decreases and so forth
47:32
and China can suffer describe the capital laws and I think it’s since 2009 that we have heard the Chinese Central
47:38
Banker very explicitly and openly at the bis conference advocating for an
47:45
international Reserve currency instead of having the dollar being this hatchman Reserve currency and they definitely
47:51
talked about this from a risk management perspective right because if there’s financial crisis that was originated
47:57
from the United States that really reduced the dollar value then all of these dollar assets would suffer and so
48:05
China has made visible kind of attempt to diversify and move away from
48:10
treasuries and other dollar denominated assets they are holding of the U.S treasury peak in 2014 about 1.3 trillion
48:18
and now the latest they are holding about 860 billion dollars of treasuries which is by no means a trivial amount
48:25
and so that means they’re still trying to diversify but it’s very difficult to do so when you have that large amount of
48:32
reserves and the fact that dollars do accounts for 58 of the total reserves
48:37
around the world right foreign exchange reserves around the world it’s like what can you buy yeah so so China they
48:44
actually wanted to buy things like U.S tet firms right or any sort of real assets from the United States but that
48:51
was basically blocked right abundant Nation yes yeah yeah because that’s where I was going to contrast it with
48:57
when the government of Norway builds up export revenues instead of saving it in dollars it’s chosen to diversify invest
49:04
whether they have a portfolio of equities otherwise known as a sovereign wealth fund I believe the Chinese
49:10
government has similar portfolios yes they do the China Investment corporation
49:17
they set it up in 2007 and that’s precisely the it’s a solving investment
49:23
funds that do go out and fund other kinds of Banks and also directly invest
49:29
in some of the projects I think some M tears get confused by Sovereign wealth funds because I think the way it’s
49:37
pitched to us say in the UK is that we squandered our oil wealth our North Sea
49:42
oil wells we didn’t start a sovereign wealth fund back when we were selling a lot more oil whereas and always done it
49:48
right and mmters will say well look any domestic spending that we need to do we’re monetarily Sovereign we don’t have
49:56
to you know what I mean it’s not dependent on our exports and so why do
50:01
Nations have Sovereign wealth funds and I guess our answer to that is well you have no choice but to build up reserves
50:07
of some kind that aren’t your currency when you’re a net exporter am I right yes that is a great question and that’s
50:14
exactly what I am hoping to spend a few more minutes on this which is what is the logic of countries that you know
50:21
knowing or not knowing that exports are a real cost and why are they still trying to net export and then just build
50:27
up all these reserves and then my dual reserves pay very little because they’re mostly there for security and liquidated
50:33
reasons so in other words our hard-working Chinese worker works so hard to export and we earned the dollars
50:39
and now we turn around invested dollars into treasuries that earn very little why are we doing this so you’re right
50:46
solving wealth Fund in some ways can help to make those reserves more profitable or more efficient or
50:53
efficiently used and however you wanted to put it instead of just putting in the treasuries that pay so little right so
50:59
it is helpful but at the same time it still doesn’t really necessarily address the question of why countries start
51:06
doing that so the US would always say the Chinese are implementing this new mercantilism policy right that China
51:13
wants to export because they want the dollars because they want to create jobs at home and so forth but I think one of
51:20
the major reasons and if you look around the world if you look at the amount of Foreign Exchange reserves that have been
51:25
accumulated especially in the developing world and you just analyze right just to
51:31
think a little bit about why countries accumulate that much of reserves right when you look at the conventional deal
51:37
is you accumulating Reserve that are enough to pay your three months worth of imports or you could reserve that are
51:45
able to cover your one year short-term debt and your articular reserves that are equivalent to a certain ratio of
51:50
your M2 there are all these different reasons for why countries accumulate reserves but by whatever measure that
51:56
you look at right countries are accumulating way more reserves than what
52:01
rational kind of policy makers would do right why are you accumulating so much of security why are you keeping so much
52:08
when you’re offering reserves as a reserves instead of actively invested overseas and use it to import right to
52:14
benefit your citizens and so on and so forth what I would argue is this we have a very dysfunctional International
52:21
Financial system the Bretton Woods system which creates all these Financial
52:27
instability all these Financial crises and there’s no actual sense of the
52:32
lender of Last Resort and we have a system where the debtors the deficit countries are responsible for making the
52:39
adjustments so this is a system where you have to seek self-protection and the
52:44
way countries do that is by accumulating reserves when you look at China for example they really learned the lesson
52:50
from the Asian financial crisis in the late 90s and that’s why once they joined the WTO once they’re able to accuse net
52:56
exports once they trying to attract for angular investment they start to accumulate foreign exchange reserves so
53:02
one could argue you could always create jobs domestically you don’t need to be
53:08
an exporter in order to create jobs there’s no no natural constraint for any
53:13
countries to achieve for employment you don’t have to do this through better day neighbor kind of policies to export jobs
53:20
you can create jobs domestically so really what countries are doing right now is that the International Financial
53:26
system is failing them and therefore they would have to trying to protect themselves by trying to be a next orders
53:32
and trying to accumulate foreign exchange reserves now I know that sounds some people would say this doesn’t give
53:38
the developing countries any sort of agency in determining their own policies but I would say they do have the agency
53:43
but they have to look at the international situations in order to decide what is the priority to stabilize
53:49
the financial order and so on and so forth so right now there’s a lot of debates about the dollarization how
53:55
Chinese U.N May in some ways replace the dollar or at least Dethrone the Dollar’s
54:01
hegemonic status but I think the real question is Deutsche simply wanted to replace one currency with the other or
54:07
do we want to reform the system so that we don’t have the need right the perceive the need a financial
54:13
instability and the need to accumulate reserves and the need to adjust as a
54:19
deficit or that a country because now all this version of adjustment is imposed on the deficit countries the
54:26
debtor countries so I think that is the real problem we have over half of these
54:31
low-income countries are either indeed that distress or at the brink of that distress and there’s no really workable
54:38
pathway right now and I think that is the big problem that the system is really failing and we need to change
54:44
that so A while back before the whole Ukraine war started I remember quite a
54:49
few articles going around about the danger to the US of the Chinese holding so many bonds and a lot of it focused on
54:56
what the Chinese could do with those bonds right the power that it gave the Chinese it’s funny everybody thinks
55:02
they’re losing in this equation as well but they forget I think where those
55:09
bonds are held and if the war in Ukraine showed us anything was that the U.S is
55:14
very willing to use its authority to deny access to those bonds to anybody
55:20
that it feels threatened by so I think it froze Russia’s reserves and I was
55:25
wondering and you’ve already mentioned that China was already seeing some risk in having everything in all the eggs and
55:31
one basket effectively in dollars and they were trying to diversify a bit but to what extent has that been even a more
55:39
pressing need following the war and seeing how the US has reacted to the Russia threat and I feel that China
55:45
often keeps its cars very close to its chest just because it wants to do its
55:50
own thing behind the scenes prepare for any eventuality and then not upset the
55:55
monster in a way until it absolutely has to but do you think that war situation has made them realize something or was
56:02
it something that they were already expecting there’s so much unpacked in your statement I mean because there’s a
56:09
really I think really great kind of context I just maybe just a few points
56:14
that you just mentioned one is yes you’re right the US definitely has the way right to block the kinds of any
56:20
actions from China to supporting called down the U.S treasury stick with freeze the Chinese foreign change reserves and
56:26
so on and so forth like the way they did to other countries including Russia or Iran for that matter from the
56:32
perspective of China I think going back to this again this idea that when you are having so much treasuries or any
56:38
sort of Technology nominated assets it’s totally not in the interest of China to purposely right trying to crush the
56:45
dollar value because they are going to be the one holding much of the loss not the United States so I think we need to
56:51
look at from both sides that the U.S has the capacity to stop that and China does not have the willingness to do that in
56:57
the first place so that’s number one and number two I think particularly you were talking about how China is not trying to
57:02
offend unless he has to and I think that in a way it does speak to China’s
57:07
priority Chinese or the Chinese leaders right at least in the opening statements they really prioritize their own
57:15
development from within it’s not that they are trying to really challenge the US’s status and whatnot and completely
57:21
like what the Washington likes to say right to change the role of the order right the rule-based stem and what not
57:28
what not I mean China definitely wants to improve that system but I I don’t see that China somehow really trying to have
57:35
the sort of open sort of cold war or open kind of confrontation with the United States I mean if anything every
57:41
occasion the Chinese leaders are trying to say let’s seek co-existence right peaceful coincidence so I don’t see the
57:48
point that China is trying to offend even at the great expense of its own economy and its dollar reserves so to
57:55
speak it’s quite funny because here obviously you get a lot of stories or China is preparing as if China is in a
58:01
constant state of preparing for war against the west and then you see them do their own thing and you’re like
58:08
they’re minding their own business I mean there’s a lot of debates about China’s increasing its military budgets
58:14
natural defense budget but when you look at the US you know over 800 billion dollars China is 200 billion yeah
58:20
China’s population is way more than the us when you look at per capita it’s really nothing the US is understanding
58:26
is the next 10 countries combined right and not to mention these overseas military outposts the U.S Far Over
58:33
dominant than any countries in the world China has one Richard base at Djibouti the U.S has what 300 400 I don’t
58:40
remember I can keep counting the numbers but they would never use those for evil of course not right Liberation purposes
58:47
yes exactly exactly so I definitely think this has been a process in the
58:52
making in terms of trying to dilute right the sort of the Reliance on the US
58:58
dollars in international trade Finance in investment as a vehicle currency and
59:03
also as for exchange reserves and as I mentioned it’s starting way early 2009
59:09
which one the then Central Bank Governor already said we need to have a international Reserve System we can’t
59:15
just rely on the dollar if the U.S creates a financial crisis right and the dollar is going down then it’s going to
59:23
drag the entire world with it so we need something else and so that’s why China is not only trying to diversify is
59:29
foreign exchanges but it has work with many other countries like Brazil like Argentina to have the r b as the trade
59:38
invoice right they’re agreeing to pay for China’s exports with the U.N instead
59:44
of the dollar and also China One strike the deal with Saudi Arabia to buy oil West Yen and settle some of the trade
59:50
with Yuan so China is definitely trying to move away from that dollar dominant system and China is also working on
59:58
setting up the swap lines right the current swaps with many countries in the world so in the sense that if there’s
1:00:05
any dry up of dollar liquidities then China and their significant trade or Investment Partners will be able to
1:00:12
provide liquidity from their swap lines China is also developing the sips right the China inter banking system which is
1:00:20
a small scale counterpart of the Swift system so that they’re able to do their International banking clearing without
1:00:27
having to resort to the US dominant system so there are all these efforts
1:00:32
that I think China is working on and trying to be less reliant on the US
1:00:38
dollar but I think again we need to take the global South not just China not just
1:00:43
the brics countries brics countries are doing a lot of some sort of the kinds of
1:00:48
reforms of the at least at the regional level at this country group level right to reduce the Reliance on the dollar the
1:00:55
NDB the new development bank which is a bank that is set up by the brics five countries they are trying to increase
1:01:01
their local currency lending to about 30 percent of their total loan portfolio this is the their new president which it
1:01:09
was the former president of Brazil have openly made announcement that we need to avoid putting all our eggs in one basket
1:01:15
we need to increase the local currency lending instead of rely on the dollars just in case if the dollar liquidity is
1:01:22
cut off or if the dollar system is blocked or if dollar loses its value and
1:01:28
whatnot so there are many different risks and I think countries start to realize and they’re trying to work
1:01:33
around so we’ve spoken about the risks of holding the currency and the benefits
1:01:39
of exporting in terms of the financial side of things but I mean the exporting
1:01:44
strategy in China was also done for other reasons I mean the reason why China has grown so much is because of
1:01:50
the growth of manufacturing over there and a lot of that has to do with I mean correct me when I’m wrong but they
1:01:57
facilitated the exporting markets about subsidizing to some extent the foreign
1:02:03
entities coming and investing and placing conditions on those Investments that they saw long-term benefits from
1:02:10
and these seem like such a departure from the usual developing country
1:02:16
approach of just fully protectionism and just curtail Imports and just focus
1:02:22
internally on your own developing your own Industries China had a much more open approach to this My worry is that
1:02:31
there’s success in doing that it’s very difficult for two countries in the world to be China I think there can only be
1:02:37
one really I was just wondering what you thought about that and whether you thought that was the best approach or
1:02:43
whether some more of the traditional type of protectionism would have been useful as well I think the whole sort of
1:02:50
discussion or the whole Theory right about open tree versus protectionism I think it’s in some ways it’s a false
1:02:56
dichotomy I think that if you look around the world looking at the history right that’s the famous Hajime John’s
1:03:03
book about kicking away the letters which is these developed countries who are now the strong advocate of open
1:03:09
Trail free trade they were never a free Trader when they were growing when they were developing countries so I think a
1:03:16
similar thing can be said about the current developing countries which is they do need some kinds of protectionism
1:03:22
quoting quote right like you said subsidize your Expo production or provide the right kind of policy the why
1:03:29
the financing the right of incentives the writers in infrastructure to support your export production I think
1:03:35
development countries should totally do that I don’t see any reason for why they have to stick to the sort of free trade
1:03:42
or liberal trade that are imposed on them by the Washington consensus because these countries the developed Church
1:03:48
they didn’t do that themselves at all right now they’re telling us to do the things that they did not do in the past
1:03:53
so I definitely think that between development first kind of priority
1:03:59
versus maintaining that free trade or liberal order I mean development countries should definitely choose the
1:04:04
first right they should choose putting the development first and protectionism or free trade quote-unquote what not
1:04:11
those only serve the purpose of their Economic Development that’s number one and number two to look at China’s civil
1:04:17
over experience and I think it’s right I don’t think that the traditional sort of export like growth is really a good
1:04:23
characterization of China you need to put State somewhere in that phrase well
1:04:28
like gross right I mean I am working on the book to talk about really From mmt’s perspective through mmt lens looking at
1:04:35
China’s growth I mean when you think about 300 million or 400 million those
1:04:40
migrant workers from the rural areas to the urban sector and working this export production sector the first question you
1:04:47
ask is you know why other countries cannot do that right I know that there is a population size issues but also why
1:04:54
we don’t see all these Urban ghettos and all these workers being unemployed and not being able to increase the
1:05:00
productivity and so forth I think the government definitely stands behind to provide the infrastructure to Urban nice
1:05:07
right to be able to create jobs for these workers and to provide the necessary social sort of infrastructure
1:05:14
right for these Urban workers to be able to work and live in urban areas and like
1:05:20
you also mentioned Patricia that China does not just allow foreign investors to come in and do whatever they want right
1:05:26
they are very carefully allow certain foreign investors to come in and allow them to be in Social in forms right it’s
1:05:33
a joy venture or is a completely privately foreign owned and also in what sectors right so there’s a lot of I
1:05:40
would say State I don’t know what you want to call it people call it stay steering they’re people call State lead
1:05:45
they’re saying stay craft but maybe all of those right but then the question
1:05:50
becomes now that China is at the point where it develops to a certain degree right it cannot continue to rely on
1:05:56
external demand it needs to develop its own internal market and its own domestic demand and I think that is precisely
1:06:03
what China has been doing right since the early I would say right around 2014 when the then Premier when jabal has
1:06:11
been talking about China’s growth has been uncoordinated and balanced and unsustainable so there are all these
1:06:17
efforts in trying now to develop more domestic demand based economy so we
1:06:23
could again talk about where China is at this point and how it’s able to do it or not that’s a huge other sort of debate
1:06:29
but just to your question yeah yes I think that in some ways the external demand has been very helpful for China
1:06:36
in the past 30 40 years but that is not really what China can continue to do in
1:06:42
the future but then also this point about free trade or liberal order and all of this I think countries should
1:06:48
always question and challenge that the interesting thing is now is the United States ReDiscover the industrial policy
1:06:55
I actually don’t think they ever forget about it right they have all these military industry complex that really
1:07:01
help to fill their industrial production and so forth I mean don’t think that industrial policy is ever at the back
1:07:07
seat it just depends on where the industrial policy is being implemented in what sector and benefit home I think
1:07:13
that is the question that has been changing but you know again the U.S subsidies on their agricultural
1:07:18
production the protection and the aquaculture sectors that never went away right so it I think it’s just
1:07:24
hypocritical when you accuse other countries in subsidizing their industrial production and yet all these
1:07:30
Advanced countries why once they have the competitiveness in their industrial sector they continue to protect their agriculture sector and yet they’re
1:07:36
simply just you know ignore that or just conceal that yes that hypocrisy is not
1:07:41
just limited to America as well because when the inflation reduction Act was introduced at the period of the year or
1:07:48
it kicked off to my memory at the beginning of the year around Davos we’ve
1:07:53
got a lot of leaders in Europe and in the UK declaring the inflation reduction act to be the opening salvos of a trade
1:08:01
War I just think well what’s the problem here let’s have a competition to create green jobs that’s finally have a war
1:08:09
where the people who lose still win right absolutely I think when
1:08:15
it comes to trying to make the planet more green more sustainable more climate resilient you know as many as much
1:08:21
subsidies as you can look for I mean that’s always good to promote right the kinds of green Industries and green
1:08:27
technologies I think the only thing is again when developed countries have all the monetary sovereignty right the
1:08:34
fiscal power to do all of this I think we should not forget that the developing countries cannot be left out because we
1:08:40
share the same planet and so I think that is really to think like when China now is dominating in new energy vehicle
1:08:48
or solar panel production or wind turbines I definitely think that China needs to share the Technologies and help
1:08:55
develop countries to build their own climate resilient sort of infrastructure and I think to some degree China was
1:09:01
doing it in its belt and row initiative especially in the recent years even though the scale has been going down
1:09:08
China’s Barrel initiatives in terms of overseas spending it has gone down visibly since about 2016 and of course
1:09:15
the covet worsened that even more but at least I think China now is trying to
1:09:21
help countries like South Africa right and trying to help them to build more reliable and green power utilities and
1:09:30
help them to build their transportation and also their power generation those two are the biggest sectors of the
1:09:37
investment of China’s overseas financing actually starting in 2018. I feel like China sharing technology with the
1:09:44
developing world is probably the US’s worst nightmare at this point try I think that’s totally true and I think
1:09:50
that at the same time I think once the US realize China now is a big competitor in those developing World they are
1:09:56
trying to gear up right so they now have the global structure partnership initiative and build out better
1:10:01
initiative and all of these I think to some degree is really they know if they’re not up the game they’re going to
1:10:07
be out of the game so a healthy competition is actually really good I think if anything one quick question
1:10:13
about China’s intentionality one quick question this and that but I think at least if China make the US aware that
1:10:19
they cannot continue to forget about the developing world you know I then that is a great success right absolutely
1:10:25
absolutely yeah yeah so yeah before we wrap up I know you’re a very busy person
1:10:30
tell us what you’ve got coming up in terms of events or papers or anything else that you’ve got going on in the
1:10:36
real world or online or you know alternate Dimensions even anything you’ve got going on you mentioned you
1:10:42
were working on a book so I’m taking sabbatical in the fall and so my husband Eric Gets also had having a whole Year’s
1:10:48
radical so that it’s really just precious time for us to really be able to focus on our research so for me I
1:10:57
have the two I think maybe three commitments for conferences so one is
1:11:02
this summer workshop on mmt that’s going to be imposed on in Poland that I’m
1:11:07
going to be part of and then there is the MIT conference in Berlin right after the summer school so I’m going to be
1:11:15
participating that as well and then I think there is another polish NGO or
1:11:21
they call it regeneration Congress it’s basically again trying to look at alternative theories to challenge the
1:11:28
mainstream thinking and so I also agreed to be part of that so those are mostly
1:11:34
just three conferences that I’m going to in the fall but before I go to Europe
1:11:40
I’m going to first make a trip to China which I think I talked to Christian about it I’m going to China next week
1:11:47
actually July the 6th so I’ll be visiting some universities and trying to promote mmt or have kinds of the
1:11:54
conversations with either MNT supporters or MNT opponents right so hopefully we
1:12:01
could have some productive conversations about m t in China or mmt theories and
1:12:07
mmt in the developing world so some of the very fascinating I think topics so
1:12:12
those are mostly in terms of conferences and workshops and I wanted to reserve most of my time working on my book
1:12:19
project which is through mmt lens looking at China’s Economic Development and I think I’m also trying to if I may
1:12:27
like if I have the time really write a little bit more about China’s role in
1:12:32
the Global Financial system in terms of again different Finance abroad and a home because I think there are just so
1:12:39
many misconceptions some of which we discussed today right like oh China’s dumping the US treasuries and the us is
1:12:46
going to go bankrupt and all of that stuff I just sometimes it’s difficult it just completely focus on your project
1:12:52
when there’s so many other feeling right very pressing kind of conversations that you want to be part of so yeah it will
1:13:00
be I hope it will be a busy semester focusing on Research well I just have
1:13:05
you’re taking some time for yourself in the middle of all of that just to look after yourself and recharge yes I will
1:13:11
definitely try to do that right work life balance what is that is that you’re on the thing I’ve read about it yeah and
1:13:19
before I forget to ask the mmt event in China is that something that people can
1:13:24
register for online is that something that we can link to I don’t really know at this point so these are mostly based
1:13:32
on universities so the one that I’m going to at the two up that I’m going to one is really the top university in
1:13:38
China it’s the zhen Ming University and they definitely have the ears of the policy making Circle and think tanks so
1:13:46
that is a very important mmt he I was a breeding ground in China there are
1:13:51
definitely professors who have been writing mmt books they have been advocating mmt in the policy making Circle they have these macro it cannot
1:13:59
Forum that they organized that they invite policy makers and think tank high
1:14:04
level advisors to be part of so I think that would be a great opportunity but
1:14:10
one way or the other I think there’s some conference proceedings or if there’s any conference papers that I could share I would definitely get hold
1:14:17
of those okay well we could talk for hours but we’re gonna have to leave it there we’ve been speaking to Professor
1:14:22
Yan Liang I’ll link to where you can stay current with Yan and everything she’s up to in the show notes for this
1:14:28
episode and to where you can find out more about the international European mmt conference which takes place in
1:14:33
Berlin on the 9th and 10th of September and as we said that will feature Yan along with L Randall Ray Nathan tankus
1:14:41
Dirk Ence Stephen Hale and Dongo sambasilla and many more for our UK
1:14:46
listeners there’s going to be a event in London on the 1st of September featuring mmt founder Warren Mosler tickets are on
1:14:54
sale yet but I’ll link to where you can sign up to the gims mailing list for updates about that and finally for our
1:15:00
patreon subscribers there’s a link to a patron episode that we recorded recently with Dr Sam Levy about economics in the
1:15:07
movies along with many other Patron only episodes including edited audio highlights of the book launch of mmt key
1:15:14
insights leading thinkers check out the show notes for all of the above but for now thanks so much for joining us today
1:15:21
on the mmt podcast Professor Yan Liang thank you again I really appreciate the
1:15:27
opportunity Christian and Patricia it’s been such a pleasure to talk to you and
1:15:32
I just look forward to hear the conversations in the near future
1:15:39
[Music] [Applause] [Music]
1:15:46
that was the mmt podcast with Patricia Pino and Christian Riley
1:15:51
don’t forget you can support the show through patreon starting at a dollar a month and get access to Patron only
1:15:58
episodes you can do that by going to patreon.com mmt podcast you can also
1:16:04
find me on Twitter at mmt podcast and you can find Patricia on Twitter at
1:16:10
Patricia npino and you can email us at mmtpodcast outlook.com thanks for listening and we
1:16:18
hope to hear from you [Music]
1:16:30
thank you
