Gao Xiqing is the president of the China Investment Corporation, a Duke educated attorney, who established the Chinese securities and exchange system and now, in his current role, controls a huge amount of Chinese capital, capital invested in a lot of American debt.
We spent some time together in August during the Olympics but we didn’t talk economics — mostly sports. In the current Atlantic Monthly the best American journalist writing about China, James Fallows, interviews Gao. I highly recommend it.
“People, especially Americans, started believing that they can live on other people’s money. And more and more so. First other people’s money in your own country. And then the savings rate comes down, and you start living on other people’s money from outside. At first it was the Japanese. Now the Chinese and the Middle Easterners.
“We—the Chinese, the Middle Easterners, the Japanese—we can see this too. Okay, we’d love to support you guys—if it’s sustainable. But if it’s not, why should we be doing this? After we are gone, you cannot just go to the moon to get more money. So, forget it. Let’s change the way of living. [By which he meant: less debt, lower rewards for financial wizardry, more attention to the “real economy,” etc.]”
“Be Nice to the Countries That Lend You Money” – The Atlantic (December 2008).
One thought on ““Be Nice to the Countries That Lend You Money” – The Atlantic”
Fallows is great. i helped him when he took over Agenda and we’ve stayed in touch since then. He’s a fellow native southern Californian and I really enjoy his writing.
The Chinese money guy is right on: we have been living on other people’s money for way too long. It’s become a way of life for corporations as well as citizens and when inter dependent economies hit a recession, every connected thing is effected.
US entrepreneurs and many companies tried to prosper on the hope and premise of the Chinese economy but never failed to understand the base-level beliefs or economic principles that are its underpinnings. And most attempts failed miserably.
yhou hhhave to get up awful early to beat a long line of cousins to get any gleanings from a PRC rice bowl and were about to discover this head-on.
Yet another great post Dave