25 Jan 2018
US writer Gordon Chang only made himself a laughing stock with his 2001 book The Coming Collapse of China, but international hedge fund managers who have bet against China’s economy are losing their pants.
In 2017 alone, bearish investors who “shorted” Chinese companies listed in Hong Kong or the Chinese mainland suffered losses of more than $35 billion, almost half their total stake, the Financial Times reported earlier this week, citing New York-based data provider S3 Partners. That has led to some of those China bears shutting their funds, many of which were set up following the 2008-09 global financial crisis that exposed the weaknesses in Western economies.
Throughout China’s rise over the past four decades, there has never been a lack of doomsayers uttering dire warnings about the country’s economic and political future. Yet their pessimistic forecasts have never accorded with reality.
China’s economy has increased nearly tenfold since the publication of Chang’s book, contributing to more than 30 percent of the global economic growth annually over the past five years, exceeding the combined total of the United States, Europe and Japan. Its continued growth to supplant the US as the world’s largest economy in the years to come seems to be a question of when, not if.
The FT report attributes the wrong betting by the China bears to their misreading of the country’s economic situation. What it fails to mention is this is borne out of the perennial bias, arrogance and complacency harbored by some in the West toward China.
They are still looking at China through an ideologically tinted lens, even though as writer Martin Jacques remarked, China “has overturned more than 200 years of history” in its process of development.
Their blinkered views mean their expectations for China’s future tend to be based on subjective impressions rather than objective analysis. They tend to focus only on the economic or social woes that China suffers on its development path while turning a blind eye to its resolve and capacity, as well as its systemic advantages, that enable it to overcome these obstacles and press on to its goals. For instance, the “short China” fund managers see the country’s debt mountain, but underestimate the country’s ability to defuse the risks to its financial stability.
On Wednesday, at the ongoing World Economic Forum in Davos, Liu He, a member of the Political Bureau of the CPC Central Committee and head of the Chinese delegation, said the country will continue to push ahead with reform and further open its market to the world, echoing what President Xi Jinping emphasized in his speech at the 19th National Congress of the Communist Party of China in October, when he said the country will press ahead with reforms to realize the economic transition from “quantity to quality” despite any headwinds they may encounter.
The future will show that it is those leaders and investors who are bullish on China that will be on the right side history.
(First published in: http://www.chinadaily.com.cn/a/201801/25/WS5a69d2c3a3106e7dcc136a76.html)