11/30/2011, 00.00
CHINA
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As China’s govt cheats, its economy is “on the brink of bankruptcy”, Chinese scholar says

These remarks are not from a dissident or a foreign analyst but from Larry Lang, professor of finance at the Chinese University of Hong Kong and a well-known public figure on mainland television. In a lecture he delivered behind closed doors, he said, “we are not allowed to speak the truth” and “Every [Chinese] province is a Greece.” In an audio file, he explains in five points why China will collapse.
Shanyang (AsiaNews) – China’s economy is on the “brink of bankruptcy” and “every province is a Greece.” Even though, this is factual, “under this system, we are not allowed to speak the truth.” These remarks are not from a dissident or a foreign analyst but from Larry Lang, professor of finance at the Chinese University of Hong Kong and a well-known figure on mainland television. Lang who was speaking in Shenyang City, in northern China’s Liaoning Province demanded strick restrictions on audio and video recordings of his lecture and farbade the audience from reproducing it. However, a leaked audio recording of the speech was made and is now available on Youtube.

In an article on Prof Lang’s leaked speech, The Epoch Times quoted the professor as saying, “What I’m about to say is all true. But under this system, we are not allowed to speak the truth.”

“Don’t think that we are living in a peaceful time now. Actually, the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs,” Lang said. For him, five factors explain China’s crisis.

First of all, China’s debt now stands at around 36 trillion yuan (US$ 5.68 trillion), which includes the total debt of local Chinese governments (between 16 trillion and 19.5 trillion yuan, or US$ 2.5 trillion and US$ 3 trillion) and the debt of state-owned enterprises (another 16 trillion). “With interests of two trillion a year, things will unravel quickly,” Lang is quoted as saying.

Then there is inflation. The official figure is 6.2 per cent, but in fact it is 16 per cent. This is explains the hundreds of thousands of episodes of social unrest and the concerns of the People’s Bank of China, which has recently putting a squeeze on liquidity.

Thirdly, the mainland’s economy suffers from “serious excess capacity” with domestic consumption representing only 30 per cent of economic activity. Even though, the domestic market is underdeveloped, consumer prices are skyrocketing. The drop in the Purchasing Managers Index to 50.7 is an indication of China’s economy going in recession.

Fourthly, the official GDP growth rate of 9 per cent is a fabrication. According to Lang’s data, China’s GDP actually shrank. This is why many private companies, which constitute 70 per cent of the GDP, have had to shut down in the past two years, increasing the ranks of the jobless.

Last point, China has one of the highest overall tax rates in the world. Chinese businesses pay about 70 per cent of their earnings in direct and indirect taxes. The individual tax rate sits at 51.6 per cent.

“Once the economic tsunami starts, the regime will lose credibility and China will become the poorest country in the world,” Lang said in concluding his conference.
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