How the Chinese feel about EU, U.S. economic problems

Marketplace Staff Oct 13, 2011

How the Chinese feel about EU, U.S. economic problems

Marketplace Staff Oct 13, 2011

Kai Ryssdal: The near-constant news of impending doom in Europe and our own near-comatose job market have left the planet’s most dynamic economy mostly out of the headlines. China’s still chugging along — growing at a steady rate of around 9 or 10 percent. And watching, we imagine, as the West tries to sort things out.

We’ve got our China correspondent Rob Schmitz on the line from Shanghai to get some idea of how our problems are playing over there. Hey Rob.

Rob Schmitz: Hey Kai.

Ryssdal: So we’ve got a billion people, that’s a whole lot of opinions, tough to pin them down. Right?

Schmitz: Yeah, that’s right. That’s a lot of opinion, right?

Ryssdal: Well, yeah. But that’s why we have you over there. What’s your sense about what they are thinking about what’s going on over here?

Schmitz: Well earlier this week, I decided to take this question across the river from by bureau to the Shanghai Stock Exchange. I stood outside. I talked to traders, I talked to stock brokers, people who spend their days immersed in global trade. The one thing everyone agreed on, number one, was that the EU and the U.S. have some serious credit problems.

Ryssdal: Yeah, we got that. We got that part.

Schmitz: Yeah, right. We know that. But what was interesting was that everyone I spoke was nervous that this economic crisis could really harm China’s economy. China still relies heavily on exports for growth and Europeans and Americans aren’t buying these exports like they used. Now you’d think that with all of its new wealth, consumers here in China could make up for that. Most people I spoke to said no way — China’s got a long way to go before consumers here are buying at EU and U.S. levels. And many of the people I spoke to said they hope the Chinese will really never be consuming at the outrageous levels we’ve seen in the U.S. and EU with such reliance on credit. Here’s tape from a 36-year-old banker Bai Feifei.

Bai Feifei speaks in Chinese

Ryssdal: Yeah, so all right, give everybody else a translation will you?

Schmitz: Right. So she’s telling me that this habit in the West of borrowing more money than you can afford to pay back is becoming popular in China and she’s really worried about it. Many people I spoke to are scared that this could cause problems for China’s economy. It’s funny, when you talk to Chinese about this, everyone draws a parallel to Wenzhou. Wenzhou is this bustling, coastal city, as you know, in China where the government first tested economic reforms that privatize parts of China’s economy. Lately it’s been famous for having businessmen who speculate on property throughout China and they’re sort of blamed for a lot of things. They’re blamed for driving the country’s real estate prices way up and for using shady, off-the-books loans in order to do that. I spoke with Wang Zongwei, a 46-year-old trader about Wenzhou and here’s what he said:

Wang Zongwei: Wenzhou is very rich, but they have no money.

Ryssdal: That’s a great line. They’re very rich, but they have no money. Right?

Schmitz: Exactly, yeah. They borrowed a lot and now they can’t pay it back. And that’s how many Chinese see the economies of the U.S. and EU, too.

Ryssdal: All right, well step back for a minute and help me understand why the Chinese government keeps buying Western debt.

Schmitz: Well, the cynic might say they’re doing it to keep their economy low to boost exports. A lot of U.S. senators are saying that, too. And there’s probably some truth in that, but that’s not the only reason. The trader I spoke to said he thought it was wise to invest in the U.S. simply because it’s an economy the Chinese have confidence in. Americans may not have confidence in it themselves, but many Chinese do. And here’s why: They have a good understanding of how far China still has to go to become a country like the U.S. China has so many problems, people here know that. And they know — more than many Americans — that China lacks a lot of things that make a truly great economy: innovation, transparency, a legal system that protects your assets. Some might argue that the U.S. is lacking in some of these categories too, but according to the people I spoke to outside of the Shanghai Stock Exchange, for all its flaws, the U.S. economic system is a more developed, mature one than China’s.

Ryssdal: Marketplace’s Rob Schmitz in Shanghai for us. Thanks Rob.

Schmitz: Thanks Kai.

Check out more responses from Chinese citizens as they discuss the West’s economic problems.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.