Chapter 452 |
Just as people have different personalities, so do economists.
Some advocate for a large government, while others argue for a small government. Some view the economic situation optimistically, while others see it pessimistically.
Professor Yu Hewei is a representative pessimist, to the extent that he is called China's Dr. Doom.
Even before the collapse of the Shanghai Composite Index in 2015, there were voices of concern about a bubble, but he was the only one who accurately predicted its timing and scale.
There are people in the world who can predict such things without any special abilities like foresight.
Professor Yu Hewei, who is now in his early 50s, is a pure Chinese native, not someone who studied abroad. His English is not very good, so he spoke in Chinese for difficult topics, and Ellie interpreted in the middle.
"As you know, China's growth rate is continuously declining."
It is natural for the growth rate to decrease as the size of the GDP increases. In the first place, it is impossible for a country of China's size to achieve high growth of nearly 10 percent every year.
The problem is the trend. The rate of decline in the growth rate is steeper than expected.
"Currently, it is difficult to maintain even the 'Baoliu' policy of 6 percent."
"I heard that the 6 percent mark has been broken."
The economic growth rate announced by the Chinese government last quarter was 6.6 percent. But no one believes it as it is.
Professor Yu Hewei nodded his head.
"It's a well-known fact that the Chinese government is manipulating statistics and figures."
There are international rules for compiling various economic indicators, including GDP. However, looking at what China has announced, there are more than one or two strange things.
It's so bad that even policymakers collect and analyze their own data separately.
"Nevertheless, the economic growth rate announced by the Chinese government is very important. Because they have been manipulating it all along."
It's a funny story, but if they have been consistently manipulating it, the indicator becomes more reliable.
"The problem is that the growth rate is continuing to decline despite the manipulation. The aging problem is also serious. In China, there is a saying, 'Mibuseonro.' It means getting old before you get rich. Before that happens, we must at least settle into a 'Xiaokang' society."
A Xiaokang society means a society where all people live in abundance.
Deng Xiaoping, during the reform and opening-up, put forward the "Xianfu" theory, which meant that those who could get rich first should do so. But as a result, the gap between the rich and the poor has widened drastically, and now it is a situation that needs to be resolved.
So the policy that came out was the Xiaokang society, and for this, China has been continuously raising the minimum wage while developing the underdeveloped inland areas.
"Herein lies the government's dilemma."
To maintain the growth rate, the government must continue to release money. But if they do this, the government and corporate debt will continue to increase, and there is a concern that the already serious real estate bubble will become even more precarious.
If they preemptively embark on industrial structural reform to prevent this, unemployment will increase, the growth rate will fall, and if things go wrong, the Chinese economy will fall into a swamp of recession.
"Structural reform requires timing and precision. You have to remove only the minimum amount of the affected area within the range that the patient's physical strength can withstand."
"When do you think that timing is?"
"It's already too late. Therefore, it must be done as soon as possible."
This is easier said than done.
It is a difficult task to feed 50 million people, but China has to support 30 times that population. The policymakers are probably racking their brains over it.
"The party is also aware of the risks. But when a problem arises, they just deal with it as it comes."
The theory of a crisis in China is not a recent one.
Last month, at a meeting where he urgently convened the party leadership, President Zhang Pinghua said that they must be wary of black swans and block gray rhinos.
While a black swan is not being able to respond to a crisis because you don't know about it, a gray rhino is not responding to it even though you know about it.
This was almost a direct quote of Professor Yu Hewei's words.
"If the Chinese economy falls into a crisis as you say, when do you think it can recover?"
"A V-shaped rebound is impossible, and it will be in the form of a U-shaped rebound, but that will also take a long time. The reason why Korea was able to quickly overcome the IMF crisis was because the world economy was in a huge boom at the time. But now, except for the United States, the whole world is in a swamp of low growth. The EU is barely propping up its economy through quantitative easing. The conditions for joining the EU include a fiscal deficit and public debt. The fiscal deficit must be less than 3 percent of GDP, and the public debt must be less than 60 percent of GDP. But how many of the 28 EU countries do you think are currently meeting these conditions?"
A very easy question.
"None of them."
"That's right."
Even Germany and France don't meet them.
It is foolish to be obsessed with a balanced budget in a situation where the economy is in a slump. When companies and households are reducing their consumption, the only way is for the government to release money.
The problem is that even if they do this, the economy does not revive.
China's contribution was great in overcoming the global financial crisis, which is said to be the biggest crisis in human economic history.
If China had not risen rapidly as a G2, it would have taken a long time for the world economy to get out of the recession.
So what would happen if China collapsed?
"The Chinese economy is like a huge unicycle. The moment it stops, it will fall. The problem is that the wheel of the unicycle is too big."
"The other unicycles running next to it will also fall over."
Just like the saying, "too big to fail," China is currently too big to die.
There are more than one or two countries that are currently dependent on China. And that would include Korea.
No matter how much you hate China, Korea is a country that lives on exports, and China is Korea's largest trading partner.
If the Chinese domestic market collapses, the whole world will be hit. This is probably the power of a population of 1.5 billion.
"I am not a pessimist. The reason I continue to talk about a pessimistic outlook is to prevent that from actually happening. Even if it does happen, if we are prepared in advance, we can lessen the shock."
As we were talking, the time was up.
We stood up and shook hands.
"Thank you for your words. I enjoyed listening to you."
"I also had a pleasant time. I would like to ask you to visit Peking University sometime. Because many Chinese students want to meet CEO Kang Jin-hoo."
"If I go to Beijing, I will be sure to visit."
***
While the leaders were busy with business, I met with Minister of Commerce Li Xuewei separately for a matter that Taekgyu had asked me about.
He had just met with the Prime Minister of Cambodia, but he welcomed me warmly despite his busy schedule.
"What can I do for you, Mr. Kang?"
Ellie interpreted for me again this time.
"It's nothing special, but I have something I'd like to ask you."
"Haha, please feel free to ask."
"Do you know when the game license review will resume?"
China is the world's largest game market, given its population. However, to service a game in China, you need to get a license from the authorities. This is called a "panho," and China has stopped issuing them since the beginning of this year.
Since they are not reviewing them at all, the launch of new games is completely blocked.
They have been gradually resuming the issuance of panhos for their own companies for some time now, but it is still a very small number. In addition, they have set a total limit on the number of panhos, restricting the number of games that can be launched.
It is even more likely that they will only issue panhos to their own game companies.
Currently, Lost Fantasy M is being serviced in 20 countries, and the online version is being serviced in 15 countries, including Korea, Japan, Southeast Asia, and North America, but it has not yet been able to service in the Chinese market.
In order for VRMMORPG to secure over 100 million users in the future, it is essential to enter the Chinese market. To do that, we need to get a panho now.
"Recently, public opinion in China has not been very good due to the problem of game addiction among teenagers."
Any hobby can become an addiction if you do it too much.
It's common for students to refuse to go to school because they're playing games, to hit their parents who try to stop them from playing, or even to die from playing games without eating properly.
As a result, military-style boot camps have even been established to treat game addiction.
Of course, these are only a few cases, but since the population is large, there are bound to be many cases.
Games are an easy target in China as well.
On the surface, they are promoting game addiction and youth protection, but there is also a strong view that the party is taming the game industry and the IT industry.
"The revised panho regulations will be announced soon."
I nodded my head.
"OTK Games complies with China's regulations. Lost Fantasy Online is operated only on a subscription basis, and there are no separate charges."
"OTK Company is an important partner for the Chinese economy. The same goes for the game sector."
China also knows the importance of the game industry and is trying to grow its own. And they are also very interested in the VRMMORPG that OTK Games is developing.
"I'll have to discuss it with the relevant ministry, but I'll take measures to get a panho as soon as possible."
"Thank you."
This time, I owe him a debt. If there is something coming, there must be something going.
"I will visit China soon."
Minister of Commerce Li Xuewei's expression was satisfied.
"You are always welcome."
***
During the Asian Economic Forum, meetings between leaders continued, and various investment plans and memorandums of understanding were announced.
The joint statement to be announced at the closing ceremony will include measures for Asian economic development and support for developing countries. The representatives of each country continued to discuss the draft of the statement.
Another noteworthy point is the participation of the North Korean delegation.
North Korea participated in the first forum held in Beijing, but only the ambassador from the embassy attended the forum held in New Delhi. However, this time, Ri Hae-ryong, the Vice Chairman of the National Defense Commission, who can be called North Korea's number two, attended with a working-level delegation. The size also doubled compared to before.
It is very unusual for North Korea to send such a high-ranking official to an international event.
The reasons are presumed to be two.
First, North Korea, which is suffering from a chronic power shortage, is showing great interest in TWR. Since it is a small reactor, it can be built anywhere, and since it reuses spent fuel rods to achieve complete combustion, the fuel cost is close to zero. Even considering the maintenance and management costs, it is far more economical than other power generation facilities. Since there is no concern that it will be diverted for nuclear weapons, it will also be easier to get permission from the international community.
Second, Vladivostok is the largest Russian city adjacent to the North Korean border. As such, the development of the Far East is very important for the North Korean economy as well.
A representative example is the Rajin-Khasan project. It was a plan for Korea, North Korea, and Russia to cooperate in renovating the railway between Rajin in North Korea and Khasan in Russia, and to turn the two cities into an economic zone.
When this project was first initiated, there was even talk of connecting the Trans-Siberian Railway to South Korea... but it is currently suspended due to nuclear tests.
Due to various sanctions, North Korea is also in desperate need of foreign currency, so North Korea is hoping for economic cooperation with China and Russia.
President Heo Chang-min, who participated in the forum, announced his plan for the denuclearization of the Korean Peninsula and a peace regime at this gathering of the media.
"The clock is ticking again, pointing to an era of denuclearization of the Korean Peninsula and permanent peace. It is important to act without missing the opportunity. We must move forward without tiring toward a peaceful and prosperous Korean Peninsula!"
***
That evening.
A banquet was held at the accommodation where the North Korean delegation was staying, to which the Korean president and business leaders were invited. I had no intention of going, but the media's attention was focused on whether I would attend or not, so I had no choice but to go.
I exchanged greetings with President Heo Chang-min, the Minister of Foreign Affairs, and the Minister of Unification. I had met the Minister of Foreign Affairs, Kim Sung-chul, before, but this was the first time I had met the Minister of Unification, Yoon Je-hoon.
Come to think of it, having a Ministry of Unification is also a unique feature of Korea.
A moment later, Vice Chairman Ri Hae-yong appeared. He greeted President Heo Chang-min and the ministers, and then approached me.
He is in his late 60s. He is on the short side, about 165 cm tall.
Vice Chairman Ri Hae-yong extended his hand warmly.
"To think that I would meet CEO Kang Jin-hoo here. Seeing your achievements, I felt proud that you are one of our people."
To think that I would even meet North Korea's number two in my lifetime.
I shook his hand.
"Thank you for your words. But didn't the Rodong Sinmun criticize me as a 'lackey of the US imperialists,' a 'vile and vicious reactionary capitalist,' and a 'ferocious South Korean puppet gang'?"
"..."