In this special episode, we sat down with former congressman and dean of Liberty University’s business school Dave Brat. He sheds light on what the U.S. midterms mean in terms of China and the economy going forward.
Brat said: “I see huge change. China right now—the Evergrande real estate story, there’s ghost cities, they’re tearing down apartment buildings. On the investment front, it’s easy when you start poor, right? The rate of growth, if you go from $1 to $2, it’s 100 percent growth, right? So the growth rate’s tremendous. But then after you build so many bullet trains and do so many apartment buildings and infrastructure, then it gets harder. Where does your next dollar go? And that’s where they’re at right now. They are stuck. And they have a 40 percent savings rate. So they can make a lot of errors in where they put those dollars, but it’s not looking good right now. And so on the investment front, they’ve got trouble. They have bubbles all over the place.”
When it comes to why investors are still betting on China, Brat said it’s “because [China’s] got overwhelming numbers, and well, they provide you a deal. It’s too good to be true. And turns out, it’s too good to be true. Some of our African friends have found that out the hard way, too.”
As for how to tackle the challenge, Brat said, “There is room for bipartisan shared values on these things. But right now, the hard left seems to have the blue party going. And the Republican Party … there was no leadership prior to the election. I think that the philosophy was, if your opponent’s digging a hole, which everyone thought [they did] on the economic grounds, that’s all you need to do. You don’t need to lead. So there was no leadership position on anything, that I heard. A great country requires leadership. China knows how to lead. I think they’re leading in the wrong direction, but they know how to lead. And now it’s incumbent on our leaders on the Democrat side and the Republican side to stand up for liberal principles.”
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