I encourage you to read the entire Grantham interview; yet his specific views on China are below.
Last year, a friend and I sat in on a lecture given by Eswar Prasad at Cornell University, on the renminbi and China's banking system. It began to dawn on us that the emergence of China as a dominant economic power is quite possibly the greatest dogma in all of finance and economics, and anyone who says otherwise is labeled not a skeptic, but a heretic. (Or at least an idiot!)
Lawrence Summers, an economist, Presidential advisor and former president of
We will see whether or not Summers is correct. Either way, I have no entrenched view or vested interest. But there is no doubt that when it comes to global-macro speculation – whether stock markets, currencies, commodities, or the wealth of nations – China is still the biggest game in town.
What is your bold prediction for the future?
Keying off the word "bold," my prediction is that
That's the nature of the hunch, I look at everything and my stomach tells me they've been extraordinarily lucky in the last 15 years. It's hard to separate good luck from talent. I have a suspicion that a lot of what other people see as skill was good luck. And that they have a difficult job, and under this stress their modest talent will be revealed. The modesty of their talent.
What are some ways they got lucky?
They got lucky that the
Everyone else seems to be quite happy [with
You had mentioned that the Chinese are new to capitalism, so their bench is not very deep.
Are they really so much better that they can handle an economy growing at four times the speed of the U.S. with a lack of experience? It doesn't compute, but we will find out.