Vice Chairman of China’s CIC Says It’s Become Harder to Defend the U.S. Model

Author: Michael Moran  ·  September 30th, 2011  ·  277http%3A%2F%2Fwww.economonitor.com%2Fmoran%2F2011%2F09%2F30%2Fa-must-see-interview-with-the-vice-chairman-of-chinas-cic%2FVice+Chairman+of+China%27s+CIC+Says+It%27s+Become+Harder+to+Defend+the+U.S.+Model2011-09-30+13%3A27%3A48Michael+Moranhttp%3A%2F%2Fwww.economonitor.com%2Fmoran%2F%3Fp%3D277 › Share This Print

For anyone who tracks or covets the attention of China’s huge sovereign wealth fund (SWF), the China Investment Corporation (CIC), a dose of straight talking from senior CIC officials is a coveted and rare thing. SWFs, with the exception of Norway’s perhaps, are notoriously opaque creatures, not only in motive, but also in actual operations. Even the precise holdings of a SWF like the CIC can only be guessed at since China’s government reveals only selective details of the performance of any of its huge global investments.

For that reason alone, watching this interview between PBS stalwart Charlie Rose and Gao Xiqing, the CIC’s vice chairman, president and former chief investment officer, would be worth a few minutes of your time. But there is a much deeper conversation going on here.

“For the first ten years, I always find myself on the defending side of the American system,” Gao says. “Always trying to explain to my countryman, ‘this is how their system works, and this is why their system is superior in many ways’.” But now I find it harder and harder to do that.” Gao cites not only the self-inflicted charlatanism of the sub-prime meltdown and the puritanical foolishness of “see no evil’ regulation as the cause of this, but also “changes in the political field.”

Gao is no critic of America in the fundamental sense. He studied here, admires the energy and ingenuity of the U.S. economy, and recognizes — even hopes to assure – that the American economy remains the world’s most important force for decades to come. But being “that guy” in China these days is getting harder thanks to an insufficient repudiation of the deregulatory financial policies that caused the economic meltdown, a lack of culpability for those most at fault, and most of all, a political discourse so out of touch with reality that it is incapable of looking beyond the next tracking poll, let alone the next election.

When you lose the faith of America-boosters like Gao, a Duke-trained attorney and founder of China’s modern stock market, something is deeply wrong.

Of course, Gao’s remarks were covered by the financial media with a filter that misses this long-term perpsective because, let’s face it, Wall Street is no better at thinking long-term than a House Tea Bagger. Typical of this deafness is the comment of a guy called “sharkswithlasers” on the Charlie Rose site – I imagine him a trader or maybe a bond analyst – dismissing the interview as boring.

“Hmmm. . .Inflation being contained. Global economy not in good shape due to fundamental problems. Fine opportunity still, just harder. Making life difficult at banks in many forms. Easier to do business in China than the United States of America. Fell asleep.”

Yeah, I’m sure you did, bub, along with the rest of the United States of America.