Li Zuojun, China’s most successful economics doomsayer
June 26, 2013 Leave a comment
Li Zuojun, China’s most successful economics doomsayer
Staff Reporter
2013-06-26
Chinese investors are holding their collective breaths to see if the banking crisis predicted two years ago by renowned Chinese economist Li Zuojun will come to fruition in the next couple of months.
Li, the deputy director at the Development Research Center of China’s State Council, penned an article in Sept 2011 predicting that there will be a major banking crisis in July or August this year caused by excessive local government debt or a housing bubble.Born in 1966 in south-central China’s Hunan province, Li graduated with a doctorate in economics from Hubei’s Huazhong University of Science and Technology in 1992. Mentored by some of the most famous economics professors in China, Li has worked as a researcher and professor, teaching classes at his alma mater Huazhong and the Chinese Academy of Social Sciences, as well as real estate companies, investment banks and property developers across the country.
He has been involved in several major domestic and international research projects and published dozens of articles in major national newspapers. He has also been a leader of more than 20 major research reports for the State Council and penned more than 50 internal papers while working in the private sector. Over the years, his writings have won four China Development Research Awards.
Li said back in 2011 that property developers were experiencing worsening cash flow problems after their four main sources of funding — sales, credit, the capital market and trust financing — had all been on the decline or have hit bottlenecks. Despite having made a lot of money from China’s housing market in recent years, the developers believed they would not be able to hold on for much longer if conditions did not improve.
Housing prices will definitely take a dive, Li said, though it is not clear how far. It is possible that the new Chinese government, led by president Xi Jinping, could maintain tight controls to limit the drop to about 10%-20%, though Li did not rule out the possibility of a US-like collapse where property prices dropped by as much as 50% to nearly 100% in some cases.
Li’s astounding accuracy in predicting China’s economy has led to him earning the nickname “China’s most successful doomsayer.”
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