China’s communist dictator Xi Jinping has no idea how to fix his country’s youth unemployment problem or deflationary spiral, Breitbart Economics Editor John Carney told Fox Business host Larry Kudlow in a Thursday interview.
The topic of discussion was China’s deflationary problem, its plunging import and export numbers, and what all of this means for the rest of the world’s economies.
“China deflation — both the consumer prices and producer prices in China are falling. And what do you think that means for our prices and our economy?” Kudlow asked, adding that China’s economy right now is “terrible.”
“We’re already at $84 a barrel for oil,” Carney noted. “Gasoline prices are headed to $4. That’s with China being very slow. If China does start to stimulate its economy to fight this deflation, that’s going to end up pushing the price of oil up higher, pushing the price of gasoline up higher, [and] contributing to inflation here.”
Kudlow then asked David Bahnsen, the managing partner of Banhsen Group, if falling prices in China will bring down prices in the United States.
“Despite the politics and the trade barriers, we still do a lot of business with China. So, if their prices are falling, David, does that bring our prices down?” Kudlow asked.
“The answer is yes,” Bahnsen said. “And we have a 30-year global precedent called Japan, and when they exported their deflation to the rest of the world it put downward pressure on global growth, including the U.S. You’re talking about Biden’s growth at 1.3 percent. [Larry] Summers calls it ‘secular stagnation.’ It was 1.6 percent for 15 years—half of our post-World War II average. That is largely deflation being exported. It hurts the United States. What is China going to do to stimulate, to counter their deflation? They’re going to try to use fiscal and monetary stimulus like every other dumb country has done in the last 50 years. It doesn’t work.”
Kudlow then introduced the problem of youth unemployment in China.
“The unemployment rate for kids in China is 21 percent, 23 percent. So, I’m just asking you, John Carney, when is the revolution coming? The young aren’t working. It’s a problem,” Kudlow said.
“They’re very scared to have that many young people unemployed, and if it goes up, that’s a big problem for Xi,” Carney said.
“Creating enough jobs for the Chinese population is the number one thing that communists need to do,” Carney continued. “They’re not doing it. The youth unemployment is a big problem. I think they are going to try to throw money at it. The problem is they don’t understand economics at all. So, they have no clue what to do. They’re not Keynesians. They’re not Friedmanites. They’re not supply siders. They’re communists. They really don’t understand economics.”
“I thought they were like Joe Biden – the big government socialists,” Kudlow quipped.
“I would say that Biden understands economics better than Xi Jinping, and that’s saying a lot,” Carney shot back.
“Oh my god, I’m going to have to process that,” Kudlow replied.
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