Marc Faber: Why China Is Quietly Pulling Ahead of the West

**SPEAKER_1** (0:05)
What kind of shape is China in? And if the US falters, can China provide growth for the global economy?

**Marc Faber** (0:13)
China today is in a mode where it's unlikely to provide growth for the global economy, as it did, say, in 2010, 2011, and on previous occasions. But its economy by itself is doing okay. It's not doing particularly well in one sector, and that is real estate. This is still an overhang. But because prices have come down, real estate has become more affordable. So that is a positive. And the economy is now essentially facing an obstacle to growth. And this is a declining population.
And especially a declining population of young people.
But the Chinese, as you know, and this most people just don't seem to realize, in many sectors of the economy, the Chinese are way ahead of the Western world. But miles ahead in terms of technology, you look at cars. I mean, in theory, the Chinese car industry could put out the entire Western car industry out of business. Because they can produce cars at about half the price of Western companies.
I mean, it's amazing. And they are technologically very advanced. And in other sectors, it's the same story. That's why, when people tell me about the bright future of AI and so forth, yeah, maybe. But maybe the Chinese will produce all India. You know, people don't talk about India, but in India, they also have more than a billion people, and they have per million people, one genius. We also have a genius per one million people. But in Switzerland, with a population of eight million or ten million, we only have eight geniuses and each have a thousand.

**SPEAKER_1** (2:39)
Don't tell Switzerland that.
It's true, but all of those, well, more in the case of China, I suppose, it's able to dominate because it's able to keep prices low, right? It's export power. But in order to do that, you can't have a robust domestic consumption or pay higher wages. It's sort of caught between those two forces, isn't it? Does that limit it? Because it always says it wants to grow its middle class, grow consumption domestically, but in order to, unless robotics will solve that problem.

**Marc Faber** (3:16)
No, the robots will not solve the problem. But given that the population is declining, you sort of need robots. And there are lots of activities that robots can do better than a human.
I mean, I'm sure.

**SPEAKER_1** (3:34)
And that keeps the cost down. That enables them to continue to be an export giant.

**Marc Faber** (3:38)
Yes, and to invent. I mean, the view in the Western world is still China produces Nike shoes and sell it to Nike and Nike distributes it in the US and so forth. But this is gone. I mean, the Chinese have a lot of innovation and inventions.
And I think the world will be surprised by the advances, the economic advances that are occurring outside Europe and the US.

**SPEAKER_1** (4:14)
Do you like, do you invest in China? Do you think that's a destination? Is that investible?

**Marc Faber** (4:20)
Yes, it's investible. And I think one way for investors to participate in China is to actually buy Hong Kong shares, because it's sort of a warrant on China.
And the city, of course, real estate came down and there was a problem in real estate and to some extent is still existing.
But I look at cities in England and in Germany and in Baltimore and San Francisco, and Chicago and Cleveland in America. Then I tell you, when you have a family and children that go to school, maybe you actually quite enjoy that your children can walk to school and not need a bodyguard to take them to school and back to your home, and that you don't need three guards to look after your house when you're sleeping at night. You understand? The safety of Hong Kong and Singapore, and also Bangkok, incidentally, is very high relative to everything else. I mean, I shouldn't say this on TV, but I don't have a key to my office and to my house. My door is always open.

**SPEAKER_1** (5:46)
I think we will have to edit that out, Marc. Thankfully, they don't know your address, and it's not that easy to get to.

**Marc Faber** (5:53)
They don't know where I hold my gold.

**SPEAKER_1** (5:56)
That's right. More importantly, where you hold your gold.

**Marc Faber** (5:59)
They don't know that I have three crocodiles in the garden.