A Wall Street tycoon who used to advocate investing in China has recently confessed that he misjudged the world’s second largest economy.
Stephen Roach is former chairman of Morgan Stanley Asia and chief economist at Morgan Stanley.
According to the Liberty Times, Roach has been an optimist who never retreated from the Chinese economy in the past. He has long been seen by Beijing as a good friend and a Wall Street advocate for investing in China.
However, starting from 2021, Roach felt deeply suspicious because China beat its leading enterprises to death.
Recently, he released a series of confessions. He first claimed that he is now seriously questioning China’s future.
In an article written at the end of August, Roach said that he misjudged Chinese leader Xi Jinping.
Roach said that with the 20th National Congress of the Chinese Communist Party (CCP) approaching, which will usher in Xi Jinping’s third five-year term, investors have reason to believe that the slowdown in China’s economic growth has only just begun.
Roach, now a professor at Yale University, said that rapid economic growth has been a top priority for the CCP’s leaders for 40 years. But Xi is preparing to give up economic growth in order to consolidate power and realize the Chinese dream.
The senior economist admitted his biggest mistake was to downplay the consequences of Xi Jinping’s thought. He pointed out that, under Xi, China’s new era is more about the supremacy of the communist party, with an emphasis on power, control and ideological constraints on the economy.
Roach stressed that China today has embarked on a new ideological movement under Xi’s leadership. It includes regulatory crackdowns on sectors such as internet platforms, online games and supplementary education, as well as a never-ending zero-COVID policy.
Optimistic about China’s economy for 25 years, Roach now claims that the world’s second-largest economy is facing great risks.