China's devaluation of its currency has been a flop and should be of major concern to the rest of the world, Forbes contributor Gordon Chang tells
Newsmax TV.
"The devaluation last week, which was about 2.8 percent, really was not enough to help exports and that was the reason for changing the value of the currency. Going forward, countries are starting to look at China and saying 'what is going on here?''' Chang said Tuesday to John Bachman, host of Newsmax Now.
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"The real problem is you have a faltering economy, you have a plunge in the stock market, now you have currency turmoil. This is very difficult for Chinese leaders to handle especially because of the intense infighting at the top of Beijing. You put all this together and this looks like a crisis."
Chang — author of
"The Coming Collapse of China," published by Arrow — said China is also poised to lose its designation as the world's most populated country.
"The UN's most recent statistics, which were released at the end of July, show India taking over as the world's most populous state in 2022. This is for the first time in three centuries and perhaps all of recorded history, China will not be the biggest country by population," he said.
"The issue here is that Chinese leaders have really been helped by the demographic dividend, which was this enormous bulge in the workforce and so it made it easy for them to succeed in the 1980s, 1990s and in the first decade of this century.
"Now they're going to have to succeed in spite of demography not because of it, because China's population is going to fall and more important the size of the workforce will get smaller. These are going to be really big issues for Chinese leaders going forward."
Chang said some companies that rely on manufacturing in China are already looking elsewhere.
"You have a lot of low cost manufacturing leaving China and the reason is because wage increases are two or three times of that of productivity gains and you can't do that forever so you do have manufacturing leaving," he said.
"Now with last week we saw that Foxconn, which is the world's largest contract manufacturer of electronics, is going to invest, they say, $5 billion into a particular Indian state. These are the types of jobs that China really needs.
"This is the industry that China needs to be in and now you have these jobs are going to be going to India. This is going to be a big blow for China."
Chang added that the troubled Chinese economy is having repercussions the United States.
"We saw the earnings results for Q2 of this year, the quarter that ended June 30 and many companies blame China for disappointing results … I'd be looking at companies like GM, for instance, to actually have problems because of car sales in China declining," Chang said.
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