Transcription
Hello everyone. Welcome back. Welcome to Lasro Talk.
Well, people have been asking me to do more programs about China's economy. And one of the biggest issues hanging over the country is the debt problem. Uh, if there's one word that can describe China's debt problem, it is obscurity. Because no one truly knows how much debt the country has. We can only guesstimate. Um, and that ambiguity is not accidental. It's by design. The CCP's financial system deliberately blurs the lines between central and local government liabilities, between public and corporate debt, and between official obligations and hidden guarantees. On top of that, corruption, political incentives, and years of massaged economic data have made it almost impossible to quantify the real scale of China's debt burden.
So, tonight I'm going to be very ambitious and trying to uh untangle the true size of the CCP's debt problem. So, for those of you who love numbers, tonight you're in for a data feast. All right, so here's the interesting part. Even though nobody can agree on the exact number, almost everyone agrees on one thing: China's debt has exploded. And according to a recent report uh by a Canadian research firm called Visual Capitalist, China's government debt surpassed that of the European Union for the first time in 2025, reaching roughly 18.7 trillion US. And over the past 17 years, China's government debt expanded by approximately 15.6 times. For comparison, US government debt grew about 3.4 times over the same period. So, China's debt problem isn't just the size, but also the speed of getting there.
And yet, Beijing has consistently insisted insisted that China's debt risks remain, in its word, generally safe and controllable. Um, according to Beijing's own published numbers, by the end of 2025, China's official government debt stood at roughly 96 trillion yuan. Uh, for this discussion, I'm going to use I'm going to use yuan. Uh, just for simplicity, I I have not converted anything to US dollars. Everything is relative. So, we're going to use yuan for this discussion. Yeah, it's 96 trillion. 41 of it is uh central government debt and then roughly 55 trillion is local government debt.
Now, China's GDP last year was 140 trillion and so using these official numbers, we arrive at a debt to GDP ratio um at roughly 68.5%. Now at first glance it appears low because when you compare that to uh the rest of the world to um the G G20 countries and this is based on an IMF report released last year. The average government debt ratio among G20 countries was about 118% and then the average among G7 countries rose to 123 and the US has a debt to GDP ratio at 125. So officially China appears to be in much better shape than most major economies.
But this is where things become misleading because those numbers mainly reflect explicit officially recognized debt. What they do not fully capture are the enormous contingent liabilities or hidden obligations embedded throughout China's systems. Various buckets of debts backed by the government but look like corporate debts such as local government financing vehicles or LGFVs, state-backed institutions, policy bank loans, pension obligations and other quasi-government entities um for which Beijing ultimately bears responsibility. And once those hidden liabilities are added back to the picture, China's debt story begins to look very different. Uh, and I'm going to say I'm going to give you a a a pre-warning, it it's over 300%.
Okay, before we get to that part, let's go through the hidden debts one by one. So, let's talk about the central government debt first. Officially, Treasury bonds are the core component of China's central government debt, but they're not the whole picture. Uh, broadly speaking, central government central government borrowing falls into two categories. The first category um consists of debts formally incorporated into the state budget system and they're mainly treasury bonds repaid through central fiscal funds, loans from international financial institutions and loans from foreign governments. And by the end of 2025, China's outstanding treasury bonds uh or this bucket is roughly 41 trillion. And that's what this this 41 trillion at the top is.
But there is also a second category that's not listed um in the fiscal budget and these are liabilities that may not formally appear within the budget uh but they're still tied to the central government's responsibility. So examples include foreign debts owed by central government departments and affiliated institutions or agencies as well as borrowing linked to major national infrastructure projects such as uh the south to north water diversion project. So the the but the problem is that Beijing has never clearly disclosed the full scale of this category. Um so it's difficult to quantify that but some people have done their due diligence and what they found is that according to the national audit audit results on government debt um officially known as announcement number 32. Um and this document is from 2013. It was more than 12 years ago. And that document stated that by the end of 2012, the central government carried approximately 9.4 trillion yuan in debt obligations requiring repayment of that roughly 7.76 trillion yuan uh consisted of treasury bond debt. So in other words uh if you do the math about 82% of central government debt at the time existed in the form of treasury bonds.
So if we assume that this ratio remained broadly similar through 2025. Now we can use um the current treasury bond balance to estimate the central government's broader official debt burden. So um well yeah I already I already show you that. So here's the uh here's the math. So in 2013 uh 82.2% of central government's debt existed in uh treasury bonds. So we if if we apply that to the 41% treasur total treasury bonds in 2025 you get 50 trillion. And that's the that's basically the broader it's an estimated broader central government debt, right? Um and that's 50 by by the end of 2025. So the difference is 9 trillion, right? The difference between the 41 and the 50 is 9 trillion. And this nine trillion according to this methodology uh is tied to central government agency or debts affiliated with the central government agencies or those state sponsored um infrastructure projects. Um so and this bring us keeping in mind this 9 trillion okay we'll come back to it later and this bring us to another important issue most people have heard about hidden local government debt especially LGFVs but far fewer people realize that Beijing's central government itself also carries enormous amounts of hidden or contingent debt and the 9 trillion that I just um that we just calculated is only one piece of that.
Um so now let's um talk about the central government's hidden debt. CCP has never publicly provided a detailed breakdown of their contingent liabilities. Um so uh there was an estimate done in 2015 that was 10 years ago that estimated that the central government's hidden debt was approximately 8.4 trillion yuan and that estimate was made more than a decade ago and today the real number is almost certainly much higher. So let's go through them one by one. There are several major categories. The first one is called policy bank, financial bonds. Um here we have so these three banks these three institutions rely heavily on bond insurance for funding. Their bonds are approved by the state council and distributed throughout China's state controlled financial system under guidance from the central bank. These policy bank bonds are often described as secondary sovereign bonds or quasi sovereign debt. But unlike here's the key point, okay? Unlike formal government debt, their issuance is not constrained by official government debt ceilings. So in practice, they function as a hidden financing channel for the central government. And Beijing has increasingly relied on this mechanism over time. In 2025, issuance of policy bank bonds was up nearly 25% from the previous year. Um by the end of 2025, outstanding policy bank bond balances had exceeded 28 trillion yuan and nearly all of those bonds are domestically held. Foreign institutions hel um reportly hold around only 700 billion yuan that's roughly two and a half percent of the total it's very small and this is precisely why many people view policy bank debt as part of China's broader hidden sovereign debt structure okay so please earmark another roughly 28 trillion yuan in contingent central government liability ilities.
Okay, let's move on. Let's talk about um this company. It's called Central Investment Limited. Now, this company is actually one of the most important and least understood institutions inside China's financial system. On paper, it's an investment company, but in reality, it functions more like the CCP's financial holding company, a state rescue vehicle, and a strategic control mechanism over China's banking and financial system. It was established in 2003 during China's banking crisis era. At the time, China's major state-owned banks were drowning in bad loans after years of politically directed lending. Beijing needed a mechanism to recapitalize and restructure the banking system without formally placing those losses directly onto the ministry of finance balance sheet. So the government created this company. Um initially it was funded using China's foreign exchange reserves through uh the People's Bank of China. Later it became a subsidiary of China Investment Corporation which is China's sovereign wealth fund. But unlike a traditional sovereign wealth fund, Beijing's primary mission is domestic financial control, not foreign investment. So today this company is a major shareholder in many of China's most important financial institutions. Um in many ways it operates almost like a quasi central bank. Uh financial vehicle uh and and the giving Beijing a mechanism to influence banks and financial markets uh through ownership structure rather than direct administrative orders. And this is why Central Huijing matters so much when discussing China's debt problem. Uh officially many of its liabilities do not appear as sovereign debt but politically markets assume Beijing stands fully behind it. Um and this company began issuing bonds in 2010 and such issuance has since become increasingly routine. Now there's no clear disclosed official figure for the company's total outstanding bond balance. So there's no official number but based on um interbank bond market patterns and institutional issuance history and available financial disclosures. A rough estimate put uh Central Huijing's outstanding bond balance uh at somewhere between 300 billion and 800 billion yuan and it could also potentially approach 1 trillion yuan. So comparatively speaking, it's not big but it's still uh piece of the one piece of the puzzle.
And then there's this piece China Railway Group. Now, the China Railway construction bonds um is another major category of quasi sovereign debt. These bonds were first issued in September 1995. Um, so they were issued by China State Railway Group rather than the Ministry of Finance. The railway system remains fully state-owned and continues to enjoy implicit government backing. Uh, as a result, these liabilities are viewed as part of China's broader hidden fiscal burden. Now uh at one point in 2015 uh China Railway Corporation's debt was estimated at 4.1 trillion yuan that was in 2015 10 years ago but what we've seen is in the following decade China continued aggressively expanding its high-speed rail network and infrastructure um including many routes that don't generate much revenue. Um so given that continued expansion, the railway system's total liabilities today are likely substantially higher. Again, it's a a estimate or guesstimate. It's somewhere between 7 to 9 trillion yuan. It it can go higher. Um but this is based on the uh the 4.1 uh outstanding balance that was uh in 2015. Um so a conservative estimate puts it at seven between 7 to 9 trillion. Um so when we add everything together the picture becomes much larger than Beijing's official numbers suggest. Um I'm talking about the central government right so so the hidden central government debt here you have you have the agency debt of 9 trillion you have the policy banks bond 28 trillion you have Central Huijing bond bonds up to 1 trillion and then you have the railway systems between 7 to 9 and there might be other quasi sovereign financing structures um that we have omitted here.
So now this may not this is still not the most dangerous part of China's debt problem because compared to the central government, local governments are far more financially fragile and far more dependent on borrowing. So that brings us to the next player of China's debt crisis, the local government debt. Um by the end of 2025, China's official local government debt reached about 55 54.8 trillion. Uh I just rounded it off to that's this number 55 trillion. Yeah, 41 and 55. Um now that was not accidental. Um oh, if you if you look at the you almost 99% or 98% of this 55 trillion are all formally issued local government bonds. Um and this is the result after Beijing uh began tightening oversight around 2011 through repeated debt audits. Um and and then in 2015, the authorities formally introduced a quota management system for local government borrowing and began converting older hidden liabilities to standardized municipal bonds. So at least on paper, China's official local government debt today appears relatively transparent and tightly regulated. But a more important point is in terms of the explicit debts, China's local government debt uh is actually larger than central government debt. And this happened I think in 2010. So if you look at the numbers right so by the end of 2025 central government debt accounted for roughly 43% of the total official government debt. Uh while local government accounted for 57% right you have 55 and 41. So local government debt is greater than central government and that's highly unusual in most major economies. Central government debt typically makes up the majority of total government debt because central governments possess greater fiscal flexibility, lower borrowing costs and greater policy tools. Um so China is different. China has the opposite problem. Local government is more in debt than the central government. And this is attributable to the 1994 tax sharing reform that I told you about in my last program talking about China's economy. When was that? April the 30th. Remember I told you that uh as a result of the 1994 tax sharing reform uh there's a distorted fiscal relationship between the central and the local governments when the central when Beijing centralized revenue while local governments retain enormous share of spending responsibilities. Um now that imbalance also applies to debts. So local governments are pushed to be ever dependent on borrowing, land sales and LGFVs while the central government enjoys a revenue surplus and a a and a smaller um um a smaller fiscal liability. And this is the source of the real problem. You know, this distorted fiscal relationship between central government and local government in my opinion is the source of China's debt problem. And this is why this problem can't will not go away. It cannot be fixed.
So now let's talk about the real problem, the local government's hidden debt. Now, in November 2024, China's China's Ministry of Finance announced that the nationwide balance of local government's hidden debt stood at only 14.3 trillion yuan at the end of 2023. That number was widely questioned. Nobody believed it. It was so low. It was only what 14 trillion. Uh now this January, January 28th, IMF released a report estimating that debt tied to LGFVs, local government financing vehicles, the core, which is the core component of China's hidden local government debt had already reached approximately 66 trillion yuan in 2024. And by 2025, that number was approaching 72 trillion yuan. So here's a question for you. Why is there such a massive gap between China's 14 trillion and IMF's 72 trillion or you you could say 66 trillion if if I compare apple to apple. The answer explains the fundamental causes of China's debt problem. According to China's Ministry of Finance, purely commercial loans taken on by LGFVs should not be counted as government debt. The authorities recognize only those liabilities for which local governments have explicitly promised repayment. But the IMF takes a fundamentally different approach. The IMF argues that many LGFVs invest heavily in low return public infrastructure projects such as highway high-speed rails whose c and these project have cash flows that are so low that they're they're it's they cannot cover their debt obligations realistically. In other words, these debt function, these debts function economically as an extension of government fiscal deficits. So that's why IMF believes they should be incorporated into the broader government balance sheet. Excuse me. So you see Beijing and IMF have different definitions on what government debt and corporate debt are. And honestly, the CCP often treats government liabilities as corporate obligations in order to keep official debt figures artificially low. And that blurred boundary between state finance and corporate finance is one of the defining characteristics of China's economic problem or debt problem because this ambiguity is is causing a lot of problem because there's no accountability. Basically it's government debt but the government say it's not it's not mine. It's corporate debt. But who is the corporate? the corporate is owned by the government. You see, um now meanwhile, Goldman Sachs produced even higher estimates. It estimated that China's hidden local government debt might have primarily tied to LGFVs might have reached approximately 91 trillion yuan. So in essence, local governments can be as high as 55 trillion front door or explicit debt plus 91 trillion backdoor that's or hidden debt for a total of 146 trillion yuan. Now the front door and back door terminologies are not what I came up with. They were actually created by Beijing. It it came um during 2014 the authorities revised China's budget law and promoted what they called opening the front door while blocking the back door. So the front door meant formally allowing local governments to issue legal municipal bonds transparently. So that's what the the 55 trillion um local government bonds are were. And then the back door referred to the um illegal or off-balance sheet borrowing channels such as LGFVs. So Beijing tried to shut down the backdoor debts by allowing front door debts, but it didn't happen that way. Um because the problem is that once the back door was opened in China, in communist China, it can never close. In other words, the front door was opened, but the back door never truly closed. And the debt problem got out of control through both the front and back doors um at the local levels.
All right. So, I think I explained this um because the local government debts is is something that everyone I mean we're all aware, but I don't think a lot of people could explain. Um uh at least I haven't seen a lot of people on YouTube explaining um how it came how it came to be. All right, let's talk about another bucket pension liabilities. Right, this is another hidden layer and it's also unique to China. Um, this issue is extraordinarily complex because it sits in the gray zone between the local and central government. It's not clear whose bucket it is. Legally and administratively, most pension obligations remain local government responsibilities. But economically and politically, a growing portion is increasingly becoming an implicit central government liability. You see how everything is twisted in CCP's um financial systems. So formally speaking, local governments still administer and fund much of the pension system. But because many provinces are already under severe fiscal strain, pension payments increasingly depend on transfer payments and support from the central government. So in practice, Beijing is gradually becoming the ultimate guarantor of pension stability. Um and then estimating China's pension liabilities is is extremely difficult because Beijing does not publish a complete long-term actuarial balance sheet for the system and the system itself was never fully funded. For many years, contributions from current workers were used primarily to pay existing retirees rather than being fully deposited into individual retirement accounts and this created massive so-called empty accounts. There are pension promises that existed on paper but were not backed by real assets. And as early as 2015, again, everything that we could reference was 2015 because it was still some kind of financial transparency back then. Um now you can't find anything. All right. So, back in 2015, estimates suggested that these empty urban pension accounts or there's a shortfall of 4.26 trillion yuan at the time. Um much now officially much of the liability um may sit outside the sovereign balance sheet. Um but the but if the government is ultimately expected to absorb the burden then economically it behaves like contingent sovereign debt. Um so again what is that number now right if it was 4 trillion um 10 years ago or 11 years ago what is that number now um now if you look at China is entering an era of rapid aging slower economic growth shrinking labor supply and weakening local government finances. So that liability may fall somewhere in the range of 15 to 30 trillion yuan um because of China's fast aging population and and the and the and the massive loss of um young workforces.
So let's put everything together and now let's add everything up. So you have um central government debt at 7 96. You add everything you add everything in. And this is I think what I came up with. What did I do? Okay. So this is hidden central government debt and this is hidden local government debt. Right? So you have LGFVs um that are estimated between 72 to 91 trillion yuan and then you have pension liabilities um that are estimated between 15 to 30 trillion. Um so if you add everything up, China's total debt is between 226 trillion to 264 trillion. Because you have 132 to 168 trillion hidden debts between the local and central governments. Those are not shown in the previous calculation of debt to GDP ratio. So if we um adjusted the uh the debt to show the fully loaded debt then you have the debt to GDP ratio at 170 to 180%. Assuming China's GDP is 140 trillion. Um now so that's already that has already exceeded that of the US and the G20 and the G7 countries. Right now those of you who have followed my channel for several years already know that I personally do not believe China's GDP figures are entirely true. I believe China has has been overstating its real economic growth for a long time. And I once did a program that estimated China's real GDP, it's somewhere between it it's half half of what it is. So if China's actual GDP is significantly lower than officially reported, then the debt to GDP ratio will be far more alarming. So for example, if we assume that China's real effective GDP is only half of the official number, then the country's debt to GDP ratio is going to double at 340 to 360%. Because the the denominator is smaller. And if that's even remotely close to reality, then China's debt problem may be far larger than most people currently realize. That, my friends, may be the real answer to China's debt problem.
So, let me um summarize. In the end, China's debt problem is not just about how much money was borrowed. It's about how the entire system was structured. Over the past three decades, Beijing built a massive economic machine powered by land sales, infrastructure expansion, local government borrowing, state-backed financing vehicles, and layers and layers of hidden liabilities. Some debts sit on official balance sheets. Others are buried inside LGFVs, policy banks, railway systems, pension obligations, and quasi-government institutions like the Central Huijing Investment Company. Some are called government debt, others are labeled corporate debt. Some are explicit, others are merely contingent. Uh but economically many of them ultimately point back to the same place: the CCP state. And that is what makes China's debt structure so complicated and potentially so dangerous because once the lines between government and corporate liabilities, public finance and state-directed investment, central and local responsibilities all become very blurred, it becomes increasingly difficult to know where the real the real risks actually sit. That's why I said nobody nobody can actually tell how bad the problem is. So this is my very ambitious attempt to quantify the problem by being overly uh by by oversimplifying things but I just want to illustrate the how how distorted the system is and potentially how big the problem can be. Um I think I just try to I just try to illustrate a point. Uh and the numbers the numbers only serve that purpose, right? Numbers are never numbers are only a tool. They exist to tell a story. Numbers are not otherwise numbers are meaningless. All right, that's what I have for you. I said those of you who love numbers, you're in for um for a data feast. Have I lost people? If you're a financial analyst, you would enjoy today's talk. And Lei was a financial analyst. All right. I uh I rest my case. Let's see what people have to say. All right. Um, let me take a sip of water. Okay. All right. Um, no questions. I think I put everyone to sleep already with all the numbers. No. Um, okay. We have maing pork today. What happened to maing pig? Maing pork. Wow. The the Oh my. So tomorrow we will have maing uh what we have bacon. We had maing pig. Now we have maing pork. Tomorrow we have maing bacon. Anyway, um all right. Um, let's see. Questions, comments. All right. Here's a question from Lana Lombardo. At the summit, did Xi Jinping's daughter serve as translator for Trumpi in very private meeting? I have not heard anything about that private meeting. So I don't know if she showed up. No, there's no followup on that. Yeah, I am as curious as you are to find out, but I have not heard anything. Pork awarded me. So, if you carry the two, it sounds like the CCP has squandered China's rise. If you carry the two, what do you mean if I carry the two? If I carry the two, which two? Am I missing something? Um, what do you mean carry the two? Well, you have to give me another super sticker for me to answer your question. But thank you for your support. All right. I enjoy the humor. Um, oh, here's another one. Uh, one could argue that the source of their debt problem is an uneducated economist with a master's in nepotism planning the economy. Actually, I wouldn't say they're uneducated economists. It's they're they have tons of educated well-educated western educated economists in their system but they wanted their uh economy to be that way. They want to have a hybrid of state controlled, you know, a quasi state controlled and a quasi market economy because if you have an absolute state economy, then you will be poor. You have no money um to embezzle, right? And if you have a pure market economy, you cannot control the distribution because the m the market will controls will control the distribution. So the fact that the China's economic system is a is a half state controlled and a half market economy gives those at the very top of the system the freedom to make money and then the power to control the distribution. You see so they get the best of both worlds. So don't think that this distorted relationship is the result of their ignorance or some uneducated economist. It's by design. They want to take advantage of both worlds. Um if they adopt 100% market economy, they will be poor. There will be no money for for anyone. Um so they allowed some market mechanism so that the economy can flourish so there's money to be made and then they also retained state economy or or mechanisms to control distribution so that they could award themselves and people in their circle in their circles the the bulk of um the wealth right they control Because in a pure market economy, the market controls distribution. Um but but then they control the distribution. So it's the best of both worlds. That's my answer. All right. So, you know, I think it was purely wishful thinking for the West to think that by introducing market economy to communist China that they're going to eventually become a market economy or embrace universal values and rule of law. No, they only incorporated or welcomed or introduced or accepted aspects of the market economy that benefit themselves. Yeah. While retaining the the state control mechanism. Everything is to benefit themselves and and their circles. So, okay. Um, wow. Shiming Le, you look like you stepped right out of a water town today. Absolutely elegant and graceful. Gorgeous style to match the brilliant mind. Well, people commented that this is a QR code inspired top. Um, I didn't realize that, but I thought that it was it it's good. It's quite fitting for today's talk. Wearing a QR code inspired top. Anyways, oh, thank you very much for the compliment. Do I look do I look feel like coming out of a Jiangnan Water Town water town today? Well, I'm from Shanghai, so I guess I am from Jiangnan. All right. Well, thank you very much for the complimenting. All right, Maine Pork. It's real easy, folks. CCP lies about everything. That's right. Well said. All right. Uh lay Brett Bayer line one wants to discuss deliver driverless cars. Brett Bayer line one wants to discuss driverless cars. Okay. All right. Um but not the Chinese ones. I I wouldn't trust the Chinese-made driverless cars. Um Jeff Stockwell Le if the state gives itself a loan can it forgive that loan? Of course it can. But but it's very interesting because one thing I learned from today's um research is the CCP has you know on the surface everything looks fine but you would I mean the the whole when I find out how the CCP set up this company called Central Huijing Investment it set up an investment company to solve a financial crisis and it's almost a quasi central bank, but it's not a central bank, it's a private bank. So, it's very interesting how the CCP plays with these financial instruments on the public side and on the private side interchangeably to hide its financial liabilities or fi hide its financial crisis. So, of course, it wants to forgive the loan, but it's not going to do it so fragrantly. Flagrantly. What am I saying? Flagrantly. Flagrantly. Yeah. Um so, that's why it's not so easy to to find out. Yeah. Um someone say, "I I saw the floods from Jason Teddy. Are they operating out of PO box? Their banks anyone the nation overseas the internet connection the phone lines are so the power lines. Yeah. Yeah. The flooding. Yeah. China is starting flood season now. Yeah. I saw some of the I saw some of um the news. And then there are two other pieces of um news came out of China. One is poisoning. The uh the local water company in a city uh somehow had um has has foul water water that smells foul coming out of water faucets and hundreds of thousands of people got sick. Um and this happened in one city and people don't know what has happened and then you have I think it's I think it's the result of local government fiscal crisis when local governments are running out of money they when they don't pay people then people don't do their jobs and then the next thing we see is exactly these Right. Uh poisonous water coming out of water faucets, buildings collapsing, roads collapsing, um bridges collapsing. So it's it's scary. Yeah, I think it's related to local government fiscal crisis. All right. Um, ma jing pork jing pig was put down by YouTube and Pinks and the Pinks. Like this is my latest creation was put down by YouTube and Pinks. Little Pinks. Okay. There are a lot of um um AI empowered pinks lately. Yeah, I w I was told um Oh yeah, someone asked me about the Ebola outbreak from and furry boss. Do you know about the risk that the Chinese workers in in mining in in DRC mining posed as Ebola carriers back to China and the rest of the world? Yes. Yeah. There are tens of thousands of Chinese miners or workers working in those mines in Africa and they pose a great health risk as they travel between China and Africa and also other parts of the world. Um Yeah. So China is at risk. Yeah. Okay. Um Jack Jensen, thank you Jack. Coffee and Paul. In poker, the house takes a percentage of the chips in playing for their service. It's called the rake. What's the rake for the CCP? The missing funds ratio. Um, I don't play poker. So, what's the rake for the CCP? The missing funds ratio. Please ask me because yeah, I I don't play poker. So, I don't know the analogy. So what what percentage of missing funds ratio that the CCP hides? Are you talking about some funds that CCP hides for itself or are you talking about I'm I'm not quite sure if I understand the missing funds ratio. What does that mean? Um so Robert Short like China and the CCP is doomed. There's no way to recover without a great reset. They needed a department of government corruption and efficiency. Does China know what an audit is? China knows what an audit is, but China right now is on is incapable of carrying out an audit. Yeah. Because people's mindset has been corrupt. Um what it's extremely sad to see how um many of the people coming out of mainland and China they do not I mean everything is in a gray area they don't see things there are things that are black and white you know but in China everything is in a gray area so they're not trained to think that there there It's it's black or white, you know. You can't you there's things you cannot do. So that's why you probably can't even find the people to do a proper audit because they can't follow procedures. You know, um they think everything is up is subject to interpretation and the boss's opinion. So everything is in a gray area. Um so that's why they can't in theory you can have an audit but in practice people are not able capable of carrying out a real audit. So that's very sad. That's my observation. Um okay. All right. Oh, here's Shiqing again. Does China have an equivalent to the US FDA? No. It might, but it doesn't do anything. Look at all the poisonous food people are suffering from. Didn't the one city that sells yame, I don't know what you call that, it's a kind of fruit that's very popular in China and they they sell that overseas as well. Sometimes you see them in in Chinese market locally here. Um the farmers they just treat the the the fruit with some kind of cancer-causing chemicals to preserve it longer, you know, to preserve the shelf life, but it's highly poisonous. Um and they they do that kind of thing. Jeremy Thomas Lelay, with all this data and knowing the CCP has to be aware, why do they still refuse to lower the offshore exchange rates? Uh, you mean the Chinese yuan is going? Yeah, the Chinese yuan is getting more expensive. Um, it could be for political reasons. I mean, it's the yuan being more expensive is not good for China's exports. Um, but it's good for China's imports and it's also good for the political image. Um, and for for the regime, economic reasons are never their priority, but political and geopolitical issues or concerns are always the top priority. So yeah, I haven't really looked deep into that. Um, so all right. Hopefully we could talk we could address that at some point. All right. Um, okay. I think I reached the bottom. Let me just take one more question and um and then that will be it. Let me see what question. DGLass 2008. Okay. Someone said in terms of this in terms of sustainability of the CCP in China, how does the financial balance sheet affect the future of China? Will China not be able to function much longer than the CCP? Well, China and CCP are two different concepts, right? China as a country will stay because the country will be there. People will be there, but the CCP is just a political party. Um it's just like the United States will always stay. Um but the political party may alternate, right? I mean they so I think when CCP becomes history, China will be there. Chinese people will have a better future. So I think those are two separate concepts and they are not they don't stand for the same thing. Okay. All right. That's all for tonight. I thank you very much for joining and I'll see you this weekend. Okay. Bye.