In Episode 98 of Hidden Forces, Demetri Kofinas speaks with famed Hong Kong investor David Webb, an outspoken critic of China's authoritarian grip over the coastal territory.

There are two parts to this story that we explore during this conversation. The first deals with Hong Kong – specifically, its political and economic future as an independent territory of mainland China. The second deals with China itself – specifically, its political and financial stability as the most leveraged economy at scale, in the world. 

The events in Hong Kong over the last several months – exacerbated by Chief Executive Carrie Lam's determination to push through the Extradition bill despite mounting opposition – have created a terrifying sense of crisis and disorder in the city. Videos of police beatings and retaliatory violence by protestors, as well as satellite images of what appear to be armored personnel carriers and other vehicles belonging to China's paramilitary People's Armed Police, have created an ominous sense of foreboding in the city. "One country, two systems," might be the fault line upon which the tectonic forces shaping China's political and economic development are colliding, creating mountains of civil unrest among Hong Kongers. At what point do the political tremors in Hong Kong become civic earthquakes capable of shattering the fragile peace between these two irreconcilable systems? Will open society prevail in Hong Kong, or will China do whatever it takes in order to reassert control over the former British colony?

In the second part of this conversation, David Webb shares his insights from his decades of experience studying the Chinese economy and investing in Chinese companies listed in Hong Kong. Those insights include a discussion about China's overleveraged banking system, an overvalued RMB, and a system of Ponzi financing for Chinese companies listed on non-mainland exchanges. David Webb also contests a thesis famously put forward by hedge fund manager Kyle Bass about the precarious position of Hong Kong's currency and the risk of decoupling with the US dollar. Additional topics include a new "tech cold war," China's propaganda battle, the US-China trade war, and much, much more. 

There is no overtime to this week's episode on account of some technical constraints. Instead, we have made the transcript to this conversation available to Overtime subscribers, which will be published in the next day or two. You can gain access to the transcript, as well as a copy of the rundown to this week's episode directly through our Patreon page. 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

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