Peter Alexander started on Wall Street. In the early 1990s he was the most junior analyst at what would now be called a family office. One of the partners asked him to look into China, which was just appearing on investors’ maps, and the assignment turned into an obsession. He skipped business school, took an English-teaching contract in Shanghai in 1996, and stayed. He worked in asset management in China, including at a fund joint venture between Prudential Financial and Everbright Securities, and then founded Z-Ben Advisors in 2004 to advise investors, asset managers, and multinationals. For two decades he spoke only to clients. In 2025 he began appearing on CNBC and Bloomberg because a growing crowd of China macro commentators were spreading views he considered wrong or badly incomplete.
He rejects both stories Western audiences usually hear about China: the imminent collapse and the coming hegemony. In his account, Beijing is restructuring its economy at stall speed and ranks resilience above GDP growth. We spend most of the episode on the arguments behind that view:
Time horizons: American companies chased short-term returns and trained their future competitors in China, Apple with Foxconn first, and German carmakers now. Europe was spared China Shock 1.0 because it kept final production at home and fed it with parts made in China. The shock reached it later, through cars.
A deliberate slowdown: Beijing is working through local government debt, leaving property behind, recentralizing infrastructure spending, and closing the gap between official rates and the old shadow-banking market. Chinese 10-year yields at 1.65% reflect a wall of savings with few other places to go inside a closed capital account.
Bilateral foreign policy: Beijing plays Airbus against Boeing and capital against capital. It seeks influence through commerce and leaves other countries’ internal affairs alone.
Reserve currency versus reserve asset: Peter dates China’s monetary response to the 2012 US sanctions on the Bank of Kunlun. The Shanghai Gold Exchange’s international board (2014) and CIPS (2015) followed as hedges, and China let its Treasuries mature without reinvesting. Since the freeze of Russia’s reserves in 2022, suppliers from Zambia to BHP have started accepting renminbi, which can be swapped for gold held in a growing network of vaults starting with Hong Kong.
On technology, he describes a country that treats AI as a tool for efficiency. For China’s open-weight models, good enough is good enough, and they are spreading across the Global South and into Chinese factories. He expects China Shock 3.0 in chips and the wider tech stack within five years and token farms selling cheap inference from Inner Mongolia within three, since China generates more power than it can transmit to the coast. That surplus comes from two decades of what he calls strategic optionality. Deng Xiaoping’s cats applied to energy: coal, nuclear, hydro, solar, and wind all at once. In robotics he points to industrial automation, such as Shanghai’s port, which cut its headcount by 80% in five years.
His advice to Western governments and boards is to get on a plane, skip Beijing for Chongqing, Wuhan, Xi’an, and Hangzhou, and put a China specialist on every board. His cautionary tale is Starbucks, which sold 60% of its China business after headquarters stopped listening to its local team.
Peter’s work is at Z-Ben Advisors.
“Nobody is coming to China right now.”
Marieke: Welcome to the Currency of Power podcast, where we explore how money, technology and geopolitics are reshaping the global order. We speak with the people building, regulating and challenging the new financial infrastructure, from currencies to stablecoins to AI to trade, energy, and the competition that’s currently happening for technological power. Our goal is to understand how the financial system is changing and who gains influence as it does. I am Marieke Flament.
Nicolas: And I am Nicolas Colin.
Marieke: And today we will talk about China, and we’ll try to demystify the empire with someone who’s been living and working there for the last 30 years. So, Peter, hello!
Peter: Good afternoon, or I guess good morning to the two of you. Thanks for having me on.
Marieke: Yes, good morning for us and good afternoon to you. Peter Alexander is a veteran of China’s financial markets, with a career that began as a China analyst on Wall Street before relocating to Shanghai in 1996. In 2004, Peter established Z-Ben Advisors, a boutique advisory practice serving C-suite and portfolio decision-makers. Peter’s clients include globally recognized investors, managers and multinationals.
Throughout his tenure residing in China, Peter has maintained a minimal public profile, preferring to stay centered on direct client engagement. That changed in 2025 (and I’m sure you’ll tell us why, Peter), as it became clear that the rise and growing reach of China macro influencers were dispersing grossly errant, or at minimum woefully incomplete, views on China. I’m reading your bio here, and I love how it’s written. To counter this, you began accepting media requests, and you’ve made numerous appearances on CNBC and Bloomberg, which, by the way, are great and highly recommended, where you pointedly counter or expand upon the conventional China talking points.
So it’s awesome to have you here. We appreciate being part of your effort to talk more openly about China and what’s going on. You and I met, I think, on the back of the Hidden Forces podcast that Nicolas and I recorded. You reached out, we started talking and reconnected about China. I think your perspectives are fantastic, so it’s really good to have you. Thank you so much for being here.
Peter: Thank you. I’m really glad to be here as well. And to your Hidden Forces appearance, just so the audience knows the reason why there was a connection: I was astounded. I literally almost fell out of my seat because you made a comment at one point that you had just returned to China and you hadn’t been there since, I think you said, 2008 or something like that. And you could tell you were brimming with a sense of, “You have to understand what’s going on; so many things have changed.” I was shocked by that, because you are one of very few people who both lived here and then returned.
More importantly, and I think this goes to my point about becoming more engaged in the conversation: nobody is coming to China right now. More concerning is nobody who is responsible and who has decision-making capabilities. It has been entirely outsourced to third parties. And even those third parties are reliant on my connections or people like me; they too have not traveled back to China. It’s worrisome because, as you have seen, it is changing at a tremendous pace across a number of different categories. So it’s great to be here, answer your questions and provide some context. As we talked about before we hit record, you can ask me anything. Nothing’s off the table.
Marieke: That’s amazing, thanks. And indeed, that’s how we connected, because having studied and lived in China and then coming back, I was blown away. Whatever your belief is, it’s probably not correct. But maybe let’s start with your journey. You’ve been in China 30 years. How did you come to China, and how did you end up staying? It’s a warm-up question, but it’s always great to hear more on background.
Peter: I’ll try to make it quick. The short, short answer is it’s just very good to be in the right place at the right time, but also to be young and very ignorant. As you highlighted in my bio, I was very fortunate, working on Wall Street, to have been there when China first landed on Wall Street’s map. That was back in ‘92, ‘93. I was a low man on the totem pole within the analyst team. I was working for what is now referred to as a family office; we didn’t call them that back in the day. And the partner said, “Hey, why don’t you take a look at this and let us know what’s going on?” Over the course of a couple of years, it just became more and more of an obsession with what was going on in China.
As a typical American, we don’t learn anything past the Battle of Hastings in 1066, right? What’s going on in the East? Nothing. Maybe a little bit of the Meiji Restoration, but that’s about it. So I began studying the history, and the more I looked into it, the more I thought it was great. Then the time came when I was supposed to go get my MBA. I didn’t think it was worth the time and the energy. I had been studying a little bit of the language in New York at the time, and my Chinese teacher said, “Hey, there are all these opportunities for English teachers. Are you interested?” I said, sure, why not? It was a year-and-a-half contract. Let me go see what it’s like.
Immediately as I landed here, something connected. And then you know what happens when you’re making plans: life. Next thing you know, you turn around and you’ve been here 30 years and worked for a handful of different companies. I do appreciate, by the way, that you pronounced the company “Zed-Ben” Advisors, which is how we pronounce it. Everybody, especially in the US, typically pronounces it “Z-Ben.”
Anyway, from 2002 to 2004 I worked on a great joint venture for asset management, and it was the first time I was able to really deploy what I had learned. But what I quickly found was that it was very difficult to communicate to foreign companies what is actually going on, to effect change, and to help them. So I decided that rather than work for one company, let me see if I can do this with a number of different companies. Originally it was really on the investment side. Then around 2023, we began to get inquiries from groups outside of financial services, people saying, “Look, we need someone who’s on the ground, who has experience, to give us a sanity check of what is actually happening, because we can’t make heads or tails of it.” So that’s the short version of the journey. Short-ish.
Marieke: That’s amazing. You mentioned something really interesting: that no one with decision-making power is actually going to China. We should discuss that, because what Nicolas and I are witnessing, at least in entrepreneurial circles, is a lot of interest in going there to understand. There are a lot of business trips being planned to see factories and robotics and AI. So at least on the entrepreneurial side, there is that.
Peter: Yeah.
Marieke: But I think your comment is about the political decision-making side, where there’s a bit less of it, and therefore misconceptions arise. So what are those misconceptions? Some of them, or the biggest of them?
Peter: There are dozens, to be quite frank. But to strip it down to what is foundational, what is truly being missed, you can pinpoint it to what I refer to as time horizons. You have high time preferences and low time preferences. As you can probably appreciate, the Americans have extremely high time preferences, and the Chinese have very low time preferences.
A lot of this wasn’t relevant, I would say, before the advent of COVID. It began to materialize in the United States with the election of Donald Trump in 2016, going into 2017, but it really came to the fore in the post-COVID years. In fact, it has everything to do with what you’re hearing about China Shock 2.0 and all of these different elements.
I’ll give you a classic case study. I refer to it as the Faustian bargain. Where exactly is the disconnect between the high and the low time preference? It is a Faustian bargain. What I mean by that is look at an organization like Apple. The reason Tim Cook was anointed CEO of Apple after Steve Jobs was the work he had done as chief operating officer. When he was brought in, he had one job and one job only, and that was the supply chain. And he did a brilliant job. This was when the iPod was coming out, before even the iPhone. He was able to build this amazing infrastructure throughout China, teaming up with Foxconn out of Taiwan. And at no point, clearly, did it even enter the minds of Tim Cook or his management team: are we benefiting in the short term and yet creating competitors in the long term?
You can see this across the board. Look at the German auto industry right now.
Marieke: Yes.
Peter: What astounds me with German industry in general is this. It’s called China Shock 2.0 for a reason, because China Shock 1.0 was the hollowing out of the United States’ industrial base. If the Chinese did that to America, what made the Europeans think it wouldn’t happen on their doorstep? There’s a degree of hubris involved. With the Germans, what’s even more concerning, quite frankly, is that they all had a front-row seat to what China was doing in the electric vehicle space. There was a time when, if you were looking for a status symbol here, you drove an Audi A8.
Marieke: Yes.
Peter: Maybe a BMW, maybe a Merc, but it was always an Audi A8. They printed money for the better part of two decades. I don’t know what they did with that money, but they did not adapt to the competitive environment that is now being thrust upon them. Whether it was the advent of quarterly earnings or stock options or whatever the case might be, there was a misalignment between China’s strategic nature (you could see years ago the direction it was moving) and the very short-term mentality that was very present in America and that we can now see in Europe as well. So that time-preference differential, if I strip everything down, is the most significant, consequential difference between these two environments.
Nicolas: I have a follow-up question on that. Why was Europe spared during the first China shock? What explains that Europe didn’t face the shock as much as the US, and why is it arriving now? You alluded to quarterly statements, et cetera. Did something change in the governance of European companies that makes them more vulnerable to Chinese competition?
Peter: It comes down to one point, and one point only, and that is the drive for outsourcing. The Americans, really, after 1993 or thereabouts and then clearly into the 2000s, outsourced to China literally their entire property, plant, and equipment. So-called asset-light: that was all the rage, efficiencies. That was what drove China Shock 1.0. The Europeans were never interested in outsourcing per se. What they were looking for were ways to build operations in the mainland that would then feed into their domestic production base. A lot of what they were doing was things like specialty chemicals or precision parts.
Nicolas: What’s the difference between outsourcing and feeding into?
Peter: Outsourcing was the complete manufacturing of a given subsection of items. What the Germans and others in Europe were doing was trying to be a little too cute by half. They thought they could bring in certain segments of production capability and not concern themselves about the Chinese learning from that.
Nicolas: Okay.
Peter: So it just took longer. You can think about it as a value-chain issue. There were significant demands on the Chinese to learn how to create a lot of what we consider very high-end manufacturing, whether processes, capabilities, or even end products. That’s why I think it took a bit longer. The automotive space is a bit different, though. That was all really about Tesla coming in and not necessarily teaching the Chinese the manufacturing process but introducing new processes that they could fold into their already present operations. So they just became much more efficient.
Marieke: I think what you’re describing is also the era of the JV [joint ventures], which goes way back, probably even earlier than China Shock 1.0. A lot of European or French companies were going in but holding back much of the IP or knowledge, only giving parts of it. That’s the difference versus Apple, which leveraged the entire supply chain: “deliver the entire thing done to me.” In the luxury industry, for example, it was never “deliver me the handbag.” It was a part of it, or a sub-part. So I think that illustrates your point really well.
“The truth lives in the middle.”
Marieke: Okay, so time horizon is one very big misconception. There’s another thing we’d love your take on. You read headlines saying China is going to crash, this is not sustainable, they’re about to implode. It’s been like that for the last decade, like Japan.
Peter: Oh, even more.
Marieke: Yeah. I remember it even when I was there 20 years ago, and you were there before. I think it’s always been there. So what is Beijing ultimately trying to achieve? What’s the right way to look at the construct of the Chinese economy? What’s the endgame here, and is it going to implode? No pressure.
Peter: No, no, no. The first thing I need to stress, and I say this all the time: the road to calling China’s collapse is littered with more dead bodies than I can count. What I have found somewhat humorous, I guess is the best word, is that the actual predictions haven’t changed. You have this cottage industry now of people who continue to come out and talk about the unsustainability of the economy, the need to rebalance, so on and so forth. The difference today versus 15 or even 20 years ago is that we now have the credentialed class of economists, if you will, who are very, very good at dancing around what they’re saying. You’re not going to get anybody who comes out and says China’s going to collapse, but they’re going to continue to talk about decay or imbalances or whatever the case might be.
My answer to everybody is always: the truth lives in the middle. That’s point number one. China is not on the precipice of collapse; I can tell you that right now. China also is not on the precipice of ascending and assuming the throne of hegemonic superpower over the United States. Where China is at this very moment is in the process of restructuring its economy. And it’s very difficult for many people outside the system who are looking at the numbers: consumption share of GDP, savings, and investment—all of these things. Yes, those are relevant.
But I’ve been telling people for years now that Keynes in China is dead. Most people will push back on me and say, “Well, look how much they’re still growing debt.” I say, “Yes, debt is continuing to grow; there’s no doubt about it. But you need to look at the growth rate and the direction of travel, as well as the rest.” It is very clear that what China is attempting to do at this point is operate as best it can at stall speed while it continuously works through all of the over-leverage that persisted from the global financial crisis onwards.
We’re talking about restructuring the debt at the local government level, which has been ongoing for a handful of years now, and which I view as relatively successful. A move away from property. And when people say infrastructure investment is still an important driver for the Chinese economy, what has changed is that it is no longer being driven by the local governments. It has been re-centralized, with the idea, hopefully, of creating greater efficiencies. There was a lot of competition at the local government level over where infrastructure investment was going to go.
Something people are not... I’m not sure if they’re not aware of it or just haven’t communicated it, but for the longest time there were two monetary systems, if you will, operating in China. You would look at the PBOC, you would look at the rates, and you would see the headlines. But for the longest time, those rates were somewhat irrelevant in terms of transmission to what the economy was doing. Because outside the formal system, you had what we’ll call the shadow banking system: the P2P lending market, the trust companies, and subsidiaries of certain financial institutions.
There was a mismatch between the demand for and the supply of credit for a long time. Because of the communist system and the way it works here, the banks’ KPIs were aligned with lending predominantly to state-owned enterprises. That left an enormous segment of the market, unregulated, I might add, that needed to go to alternative sources for credit. This is where P2P and everything else came in. Meanwhile, you had this massive pile of savings looking for, as we like to say, alternative returns over bank savings. To make it simple, 10 or 15 years ago you had something like 5% for bank savings and 18% in P2P.
If you look at the trend, especially going back to 2017, and even more so from 2023 to today, the spread between unofficial and official PBOC rates has declined tremendously. You’ve also had the removal of things like the implicit guarantee savers had when they originally went into these alternative products. Now, if you’re buying a bank wealth management product, it’s nothing more than a short-duration fixed-income product. They trade at NAV, plus or minus one. So you can’t go back and say, “I have principal protection.” Not anymore.
This is a very long answer to your question, but the point I want to make is that there has been an ongoing restructuring. And when you reduce the amount of credit going into the system, what happens to the economy? It slows. Are the numbers of 4.7 right? I have no idea. But I can tell you the economy has slowed, and it hasn’t slowed due to a significant market correction. This is a feature, not a bug.
When I talk with various external groups, as I’m sure you can appreciate, this message of mine does not land very well, because it is so non-conventional. And by the way, this is extremely bad for business development, but so be it. My engagement with external parties is centered entirely on explaining to people what they need to know, not what they want to hear. I am not aligned with whatever the theme du jour might be on Twitter.
Here’s the final point I’ll make. If, and it’s a big if (I do not know if this is going to be successful), China is able to navigate the process and the deleveraging and restructuring go through, China will be borderline unstoppable, because it will have a much stronger foundation from which to move into this whole new so-called fourth industrial revolution, or AI economy. That, in my estimation, is the primary goal of Beijing and has been, especially for the last three or four years.
Nicolas: Can you explain in more detail what becomes of China’s savings, then, if less of those savings is allocated to domestic investment? Where does the money go? More domestic consumption?
Peter: Well, if you talk to most economists, that would be the ideal solution. Again, we have to be mindful that there is an enormous amount of what I’ll refer to as projection among the economists of the world, a belief that this is how things are meant to be done: “We’ve been doing things in market economies for this long; China needs to do this.” I would say first that anybody who believes Beijing’s leadership is unaware of the consumption issue is being disingenuous. Beijing is obviously well aware of it. The question comes down to how you move toward a more consumption-oriented market, and I can get to that in a second.
But specifically to your question, Nicolas: why are Chinese 10-year rates at 1.65? Because when you have a closed capital account where property is toxic and equities are at best volatile (more recently volatile to down), you then have the option of fixed income. What I find very interesting is that when you talk with most people externally, they’ll make what I believe is a very rash assessment: “Chinese interest rates are low, deflation, the economy’s falling off a cliff.” Now, economic conditions are certainly playing a role in this. But based on what we can see, there is what we refer to as a wall of Chinese money, the savings. And if it goes in one direction, it’s going to impact price, in this case yields, far more than anything else.
The more medium-term issue becomes: what may or may not Beijing do to try to motivate or create greater sentiment locally for people to move back and begin to consume? That is a question I cannot answer. I’ll be straight up with you. And I will repeat: it is not about the social safety net, for two reasons. Number one, there is a social safety net here. It’s not a social safety net that Western economies believe is enough. And the Chinese are very mindful of the entitlement systems in Europe and the United States, and they have no desire to move in that direction. There is a limited amount that will be provided.
The bigger issue is sentiment. Ten years ago, everybody was excited about the economy. Everybody had money and property; there was the wealth effect. Today that has been displaced because of the ongoing shift in the overall economic model away from property and infrastructure. So there is, in my estimation, an outlook in Beijing that if they can move quickly enough with services and new types of industry, whether it’s AI, biopharma, or you name it, this will be able to propel the market forward. I’m not 100% sure they’re going to be able to thread this very, very tight needle. But their thinking is that they don’t want stimulus for the sake of stimulus because there are significant scars remaining from ‘08 and ‘09. So there is a desire to try to structurally build in demand that would then lead to a rise in overall consumption.
Marieke: I think the point you made on projection is really interesting: we project the way our financial system and our institutions work onto what therefore should be for China. We had a very interesting interview, almost a year ago now, with Sinéad O’Sullivan, who wrote about the banking system in China and the role of the central bank, and the huge amount of misconception we have in the West about it, and therefore about the planning and the way resources can be allocated.
Peter: Yep.
Marieke: The other thing I find fascinating in what you’re saying is this idea of restructuring the economy. The property crash could, in some way, shape or form, have dragged a lot of the global economy down with it. But it didn’t. It’s still deflating, kind of a soft deflation of the bubble, but it’s not an implosion. And the credit restructuring you’re talking about is really interesting on that point.
