The Economist magazine’s Tom Standage interviewed Michele Wucker on The World Ahead podcast posted Monday, March 30, 2020. In the episode, focused on Covid-19 and the perils of prediction, they talked about her gray rhino theory and how it applies to the pandemic and economic crises. You can listen HERE.
China must be on guard against highly improbable, unimaginable “black swan” events while also fending off highly probable but often neglected “gray rhino” risks, Chinese President Xi Jinping told senior Communist Party officials at the opening ceremony of a study session at the Party School of the CPC Central Committee January 21st.
Xi spoke shortly after newly released economic data showed that in 2018 China’s economy had slowed to the lowest rate in 28 years.
“In the face of a turbulent international situation, a complex and sensitive environment, and the arduous task of reform … We must be highly vigilant against ‘black swan’ and ‘grey rhinoceros’ incidents,” he said. Xinhua News Agency issued a full statement on his talk.
Xi cited areas in which China faces major risks: politics, ideology, economy, science and technology, society, the external environment, and party building.
His comments generated worldwide news coverage, from Australia to Indonesia to Argentina, and helped send U.S. stocks down over concerns about the effect of a slowing Chinese economy on global growth.
Columnist Ana Fuentes of Spain’s El Pais newspaper wrote, “More than black swans, it appears that 2019 will be the year of gray rhinos, threats that we have identified but have not been able to or known how to stop.” Top on her list was the crisis of governability in the West.
THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore, was released in China by CITIC Press in February 2017 and has become an influential best-seller.
BuzzFeed reporter Emily Tamkin interviewed Michele Wucker and quoted her in Trump Wants To Cancel Birthright Citizenship. The US Has Already Helped One Country Do That, a November 12, 2018 article about the Dominican Republic’s stripping of citizenship to Dominicans of Haitian descent.
Donald Trump’s plan to end birthright citizenship by executive order was immediately denounced by legal scholars as an illegal intrusion on the Constitution’s 14th Amendment. But the United States knows something about ending birthright citizenship because it played an active role in helping another country bring it to a close — the Dominican Republic.
That role, which was unfolding before Trump became president, has long been the subject of criticism — from the Organization of American States, the Inter-American Commission on Human Rights, and former Peace Corps volunteers who served in Haiti, which shares the island of Hispaniola with the Dominican Republic. Trump’s criticism of birthright citizenship and call for a wall on the US–Mexico border have renewed concerns that the US is inflaming the Dominican Republic’s already hostile xenophobic attitudes toward its Haitian minority.
“US human rights organizations were very vocal against the court ruling in 2013, and were very vocal in documenting some of the problems, particularly as it came into force in 2015,” Michele Wucker, author of Why the Cocks Fight: Dominicans, Haitians, and the Struggle for Hispaniola, said.
I enjoyed talking with the FT’s Matt Klein about why we don’t deal with problems we see in advance – and how to fix it- on the January 18, 2018 edition of FT Alphachat, the conversational podcast about business and economics produced by the Financial Times in New York. Each week, FT hosts and guests delve into a new theme, with more wonkiness, humour and irreverence than you’ll find anywhere else.
The gray rhino has continued its charge around the globe, with a front page, above the fold article in The New York Times July 23, 2017: “Let the West worry about so-called black swans, rare and unexpected events that can upset financial markets. China is more concerned about “gray rhinos” — large and visible problems in the economy that are ignored until they start moving fast.”
Here’s a roundup of some recent media coverage of China’s effort to crack down on its financial gray rhinos, including liquidity and credit risks, shadow banking, abnormal capital market fluctuations and real estate bubbles:
China ignores the ‘grey rhino’ threats to its economy at its own peril Andrew Sheng, South China Morning Post, July 21, 2017
From black swans to gray rhinos, Andrew Sheng, The Star (Malaysia), July 22, 2017
In China, Herd of ‘Gray Rhinos’ Threatens Economy Keith Bradsher and Sui-yee Lee, The New York Times, July 23, 2017
Beware the ‘grey rhinos’ of economic risk or ‘prepare for pain’, analyst warns China Sidney Leng, South China Morning Post, July 23, 2017
Watch out for ‘grey rhino’ in jungle of financial risks, China Daily, Jul 24, 2017
The $180 million conflict that kept Scaramucci out of the White House in January has only gotten shadier Linette Lopez, Business Insider, July 24, 2017
Wanda Swears Off Overseas Deals after Xi Exchange, Greg Isaacson, Mingtiandi, July 25, 2017
China’s Communist Leaders Focus on ‘Grey Rhino’ Private-Sector Risks Alex Frew McMillan, MarketWatch, July 26, 2017
Hunting rhinos: What Dalian Wanda saga says about China Karishma Vaswani, BBC News, July 26, 2017
Interview: Environment, resource constraints biggest “gray rhinos” in China: author
Xinhua, July 27, 2017
CINA. I tre rinoceronti grigi di Pechino. Graziella Giangiulio, Stampa (Italy), July 27, 2017
China to crack down on ‘gray rhino’ risks Li Xuanmin, The Global Times, July 30, 2017
Los cuatro ‘rinocerontes grises’ que amenazan con embestir al mercado Victor Blanco Moro, El Economista (Spain) July 30, 2017.
Chinese Government Concerned about ‘Gray Rhino’ [VIDEO] World Insight with Tian Wei, CGTN, August 3, 2017
China Steps Up Warnings Over Debt-Fueled Overseas Acquisitions By Sui-Lee We. The New York Times. August 18, 2017
In front-page commentary published July 17th, 2017, People’s Daily, the official newspaper of China’s Communist Party, warned of the need to avert highly obvious “gray rhino” risks as well as rare and unpredictable “black swans.” The commentary rocked China’s stock markets and signaled a new policy direction intended to more aggressively address obvious financial risks.
The article said that China should “strictly prevent risks from liquidity, credit, shadow banking and abnormal capital market fluctuations, as well as insurance market and property bubbles.”
Taking the commentary as a sign that regulators would crack down on speculation, investors immediately dumped small-cap stocks, seen as more likely to carry debt that could become unmanageable. “China’s small-cap Shenzhen index plunged 4.3% on Monday. The ChiNext, which focuses on high-tech companies, plummeted 5.1% and closed at its lowest point since early 2015,” noted CNN Money.
The timing of the People’s Daily article was particularly telling, immediately following last week’s National Financial Work Conference, a key policy strategy session that occurs every five years. This year the conference created a “super-regulator,” intended to improve the country’s ability to tackle a financial crisis, that merged four existing supervisory watchdog. It also strengthened the central bank’s powers.
A few hours after the People’s Daily article appeared, new data showed the Chinese economy re-accelerating.
The Chinese government’s embrace of the gray rhino language generated widespread media coverage.
“The unusual zoological turn of phrase in the Party’s language could… hint at a genuine effort to re-energize its long-drawn-out regulatory clampdown,” Sunny Oh wrote for Marketwatch.
Similarly, ZeroHedge noted, “[I]n a surprising case of forward-looking prudence, the Chinese government is doing what numerous Fed members have also done in recent weeks, by setting a surprisingly wary tone about risk, demonstrated best by the front page commentary in the People’s Daily.”
Former Dallas Fed chief Richard Fisher referred to gray rhino risks on Squawk on the Street Monday.
Here’s some other notable coverage:
What’s a ‘gray rhino’ and Why Did It Cause Chinese Stocks to Drop? CNN Money, July 17, 2017
¿Por qué un ‘rinoceronte gris’ causó la caída de las acciones en China?
‘Tê giác xám’ ?ang ?e d?a th? tr??ng Trung Qu?c VNExpress (Vietnam)
Piyasan?n yeni korkusu: Gri gergedan BusinessHT (Turkey)
China’s Economy Charges On as Officials Target the Risk ‘Rhino’ Bloomberg News, July 17, 2017
China economy charges on as leaders target the risk `Rhino’ The Peninsula (Qatar), July 18, 2017
Why China Fears “Gray Rhino” Risk to Fragile Financial System Marketwatch, July 17, 2017
When a ‘Black Swan’ Will No Longer Do ZeroHedge, July 17, 2017
Xi’s Risk-off Push Ripples Through China as Transition Nears Bloomberg News, July 18, 2017
China Sentences to Ponder, Gray Rhino Edition Marginal Revolution, July 18, 2017
Beijing Watches Out for “Grey Rhino” and “Black Swan” in Jungle of Financial Risks South China Morning Post, July 19, 2017
People’s Daily Reference to the Gray Rhino -What Is It? jrj.com (Chinese Simplified Characters), July 19, 2017
China Ignores Gray Rhino Threats to its Economy at its Own Peril Andrew Sheng, South China Morning Post, July 21, 2017
Keeping Financial Risks at Bay, China Daily, July 20, 2017
Gray Rhinos, Game of Thrones, and TV’s Golden Age People & Profit, France24, July 21, 2017
Karin Bauer at the leading Austrian newspaper, Der Standard,
interviewed Michele Wucker about THE GRAY RHINO during Michele’s recent visit to Vienna. You can read the interview HERE (click the “more” button at the end of the article to translate into English; or use your browser’s translate function)
He applies the framework to his own memories in military situations: “As a US Naval Officer, I saw this first hand on the bridge of ships as officers would delay making a course correction in an obvious close crossing situation with another ship. Officers would have the data at hand from 2-3 different radar sources as well as visually from lookouts, but hesitated to make the call to the Captain to recommend a course change. The fear of looking foolish, making a wrong recommendation, not having the correct information would all play on the officer’s better judgment to take action. This invariably would end up with the officer looking reckless and the Captain coming to the bridge and making the needed course changes in a more complex and urgent situation.”