China's richest man just gave Beijing a reality check

Wang Jianlin art

(Jason Lee/Reuters)

China's richest man thinks Beijing needs to cut its growth forecast and deal with it.

Real estate mogul Wang Jianlin told Sandy Li at the South China Morning Post that the country needs to accept lower growth and transform the economy.

"China needs to drop the fantasy of keeping a high growth rate of 7% or 8% and just accept 6%, 7%, or even 5% percent," he said. "China's economy needs to transform from relying on investment and exports to consumption. That's a painful process. If the transformation doesn't happen now, it would be even more painful in the future."

Wang, founder of conglomerate Dalian Wanda, is worth an estimated $35.1 billion.

In July, his company announced that it would close 40 department stores in the country — that's almost half of the 99 it owns. It also announced that it would close 80 karaoke dens.

Consider that a big reversal. The company has 100 malls across China, and in March it announced plans to build 800 more by 2020.

Screenshot 2015 08 28 13.09.41

(Reuters)

Based on the drawdown announced in July, though, it's unclear if this kind of expansion is still in the cards for Dalian Wanda. Wang clearly sees something coming.

The Chinese government posted second-quarter gross domestic product growth in July that beat forecasts at 7.0%, though many analysts expressed reservations with the numbers.

Chinese markets have experienced a wild ride since then, with the Shanghai composite tanking and the country's government embarking on a devaluation of the yuan.

The country's employment market has shown strains, international investors have fled from the country, and the Chinese establishment has started investigating high-profile figures in the media and finance communities.

Wang's son, Wang Sicong, appeared recently in a BBC documentary, commenting on how the Chinese government controls all aspects of it's youths' lives and culture — and how deviance from the government norm would be "suicide."

Read the South China Morning Post article here.

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