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COUNTRY INSIGHTS

The Evolution of the Chinese Debt Burden
CHINA FINANCIAL · Report · 22 Dec 2016

Special points to highlight in this issue: * Chinese domestic bond markets performed badly last week, in a foretaste of what we are likely to see in 2017, and probably more than once. * In previous newsletters, I have written about my medium-term outlook for the Chinese economy: until China rea...

How might a Trump administration affect China?
CHINA FINANCIAL · Report · 14 Nov 2016

Special points to highlight in this issue: • The ouster of Lou Jiwei nearly two weeks ago as Minister of Finance was a surprise, but probably will not result in a less urgent policy towards debt management. • There is no reason to be impressed with aggressive debt-reduction plans, however. As ...

The European crisis in seven steps
CHINA FINANCIAL · Report · 04 Oct 2016

As much of a threat China’s high and rising debt burden has become to its continued growth, the biggest risks to the global economy probably lie in Europe, and especially in its banking system. • Growth rates in peripheral Europe continue to be revised downwards, and deadlines for budget deficit...

Chinese Debt Management
CHINA FINANCIAL · Report · 15 Sep 2016

Special points to highlight in this issue: * There is a temptation for policy advisors to propose specific solution to problems only after they have been abstracted from their systemic contexts. In an economy with deep imbalances and strong institutional constraints, however, this can easily bac...

Beijing must implement balance-sheet reforms
CHINA FINANCIAL · Report · 08 Aug 2016

Special points to highlight in this issue: • Forecasting GDP growth in China over the rest of 2016 is a fairly meaningless exercise, not because there is too much economic uncertainty for an accurate forecast but rather because growth will be determined as the outcome of a political exercise b...

What kinds of reforms?
CHINA FINANCIAL · Report · 29 Jul 2016

Special points to highlight in this issue: • The orthodox macroeconomic model, which dominates mainstream thinking about China, implicitly assumes that the main determinant of economic growth is the mix of a country’s assets – not just capital assets but also other, less tangible assets such a...

Last month’s data is positive for Chinese prospects
CHINA FINANCIAL · Report · 29 Jun 2016

Special points to highlight in this issue: • Investment growth decelerated sharply in May. This was already pretty clear from the year-to-date numbers released by the NBS, but even more clear once the May data was disaggregated. In May investment grew by around 6%, bring year-to-date growth down...

The math of income and GDP targets
CHINA FINANCIAL · Report · 25 May 2016 · 2 responses

Special points to highlight in this issue: • While paranoia about China keeps Washington focused on predatory Chinese trade, Germany’s current account surplus is almost certainly a far bigger problem and one that may take longer to resolve. China is not the threat that many in Washington think...

An increasingly fragile financial sector
CHINA FINANCIAL · Report · 02 May 2016

• China’s financial system is becoming increasingly complicated and confused (not to mention confusing), and this is most likely a consequence of a contraction of PBoC reserves (after two decades of expansion) and what we can only assume is a rising amount of unrecognized bad debt, which ties up ...

How will a Chinese adjustment affect the world?
CHINA FINANCIAL · Report · 17 Apr 2016

Special points to highlight in this issue: • Recent debt and economy-related data released by the PBoC and the National Bureau of Statistics suggest that economic activity is stabilizing, but for the wrong reasons. Debt continues to rise faster than ever. • I continue to expect that China is mo...

Uncertainty continues to rise
CHINA FINANCIAL · Report · 31 Mar 2016

Special points to highlight in this issue: • There seem to be a lot of rumors swirling around about the leadership, but Beijing is always filled with rumors, and the seeming intensification may just be a consequence of the political calendar. Next year, of course, is the 18th Party Congress, in ...

The RMB and capital outflows
CHINA FINANCIAL · Report · 22 Feb 2016

- Beijing’s FX reserves are substantial, and recent concerns that they will very soon be depleted are overstated, although there is no question that if net outflows continue at current levels for many more months, we will have to start seriously reconsidering. - The idea, however, that Chi...

China gives the year a wild beginning
CHINA FINANCIAL · Report · 08 Jan 2016

Special points to highlight in this issue: The wild gyrations in the Chinese stock market this week don't tell us much about the direction of the Chinese economy, but they do tell us just how much uncertainty there is, both in the outlook for the economy and in the way Beijing will manage it.Thre...

Choosing more debt, more unemployment, or transfers
CHINA FINANCIAL · Report · 23 Dec 2015

Special points to highlight in this issue: In 2016 the PBoC will evaluate the change in the value of the RMB not just in dollar terms but increasingly in terms of a wider basket of currencies. We should not discount the possibility, however, that after a quarter or two of dollar strength o...

China’s rebalancing timetable
CHINA FINANCIAL · Report · 08 Dec 2015

Last week’s announcement by the IMF – that the RMB would join the four currencies that comprise the SDR – set off yet a new round of speculation about the future value of the RMB. On balance and over the medium term there are stronger economic reasons to keep the RMB steady than to devalue th...

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