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Does Xi Jinping control China’s economy?
CHINA ADVISORY · Report · 08 Jun 2018

Xi Jinping is widely viewed as China’s strongest leader since Deng Xiao Ping thirty years ago. He has consolidated control over the Party, rammed home an anti-corruption campaign, and pledged backing for the expansion of the state sector through programs such as “One Belt One Road” and “Made in C...

Forecasting Chinese commodity prices
CHINA ADVISORY · Report · 16 May 2018

Chinese commodity price index predictive factors Chinese commodity price indexes can be predicted based on several indicators from the previous months. Indexes that can be determined include China's Basic Commodity Price Index, China's Energy Price Index, and China's Steel Price Index. The pre...

Tsinghua Unigroup: The “bank” behind China’s semiconductor ambitions
CHINA ADVISORY · Report · 27 Apr 2018

Tsinghua Unigroup is a spin-off of Tsinghua University, the MIT of China. It has developed into a conglomerate that is one of the key funding sources for China’s semiconductor industry. Unigroup raised an initial fund of Rmb180 billion from corporations, banks and state funds. Since then, it has ...

Notes from Beijing: Tighter control of the banks
CHINA ADVISORY · Report · 20 Apr 2018

After a week in Beijing we learned that the shift to new regulatory management, coupled with solidification of Xi Jinping’s power, is resulting in tighter control of China’s banks. There is a systematic effort to reduce reliance on off-balance sheet credit obligations in the banks that is working...

Xi Jinping’s measured Boao speech
CHINA ADVISORY · Report · 10 Apr 2018

Xi Jinping made a surprisingly concessionary speech at the Boao Forum on April 10 in response to the escalating trade war instigated by the Trump Administration. We had expected him to avoid making any overt signs of concessions to Trump’s trade threats. Perhaps we underestimated how little these...

Successful regulation of P2P defaults in China
CHINA ADVISORY · Report · 02 Apr 2018

China’s regulators have instituted stricter rules on the financial system. In online finance, they have effectively restricted the growth of peer-to-peer lending (P2P). This has helped to reduce the number of P2P defaults and is an example of how regulators are increasingly able to reduce risk in...

China’s tariff plan: Xi Jinping plays smart domestic politics
CHINA ADVISORY · Report · 23 Mar 2018

Beijing’s response to Trump’s tariffs was an astute brand of politics. Both sides are playing as much to internal politics as to their opposing countries. Trump is shoring up his political base by supporting the steel industry. Xi Jinping is wisely attacking states harboring Trump’s supporters, b...

Ant Financial’s aggressive strategy
CHINA ADVISORY · Report · 19 Mar 2018

Ant Financial operates through two businesses, Ant Credit Pay, which is a “virtual” credit card customers use to buy goods through Alibaba’s online platforms, and Ant Cash Now, which provides loans in cash issued directly to users who pay in installments with interest. The capital is supplied pri...

China’s work report: Why isn’t China growing faster?
CHINA ADVISORY · Report · 09 Mar 2018

Last week, China outlined its goals for 2018 in its annual work report issued by Premier Li Keqiang. It’s very ambitious – and there’s a lot that is quite misleading…. The real issue is the promise that fiscal policy “will continue to be proactive.” What does this mean in light of all the talk...

​Xi Jinping’s constitutional change….power grab or sign of weakness?
CHINA ADVISORY · In Brief · 28 Feb 2018

The announcement that Xi Jinping will seek an unlimited term as President of China has been widely misinterpreted as the act of a strongman that could lead to a return to the days of Maoism. Instead, we should view the announcement as a sign of weakness – Xi is tightening his political control as...

Is Xi Jinping in control of the Chinese economy?
CHINA ADVISORY · Presentation · 20 Feb 2018

Xi Jinping is both Chairman and CEO of China, which has led to ineffective policy making: no one is “driving” supply side reform. But while reform has been limited, there are signs of risk reduction in the financial sector, and local governments are providing some solutions.

China buys the world: The domestic politics of China’s foreign direct investment
CHINA ADVISORY · Presentation · 20 Feb 2018

There is a suspicion that there is a collective brain that directs Chinese companies’ actions, and that recent outbound acquisitions have been directed by pervasive government planning. However, China’s ambitions are complex, and there is no invisible hand. State and market capital will continue ...

China’s bad debt problem: Underestimated NPLs still a big threat to China’s banking system
CHINA ADVISORY · Report · 16 Feb 2018

There have been a number of external estimates of China’s bad loans. The most widely utilized number was provided by the IMF, which analyzed 2,871 companies to estimate what percentage was not generating enough cash to pay interest expense. It arrived at an estimate of 15.5% of total corporate lo...

China’s hidden stimulus: LGFVs local investment platforms load up on bonds
CHINA ADVISORY · Report · 22 Jan 2018

Chinese officials have made many statements in recent months about reducing risk in the financial system, and “deleveraging.” However, while tools such as higher interest rates and rules to reduce risky assets have targeted the weakest banks, credit continues to flow into the economy. Credit s...

The systemic risk of private-public partnerships
CHINA ADVISORY · Report · 03 Jan 2018

• Regulatory Arbitrage. China is promoting Private-Public Partnerships (PPP) as the new way to stimulate the economy and bypass restrictions on local debt. • Local Debt. This is implicit debt of local governments. Holders of Rmb1.28 trillion of domestic LGFV bonds and $34.0 billion of foreign LG...

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