We wrote yesterday about Japanese retail and institutional investors exiting Freddie and Fannie holdings, and didn’t consider it as worrisome as it might seem on the surface, since at this juncture, the funding of our current account deficit is coming almost from central banks and to a lesser degree, sovereign wealth funds. Tonight, the Financial […]
Read more...Reader Michael sent us a Credit Suisse Equities research report dated August 27 and called our attention to the section on China. Note that the analysts did some primary research to try to get a grip on the post-Olympics outlook. They expect a widespread, albeit not too severe, slowdown (click to enlarge, and yes, it […]
Read more...If you had any doubt that China would remain unaffected by the global slowdown, that should be put to rest by various stories discussing that the Chinese government is mulling a stimulus package. Yes, you could argue that the economy might need a tap on the gas pedal to compensate for all the factory closings […]
Read more...This is a great piece by Orville Schell in the New York Review of Books. These essays tend not to lend themselves to editing, but this one does in reviewing several works both for their immediate content and how they relate to the larger issue of China’s deeply held sense of insecurity. I’ve taken the […]
Read more...Brad Setser thinks that China is again holding the RMB down to maintain export volume in the face of softening global demand. From the comments (my emphasis): China prefers subsidizing US consumption of Chinese goods to subsidizing Chinese consumption of Chinese goods… if China’s foreign asset accumulation continues at $800b a year, it will add $3.2 […]
Read more...The text that accompanies the slides from a July JP Morgan report in its Hands-On China series by Michael Goettti (hat tip reader Michael) notes that it you asked most people how quickly Chinese food consumption was growing, most people would peg it in the 7% to 10% growth range, paralleling GDP growth. This is […]
Read more...Nouriel Roubini and Brad Setser appear to have called this one correctly. Simply staggering amounts of hot money have been flowing into China, betting on faster appreciation of the yuan. or better yet, a significant revaluation. In fact, this level of weight of money would normally be a self-fulfilling prophecy. Hot money is highly stimulative, […]
Read more...As he is often wont to do, Ambrose Evans-Pritchard worries, in dire terms, about the poor prospects for growth and stability, It would be easy to dismiss him as histrionic were it not for the fact that some commentators who have been right so far about the progress of the credit crunch, are also hyperventilating. […]
Read more...One of the insufficiently-covered stories in the business press is the accelerating growth of China’s foreign exchange reserves. That information is treated as old hat. Yes, China has a big trade surplus so it has substantial FX reserves. Next? But a new and volatile element has been added to the mix. The money coming into […]
Read more...The headline above, which comes from an article in the Telegraph by Ambrose Evans-Pritchard, might benefit from a better image. “Blowing up” doesn’t seem the right image to describe an economy at risk of a sudden drop in growth. But something more fitting, like engines going into stall, might have taken too much space. Aside […]
Read more...We’ve believed that China would have to hit a speed bump, or worse, at some point. To resort to cliche, trees do not grow to the sky and rapid GDP increases often wind up seeding their own undoing. There are already signs of trouble. Exports are a big driver of Chinese growth (the other is […]
Read more...I had grumbled recently that the financial press had not paid any attention to the simply stunning rise in China’s foreign exchange reserves, which were estimated to have increased by $75 billion in April alone. Brad Setser and Michael Pettis have been reporting regularly on this beat, but it has gone undernoticed in the wider […]
Read more...China had said it would increase fuel prices, which are heavily subsidized, in a statement last month, but had not given any timetable for its actions. Most observers had assumed any change would take place after the Olympics. In a surprise move, perhaps impelled by inflation concerns, the Chinese announced a price hike effective tomorrow. […]
Read more...The world is finally waking up to the fact that inflation is getting to be a wee bit of a problem and inflation is very unkind to investments. Confidence in China may be fragile, since the stock market reaction seems well out of proportion to the significance of the so-called tightening via a 1% increase […]
Read more...Bloomberg reports (hat tip Calculated Risk) that the US, Japan, China, India, and South Korea agreed on the need to cut energy subsidies and take other measures: The U.S. and the four Asian nations, together accounting for half the world’s energy consumption, said today wider use of alternative fuels such as clean coal, nuclear power, […]
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