Category Archives: China

Chinese Monetary Official: Housing Risk Greater Than in US, UK Pre-Crisis

An interview with the Financial Times by Li Daokui, who serves on the Chinese central bank’s monetary policy committee, included an uncharacteristically candid comments on the state of China’s housing market and by implication, the direction of Chinese interest rate movements. From the Financial Times: “The housing market problem in China is actually much, much […]

On the Fat Fingered Trade and Market Freakout

We’ll know in due course, now that an investigation is underway, why the equity markets in the US went into complete freefall for about twenty minutes, with the Dow dropping 998 points. Per Bloomberg: Larry Leibowitz, chief operating officer of NYSE Euronext, said trades sent to electronic networks fueled the drop. While the first half […]

Pharmaceutical Companies Risking Drug Safety Via Cost Controls?

Reader Francois T sent this by e-mail: It is a well known (self-serving) assumption among business leaders that management is a “special skill” that can be applied to pretty much any field. Alas, this, ahem, skills set seems to bring the bad attitudes also. Problem is, this can become deadly for their costumers when those […]

Three ways to keep NPLs down, recapitalize banks, and socialize losses all at the same time

A post by Edward Harrison Michael Pettis is out with another great piece on the likelihood that non-performing loans (NPLs) will rise in China when the present spate of malinvestment comes a-cropper. What caught my eye were his statements about the hidden ways in which government pays for bank recapitalization in order to deal with […]

Geither Defers “Currency Manipulator or Not” Determination on China

As expected, Treasury has put off a decision on whether to label China a currency manipulator for a few months, pending negotiations with China. The problem is, however, is that China has been signaling that it is pretty non-negotiable (yes, there has been the occasional conciliatory remark, but they have been notably few and far […]

More Evidence of Lack of Competitiveness of Many Chinese Exporters

One argument we have made, which some readers find difficult to accept, is that China’s keeping its currency, the renminbi, at artificially cheap levels is tantamount to an across-the-board export subsidy (the proof that the RMB is artificially cheap comes via the fact that China has had to engage in massive dollar purchases to keep […]

China’s Debt Bubble: When Will the Ponzi Unravel?

Independent Strategy’s latest report, “China’s credit bubble: the missing piece in the jigsaw” makes a persuasive case that China’s debt fueled growth model is due for a hard landing, but the timing is uncertain, since the debt is funded internally. China is barely past an episode of dealing with banks chock full of bad loans […]

Top ten reasons you know China has a financial bubble on its hands

A post by Edward Harrison. Edward Chancellor, author of the seminal book on financial speculation and manias “Devil Take The Hindmost,” is now turning his eyes to China. He sees a number of red flags which point to excess in China. Chancellor writes: In the aftermath of the credit crunch, the outlook for most developed […]

China Expects to Announce Trade Deficit for March

A story in China Daily indicates that the Chinese offiicaldom foresees a record trade deficit for March: The country will probably see a “record trade deficit” in March thanks to surging imports, Minister of Commerce Chen Deming said on Sunday, while warning that Beijing will “fight back” if Washington labels China a currency manipulator. Speaking […]

China’s Exporters Hanging by a Thread?

Has the Chinese export sector become hostage to WalMartization, the ability of powerful retailers to squeeze vendor profit margins? Reader Michael Q called our attention to a key remark in a Wall Street Journal story: Vice Commerce Minister Zhong Shan, in an exclusive interview Thursday ahead of a visit to the U.S., said that the […]

On China’s currency peg and potential policy actions

A post by Edward Harrison In reading Scott Sumner’s take on the China currency peg dilemma, I see that both he and Paul Krugman hit on the fundamental problem in the debate: reserves. Everyone is talking about the peg as if relaxing the peg will be the magic bullet to America’s current account problem. But […]

Will the Chinese yield to external threats?

A post by Edward Harrison I am going to talk here a little bit about the looming trade war between China and the United States. But I am going to come at it from a side angle via some historical analogies. Common folklore in the United States says that the Soviet Empire collapsed in large […]

Martin Wolf: China, Germany Commiting World to Deflation

The Financial Times’ Martin Wolf gives a cogent and sober assessment of what he deems to be a destructive refusal to adjust policies on behalf of the world’s two biggest exporters, China and Germany. The problem is that both simultaneously want to have their cake and eat it too. As we stressed in a recent […]

Calibrating differences between China and Japan’s bubble blow-off top

A post by Edward Harrison. I was talking to a friend of mine who does emerging market investing for a living and I asked him what he made of recent China-bullish comments by Stephen Roach. The Morgan Stanley Asia head was in Germany speaking to German business daily Handelsblatt last week. The guys from Handelsblatt […]

Are Rising US-China Tensions Pointing to a Rupture?

Relations between the US and China have been deteriorating. Although both sides have poked each other in various ways (Obama meeting with the Dalai Lama, China dissing Obama in Copenhagen by standing him up for a meeting, some tit for tat on tariffs), the major, unresolved bone of contention is China’s pegging of its currency, […]