China Economy

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Charting China’s five-year plan

Bernard Hickey at Interest.co.nz yesterday alerted me to an interesting presentation by the Brookings Institution on China’s latest 5-year plan, which has been widely discussed as focussed on sustainable growth and reducing inflation, rather than going for growth for the sake of it. The presentation contains a series of excellent charts summarising China’s progress and

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China and the future of capitalism

Let’s try some more scenarios, but this time with your participation. My reasoning is this. Most economic and financial commentary is about telling the story of the past leading up to the present. So why not try to tell the story of the future? After all, that is what matters for investment and policy. Can’t

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Wolf debates Stevens

Today Martin Wolf of the FT joins the growing ranks of China skeptics. It is interesting to contrast his views with those of Glenn Stevens, enunciated in his speech yesterday. According to Wolf: Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding

11

Chinese banks feeling the heat

Following on from last night’s post on S&P’s recent report on China and commodities, the Royal Bank of Scotland (RBS) yesterday released an interest report (available below) on the precarious position of the Chinese banking system. Here are some key extracts: Chinese banks’ aggressive credit expansion in the past two years greatly facilitated China’s strong economic recovery

11

S&P on a China disaster

Late last week, Standard and Poors (S&P) released a 22-page report entitled The Potential Risk of China’s Large and Growing Presence In Commodities Markets, which warns that record high commodities may represent an unsustainable bubble at risk of correcting in the event of a significant slowdown of the Chinese economy  (hat tip Interest.co.nz for the

16

China’s hidden debt

Niall Ferguson coined the term “Chimerica” to characterise the economic relationship between China and the United States. In his view, China does the saving, and the United States does the spending.  This is true to a certain extent but that does not mean that China does not borrow. Today, I want to explore debt in the

18

China not slowing enough

The People’s Bank of China has raised interest rates and reserve requirement ratios a number of times since last year as the government pledged to make inflation fighting and property price curbing their top priority.  So far, the two main objectives have not been achieved.  However, the effect of tightening has been increasingly visible. For

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China is different

  We need a new framework for understanding and interpreting what is happening in China. As a friend recently commented to me, there should be three categories of economies: developed, developing and China. China may struggle, but it will struggle in a uniquely Chinese way, and inevitably pose deep questions about the future of capitalism.

6

World Bank warns China (Canberra)

The World Bank has damned the lifeboats in its China Quarterly Update and called out multiple risks including a housing bubble, inflation and external imbalances. Here is the money excerpt: Inflation is unlikely to escalate but there are risks. Food price increases seem to have slowed for now, sequentially, and the (yoy) rate of increase in

3

Pettis on yuan

From Michael Pettis this week: On Friday last week the National Bureau of Statistics released the eagerly anticipated first quarter data.  As has been widely reported, first quarter GDP was up 9.7% year on year. CPI inflation 5.4% in March, a 32-month high, and up from 4.9% for the first two months of this year.  For the first

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Roubini calls time on China (part 2)

Earlier this month, Houses and Holes posted a report from Professor Nouriel Roubini warning that the Chinese economy is overheating and risks a sharp slowdown sometime after 2013. Now Professor Roubini has followed up with an article on Project Syndicate fleshing-out his views in greater detail. Professor Roubini  more or less supports earlier warnings from Michael Pettis and prominent China

7

China’s leading indicators

Here’s a heads up about the important Chinese data that is out around lunchtime today.  Amongst the raft of data to be released is the GDP data. Chinese growth is increasingly important to everyone on the planet as our beloved Central Bank Governor pointed out in New York two nights ago. The chart below shows the

18

Moody’s downgrades China’s property sector

Just in, credit rating agency, Moody’s Investor Services, has downgraded China’s property sector to negative from stable, citing both falling property sales and prices [my emphasis]: Hong Kong, April 14, 2011 — In a new report, Moody’s Investors Service changes its outlook for the China property sector to negative from stable. The change reflects the

5

Beijing down 29% ?

On new years day of this year the Chinese government announced that it had a new plan for housing China’s central government will strengthen its campaign to control soaring housing prices in 2011, a senior official said on Wednesday. Minister of Housing and Urban-Rural Development Jiang Weixin told a national work conference that the government will

13

Andy Xie on China

Andy Xie, an independent economist based in Shanghai and the former Morgan Stanley chief Asia-Pacific economist, yesterday published an excellent article in Caixin warning that an inefficient public sector and negative real interest rates are pushing China towards stagflation, instability and a possible financial crisis (h/t interest.co.nz). Xie’s article more or less supports earlier warnings

7

EIU report on China’s housing bubble

Below find the executive summary of a new report into China’s housing bubble from The Economist Intelligence Unit. It has some terrific stats and is well worth your time, even though its analysis and conclusion add up to the intensely suspicious conclusion that ‘this time it’s different’. One particular claim I’ll take umbrage with is

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Canberra please read: Roubini calls time on China

From Nouriel Roubini at RGE Monitor: I’m writing on the heels of two trips to China during which I met with senior policy makers, bank executives and academics, just as the government launched its 12th Five-Year Plan, intended to rebalance the long-term growth model. My meetings deepened my own impression and RGE’s long-standing house view of

9

Power hungry China

Analyst presentations can be tedious affairs, often an equal mix of the obvious and the dubious. But one I saw about China’s Five Year Plan’s implications of Australia really had me listening closely. The visiting China-based analyst was showing a slide of the projections of the growth in “low carbon” energy out to 2015. It

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China’s largest ghost city filled

At last, a good news story on China. Readers might remember that I posted an article in December showing alarming satellite photos of entire cities laying vacant (see China’s empty cities). In that article appeared the below photo of Zhengzhou New District, which was supposedly “China’s biggest ghost city, complete with entire blocks of totally

2

Michael Pettis: China slowing

` Exclusively from Michael Pettis newsletter: Quite a few numbers came out this week, but none of them were especially dramatic or likely to change anyone’s mind about anything. The most interesting thing to me is that there are indications that, once again, the economy may be slowing quickly. Every time Beijing gets worried about too

4

Macquarie bursts the China bubble

The pressure is growing for China to open up its capital markets as a way to solve its internal bubbles. The question is: how will that affect the rest of the world? The greatest impact of China – its massive scale – is so far largely confined to trade and global production chains. What happens if

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The China domino

The stated goal of the Hu Jintao-led Chinese government is a “harmonious society”. Perhaps that is why the word “Egypt” was blocked on certain search engines over the weekend. Multiple factors are in play in Egypt, but there is one vital similarity with China: Food inflation of a breadth and severity that few in the