Rmb discontents: where’s Europe?
The renminbi is back in the US political arena, with Mitt Romney vowing to call China a “currency manipulator” if elected president.
But a new FT interactive graphic illustrates that it is Europe and China’s emerging market peers, not the US, that have the most reason to be upset over Beijing’s currency regime. Continue reading »
China’s world view: a long way to go
China has come a long way from Deng Xiaoping’s strategy of “hiding our brightness and biding our time”. It has sent a man into space, dispatched peacekeepers around the world, hosted the Olympics, become the world’s second-biggest economy and the dominant force in global commodity markets … the list goes on.
Yet to hear it from China’s foreign policy officials, things haven’t changed much at all: China is still just a developing country, minding its own business. Continue reading »
Chinese women: the real power behind the curtain?
Behind every fallen Chinese man, there stands a great woman. The purge of Bo Xilai, once seen as a top leadership contender in China, has added to a long list of powerful officials who have been felled by the alleged misdeeds of their wives, mistresses and mothers.
For a country never short on conspiracy theories, the police decision to focus on Gu Kailai, Bo’s wife, in a murder investigation calls to mind its centuries-old tradition of blaming women when political turmoil erupts. Continue reading »
China’s onionomics: the roots of inflation and informal lending
The most lucrative investment strategy in China? Go long vegetables – just be sure to pick the right one.
After the prices of garlic, mung beans and corn spiked at different times over the past few years, the humble onion is now getting its day in the sun. Chinese green onions, which resemble leeks and are a stir-fry staple, cost about Rmb7 ($1.10) per kilogram these days, five times more than a year earlier. Continue reading »
China’s holy grail: a leading indicator
For anyone foolhardy enough to make Chinese economic forecasts, a constant problem is the lack of crystal balls at hand.
The usual arsenal of predictive tools in other countries – yield curves, stock prices, purchasing manager surveys, Conference Board and OECD indices – all exist in China. But all are market-based measures, making them deeply flawed in an economy which is so heavily managed by the government. So what to believe? Continue reading »
China’s budget tricks: hidden deficit
Dream on, Athens. When Beijing presented its 2012 budget this week, the main concern from investors was that the government was not going to run a big enough deficit.
But a closer look at the spending plan reveals that China may have a couple of accounting tricks up its sleeve: its true deficit is likely to be quite a bit larger than the finance ministry claimed. Continue reading »
China ditches the dollar (sort of)
China has earned a reputation as a hypocritical investor over the past few years. It has repeatedly warned the US that quantitative easing was debasing the dollar, only to turn around and plough even more of its vast foreign wealth into dollar-denominated assets.
But perhaps those warnings weren’t so hollow after all. The latest data from the US Treasury suggests that China has in fact executed a major diversification away from the dollar. Continue reading »
Lei Feng: a Maoist icon for bankers
China is dusting off a Maoist icon for the modern age.
Lei Feng, a soldier celebrated for his revolutionary fervor in the 1960s, is being invoked to justify everything from a Good Samaritan law to better risk management at banks. Continue reading »
Jeremy Lin: a Chinese trademark?
With Apple battling for its iPad trademark in China, another famous American product – Jeremy Lin – could soon face similar trouble.
A small sporting goods company in Wuxi, a manufacturing hub near Shanghai, has obtained a trademark on the Chinese name of the New York Knicks basketball star. Continue reading »
Chinese GDP: doesn’t add up
One of China’s longer-standing economic controversies has erupted again. All 31 provincial-level jurisdictions have reported their 2011 GDP figures and the results are unbelievable in the original meaning of that word – as in, not able to be believed.
Of the 31 growth rates, 28 were faster than China’s overall expansion of 9.2 per cent. Chinese media have pounced on this discrepancy to question the reliability of official economic data. That’s not entirely fair. Continue reading »
Rmb: changing China, not the world
A study of the renminbi published by the Brookings Institution this week outlines how the Chinese currency’s international status still pales in comparison to the dollar’s. It also offers something of a blueprint for how Beijing can change that.
There is, of course, much excitement – and concern – globally about the renminbi’s ascendancy. But the study shows that internationalisation of the currency will do far more to change China before it has a chance to change the world. Continue reading »
China RRR: Wrong focus
Many of the top analysts who cover the Chinese economy predicted that the central bank would loosen policy by cutting banks’ required reserves in January. It did not.
Should investors be disappointed at the lack of easing? Pleased that the government seems so confident abut the health of the economy? Or are they simply barking up the wrong tree? Continue reading »
China growth: still up in the air
So much for a hard landing – in fact, so much for any landing at all. China’s economy grew 8.9 per cent year on year in the fourth quarter, comfortably faster than market expectations, and just a whisker below the third quarter’s 9.1 per cent pace.
But the figure is, of course, for the entire quarter. The finer-grained picture from a monthly breakdown shows that the Chinese economy is indeed on the descent. Continue reading »
Renminbi: proof you can be half-pregnant?
Purists would have that an exchange rate is much like a woman: just as she can’t be half-pregnant, a currency cannot get very far when only half-convertible.
Beijing is now doing its darndest to disprove this truism – well, at least the latter part of it. With its carefully scripted internationalisation of the renminbi, China is expanding the convertibility of the renminbi in increments. And for now, it has been hugely successful in attracting sustained interest from investors. Continue reading »
China PMI: beware the calendar effect
China did its bit to get 2012 off on the right foot, delivering a significant surprise lift in its official PMI for December that has given a glimmer of hope to markets shaking off their holiday slumber.
Not to spoil this hopeful start to the new year, but a deeper look at the numbers – and at the differences between the Gregorian calendar and China’s lunar calendar – suggests the initial flush of optimism might be overdone. Continue reading »
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