Chinese Living Standards, International Perspective: The World Bank’s PPP Debate
Emerging economies are catching up with advanced economies, but differences of living standards remain far apart. A new report by the World Bank’s International Comparison Program (ICP) suggests that the purchasing power of China’s renminbi is significantly stronger than exchange rates indicate, based on 2011 prices. Measured by its currency’s purchasing power, the report concludes ... Read more
The Global Economy’s Shifting Center of Gravity
In the current policy debate on whether China, India, and the rest of Asia can continue to grow without a return to international markets of the US consumer—or, indeed, the opposite whether those national-economies will from now form the engine of growth for the global economy—compelling empirical evidence has been relatively scarce. This posting seeks ... Read more
Japan’s Third Lost Decade Begins
Japan’s recession is not paving the way for sustained growth. It is prolonging new debt and liquidity and thus deteriorating fiscal discipline. In the last quarter, Japan’s economy fell into recession. In the West, it was characterized as “unexpected.” The realities are precisely the reverse. With its third ’lost decade,’ Japan has entered an era ... Read more
Cash Exiting China
Something that I have thinking about for a few weeks – and was reminded of reading Ryan Avent this morning – is the series of pieces at FT alphaville regarding the outflow of cash from China. See here and here and here. The thinking had been that the renminbi was a one-way bet as China ... Read more
iPad Mini Index: RMB Fairly Valued, Euro Overvalued
View a larger version of this Geo-Graphic here. The “law of one price” holds that identical goods should trade for the same price in an efficient market. To what extent does it hold internationally? The Economist magazine’s famous Big Mac Index uses the price of McDonald’s burgers around the world, expressed in a common currency (U.S. ... Read more
Water Wars: The Next Clash Between India and China
By Amitava Mukherjee: A China watcher named Claude Arpi has drawn attention to a recently posted article on the website of the Yellow River Conservancy Commission under China’s Ministry of Water Resources. The article speaks of the necessity and feasibility of diverting the waters of some rivers, including the Brahmaputra (called Yarlung Tsangpo in China), to ... Read more
U.S. on Sidelines in South China Sea Standoff
By Nick Cunningham: Vietnam and China are engaged in a heated standoff in the South China Sea, with both sides thus far unwilling to back down. The problem started earlier this week when China sent an oil rig and other accompanying vessels into an area within the 200-mile exclusive economic zone of Vietnam. From there, ... Read more
More Bad News for Fukushima and Tepco
By Andy Tully: Tokyo Electric Power Co. (Tepco) now says the meltdown of the Fukushima No. 1 nuclear power plant in March 2011 involved all the fuel rods in the affected reactor, causing them to fall to the bottom of the containment vessel. Eight months after the massive tsunami caused the accident, Tepco said the ... Read more
Time for an Asian Infrastructure Investment Bank
The proposed Asian infrastructure bank could galvanize growth in emerging Asia and boost lingering global recovery. According to Western media, the Asian Infrastructure Investment Bank (AIIB) is to rival the World Bank and the Asian Development Bank (ADB). In reality, the idea of the AIIB was put forward more than a year ago; not to ... Read more
The Great Pretender–India’s Economic Past and Future: Part 1, ‘India Shining’
In the aftermath of the global financial crisis, optimists hoped that the BRIC (Brazil Russia India China) would drive the global economic engine. But China’s economic growth has slowed to its lowest rate in three years. Brazil’s economic growth has fallen from around 7.5% to under 3%. Russia’s economy is heavily dependent on oil and energy ... Read more