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
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
What Does a ‘Good’ Chinese Adjustment Look Like?
I have always thought that the soft landing/hard landing debate wholly misses the point when it comes to China’s economic prospects. It confuses the kinds of market-based adjustments we are likely to see in the US or Europe with the much more controlled process we see in China. Instead of a hard landing or a ... Read more
China’s Bad Debts Can’t Be Simply ‘Socialized’
Once again I am going to discuss debt, and my discussion will be mainly conceptual. I suspect that many of my regular readers might wonder why I keep returning to this subject – and, often enough, keep saying the same things. The reason is because while debt plays a key role in understanding the recent ... Read more
Chinese Cyber Espionage: We Know Everything Except What to Do About it
Three documents that came out this week lay out the “who,” “how,” “why,” and “why it matters” of Chinese cyber espionage. Unfortunately, we still lack the “what to do.” The “who” and “how” was contained in a new report, Putter Panda, by the cybersecurity company CrowdStrike [Full disclosure: CrowdStrike helps fund a speaker series at CFR]. ... Read more
China, Not Piketty, Explains ‘Confused Signals’ in U.S. Asset Prices
The FT’s Ed Luce recently took on the “confused signals” being sent by U.S. stock and bond prices moving in sync (upward). Which is it, he asks? Are economic prospects good, as stock prices suggest, or bleak, as bond prices suggest? Both and neither, he offers. High-end retailers like LMVH and Tiffany are doing great, he says, ... Read more
The Rise of Cyber-Security Blackwaters
Recently, the Department of Justice launched its first criminal cyber espionage case against alleged Chinese hackers. The case depends on new cyber-security start-ups – the successors of Blackwater. On Monday May 19, 2014, the Department of Justice (DoJ) filed criminal charges against five hackers in the Chinese military, accusing them of stealing American trade secrets through ... Read more
China’s Place in the Global Economy
Last week’s announcement that China’s GDP grew at an annualized rate of 7.4% in the first quarter of this year has stirred speculation about that country’s economy. Some are skeptical of the data, and point to other indicators that suggest slower growth. Although a deceleration in growth is consistent with the plans of Chinese officials, policymakers may respond with ... Read more
China’s Shadow Banking System
Chinese debt concerns are complicated by two structural issues – the rise in borrowing by local governments and the increase in the role of the shadow banking system. Both sectors are testament to Chinese entrepreneurial spirit, but also point to deep problems in China’s financial system. Local But National… Outside of security matters or foreign ... Read more
China’s Debt Vulnerability
Western understanding of China has never greatly progressed beyond Charles de Gaulle’s statement that: “China is a big country, inhabited by many Chinese”. Despite constant analysis of developments in China in excruciating detail, economists seem to have only recently its identified debt problems. In fact, the country has had a 35-year addiction to cheap credit.Quantum ... Read more