Many investors assume that energy use is a relentless upward march as populations grow and consumers acquire more gadgets. But oil consumption has contracted meaningfully in the past, most notably in the first oil shock, when demand fell from roughly 67 million barrels per day to 59. And recall that the oil price shock was […]
Read more...China’s third quarter growth slowed to 9%, a faster deceleration than most experts forecast. Conventional wisdom has held that China’s expansion would fall as low as 8%, which would feel like a recession internally. However, with growth having already falle to 9% before the credit crisis hit the worst of its latest acute phase, and […]
Read more...One of the trades that looked like a no-brainer was betting on continued appreciation of the Chinese renminbi. In fact, so strong was the confidence in this outlook that China suffered from large-scale hot currency inflows (as recounted ably by Brad Setser) despite the official obstacles. A top investment bank in China is now forecasting […]
Read more...The Baltic Dry Index, which some use as a proxy for the outlook for global manufacturing, has been falling since late June, not long before the commodities bubble burst in July, and has been in retreat since then. What is particularly worrisome is its steep dive in the last two days, despite Herculean efforts to […]
Read more...This proposal by Arvind Subramanian in the Financial Times makes quite a lot of sense, but given the collective denial in the US about how bad things are (despite the cratering of the markets, neither Presidential candidate was willing to say the economy would get worse, when that is a given) and our dependence on […]
Read more...Reader Michael passed along the Economist review of a new book, Capitalism with Chinese Characteristics: Entrepreneurship and the State by Yasheng Huang, which turns conventional wisdom about China on its head. It contends that, post-Tiananmen Square, new Chinese leadership shifted its approach to economic development to one that had more state direction than before, and […]
Read more...Ambrose Bierce, in The Devil’s Dictionary, defined an alliance as: In international politics, when two thieves have their hands plunged so deeply into each other’s pocket that they cannot separately plunder a third party. The corollary is that when your ally stumbles, you fall down too. China is learning that lesson the hard way. By […]
Read more...It has been conventional wisdom that China, Japan, and other countries that run trade surpluses with the US, which means they fund our overconsumption by buying assets like US Treauries, would never restrict the flow of credit to us because it would lower their exports and hurt their growth. We’ve long been leery of the […]
Read more...Two stories on Bloomberg discussed how the world’s export powerhouses, China and Japan, are feeling the effects of the global slowdown. First on China, which seems inclined to weaken the yuan to defend growth. That’s a mixed blessing for the US. A stronger dollar hurts the export sector, the one sunny area of the economy, […]
Read more...Either the Chinese do not understand banking and investing or the line being fed the Western press about the struggle over the Bank of China’s reserves is a cover story of some sort. Given the fact set, Dean Baker’s reaction ‘Is China’s Central Bank Run By Morons?” is not unreasonable. I have a different theory, […]
Read more...Morgan Stanley economist and Asia chief Stephen Roach’s current offering at the Financial Times, “Beijing’s Olympian task is to curb inflation,” says that the Chinese officialdom is focusing overmuch on growth in its policy mix. And Roach most assuredly believes that a serious slowdown is just starting. The article oddly underplays its bottom line. China […]
Read more...We wrote yesterday about Japanese retail and institutional investors exiting Freddie and Fannie holdings, and didn’t consider it as worrisome as it might seem on the surface, since at this juncture, the funding of our current account deficit is coming almost from central banks and to a lesser degree, sovereign wealth funds. Tonight, the Financial […]
Read more...Reader Michael sent us a Credit Suisse Equities research report dated August 27 and called our attention to the section on China. Note that the analysts did some primary research to try to get a grip on the post-Olympics outlook. They expect a widespread, albeit not too severe, slowdown (click to enlarge, and yes, it […]
Read more...If you had any doubt that China would remain unaffected by the global slowdown, that should be put to rest by various stories discussing that the Chinese government is mulling a stimulus package. Yes, you could argue that the economy might need a tap on the gas pedal to compensate for all the factory closings […]
Read more...This is a great piece by Orville Schell in the New York Review of Books. These essays tend not to lend themselves to editing, but this one does in reviewing several works both for their immediate content and how they relate to the larger issue of China’s deeply held sense of insecurity. I’ve taken the […]
Read more...