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Recently there has been a growing concern among some inside and outside of China about the impact of the Japanese quantitative easing program on the Chinese economy. In the Financial Times, David Li wrote that “China has become the de facto shock absorber for Abenomics.” These fears are misplaced. The April edition of the IMF’s [...]
Since the reform era began, high GDP growth has been important to a successful career in Chinese politics particularly at the local level. The new Xi-Li administration is now hoping to change that. Since the 18th party congress, Chinese new Xi-Li administrations have emphasized improving the quality and efficiency of growth (提高质量和效益) and repeated the [...]
Owners of the debt of local government special purpose vehicles (SPVs) should choose wisely and be cautious. At least this is the message central government officials are communicating to China’s financial markets. Two weeks ago, Premier Li Keqiang identified “controlling the risks of local government debt” as one of his administrations key reform initiatives. But [...]
Public debt levels in China are an issue of ongoing concern. In particular after the 2009 stimulus concern over the sustainability of debt levels increased when China National Audit Office announced that local government debt rose from 17.7 percent of GDP in 2008 to 26.5 percent in 2009. A recent IMF working paper suggests these [...]
China’s largest policy bank, China Development Bank (CDB), was recently described as “China’s Superbank” by Henry Sanderson and Michael Forsythe. The title seems fitting since CDB’s long standing chairman, Chen Yuan, has often claimed that despite being a policy bank CDB offers a lending model superior to commercial banks. However, CDB may not be so [...]
Revisions to economic statistics are common and often do not have a dramatic impact on the overarching trends, other times they are significant enough for analysts to change their perspective on what is happening in a country. The most recent revision to balance of payment data released by China’s State Administration of Foreign Exchange (SAFE) [...]
If anyone suspected the new Chinese leadership would relax controls on local government spending in 2013, they were wrong. CBRC is preparing to issue the third installment of the now annual guiding opinion on monitoring the risk of local government financing vehicles (LGFVs). When released, the new draft will strengthen provisions for controlling bank lending [...]
In 2012, Chinese commercial bank profits grew by 19 percent at the same time regulators increased the flexibility of deposit interest rates. The Peoples Bank of China should take this as an opportunity to continue to gradually liberalize interest rates. A double digit increase in bank profits in 2012 suggests interest rate liberalization should continue [...]
Increasingly China’s new leadership has revitalized the topic of urbanization. Last November, the vice-premier, Li Keqiang, wrote an article calling urbanization a “huge engine” for future economic growth. More recently, the newly released income inequality plan has even described urbanization as a tool to reduce income inequality. This renewed emphasis on urbanization appears to have [...]
For the uninitiated, when looking at China from afar it is easy to assume that in a “socialist-market economy” the state would play a significant role in employment. Even for seasoned China watchers, it is easy to fall into the misconception that the painfully slow pace of economic reforms during the Wen Jiabao and Hu [...]