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The 10.7 trillion renminbi in local debt revealed by the National Audit Office earlier this year has led to all matters regarding local government finances to be carefully scrutinized. Slowing economic growth and reduced revenues from the property market mean that Chinese local governments need to borrow more money to continue their high levels of [...]
President Obama’s announcement of progress and support for the Trans-Pacific Partnership (TPP) during the recent Asia-Pacific Economic Cooperation (APEC) summit has led to new scrutiny of the role of SOEs in Asia. Many business groups, including the Chamber of Commerce and the Coalition of Service Industries, have argued that any agreement must include provisions that [...]
The RMB727 billion drop in deposits in the banking system this past month may further limit the ability of credit-strapped banks to make loans. The fall in deposits is another example of the impact of distorted interest rates. Negative real interest rates on deposits (averaging -.5 percent since 2004) has slowed the accumulation of new [...]
There is a lot of fretting in the press this week over China’s October trade statistics. It’s true that the month-on-month growth statistics show a modest decrease. There could be a variety of different factors behind the slowdown, including an appreciating currency and weak demand in the advanced economies. That said, it’s important to view [...]
Nicholas Consonery is an Asia analyst at Eurasia Group. China will not be saving Europe. That scenario was floated as a possible, if not likely, outcome for the G-20 talks last week. But instead Beijing showed that it is, for now, still largely unwilling to shoulder responsibility for fixing the continent’s financial woes. What happened? [...]
Fighting bubbles in an economy as big as China’s requires both patience and skillful management of public expectations. Recall that it was December 2009 that China’s economic planners first began efforts to tame the property market by raising the required down payment on investment properties to 40%. That it took almost two years and a [...]
The incremental approach Chinese policymakers have used for renminbi internationalization occasionally leads to strange outcomes, such as a markedly different price for offshore and onshore renminbi. Since the creation of a cross-border trade settlement scheme in 2009, renminbi deposits have rapidly accumulated in Hong Kong . The buildup of renminbi deposits has occurred primarily through trade settlement (Chinese [...]
Over the past two years China’s authorities have constricted the growth of credit in an attempt to combat inflation and rein in excessive loan growth. This has made it more difficult for a variety of businesses to obtain credit, particularly bank loans. As a result, firms are increasingly turning to the shadow banking industry to [...]