Category: China

Hitting a New Growth Target

China’s new growth target of 6.5-7% will ensure more flexibility amid deceleration at home and stagnation in the West. It is a balancing act between reforms and deleveraging.              

Forces Impacting Chinese Trade Figures

Investors are skeptical of Chinese economic data.  However, news yesterday that Chinese exports fell by a quarter in February shocked investors.  Many worry about the implications not just for China, but also for world growth.  It comes as the IMF is signaling it will likely cut its 3.4% global growth forecast next month.

China’s ‘Market Economy Status’

The future of the EU–China trade relationship — one of the largest in the world — will be substantially impacted by a debate over whether China should be granted ‘market economy status’ (MES) this year. Under the terms of China’s ‘Protocol of Accession’ to the World Trade Organization, WTO members are allowed to treat China as a ‘non-market economy’ until December 2016. After that time — at least in the Chinese interpretation — WTO members are to accord China MES.

Is China’s Xi on the Correct Economic Path?

President Xi Jinping’s economic thinking – “Xiconomics” – reflects the kind of adjustment that is required by Chinese rebalancing in a challenging international environment.

Three years ago, sinologists in the West – led by Barclays Capital – introduced the term “Likonomics” to describe the central tenets of Premier Li Keqiang: no stimulus, deleveraging, and structural reforms. By now, those policies were expected to push China toward a “temporary hard-landing” with quarterly growth plunging to 3%.

China’s Rise to Challenge the U.S.

China’s rise as a quasi-superpower represents the most important change in the international system in the 21st century. China is now widely viewed as the de facto strategic rival of the United States and a potential challenger to US global supremacy, particularly in the Asia Pacific.

Many observers have described Chinese diplomacy as newly and increasingly assertive in the wake of rising tensions in the South China Sea. How should we understand this ‘new’ assertiveness?

China Viewed as a Convergence Success Story

China’s diminished growth prospects have figured prominently in recent commentaries about global economic conditions and world stock markets (e.g. Frankel 2016). The general view, with which I concur, is that China will grow in the future at a much slower rate than it has in recent decades. This growth slowdown will reduce international trade and has probably contributed already to the depression in oil prices (Blanchard 2016).

Balance of Payments Out of Balance? See Errors and Omissions

Chinese markets will be closed next week for the Lunar New Year celebration.  However, over the weekend, China will report its January reserve figures.  The market suspects that the PBOC burnt through another $120 bln of reserves. 

China’s reserves stood at $3.81 trillion in January 2015.  There are expected to stand near $3.21 trillion as of the end of last month.  

China’s ‘New Normal’ Economic Growth is still Strong

For China, the story for its economy in 2015 simply reinforced what was already becoming apparent through 2014. GDP growth was slowing, and the political capital the Communist Party could collect from lauding this one statistic was diminishing.

Premier Li Keqiang even suggested in November that growth would fall from `around 7 percent’, to something closer to 6.5 percent. The era of the `new normal’ was well and truly upon China. The need to increase its performance in services, raise consumption and support urbanisation was therefore also growing.