Beijing is so packed with Chinese tourists right now that several times I have had trouble getting my phone connected, but despite the promise of substantial "revenge spending" during this year's one-week national holiday, consumer spending in...
the first four days was still down a whopping 31% from the same period last year.
Even though Chinese tourists cannot go abroad this year, there are still 20% fewer tourists traveling in China than there were last year, and they spent on average 12% less per person.
3/4
That isn't good. I have been relatively bearish about the revival of consumption, but I still expected the national holiday to be better than this. If Chinese tourists remain so cautious about spending, even with the sense that Covid-19 is truly behind us, it is hard...
4/4
to see how domestic consumption will be as much of a driving force for growth has Beijing is promising. Let's see how the trade surplus evolves.
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According to this very interesting article Chinese entities have sharply increased their buying of JGBs this year in order to get a yield pickup over USTs, which means, I guess, that they have swapped the JGBs into USD. The article adds:
“The yuan's level is guided in reference to a basket of currencies that includes the dollar, euro and yen. China's currency faces upward pressure because the country's economy recovered relatively quickly from the coronavirus downturn. Selling yuan to buy...
3/6
yen-denominated JGBs helps China ease that pressure.”
Actually, selling yuan to buy any foreign currency bonds helps China ease appreciation pressure, but for me the important question is whose currency is taking the brunt of yuan selling. If Chinese entities bought...
Good article, but worrying. Albert Hirschman argued that once a developing country reaches the maximum level of investment it can absorb productively, which I'd argue China did in the past two decades, it must implement the financial, legal, and... ft.com/content/582411…
2/6
political reforms that allow its workers and businesses to operate productively at higher investment levels. This, he always said, was the hard part, as it always involved changes in the distribution of wealth and political power away from the incumbents.
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I think Hirschman is right. The main difference between advanced economies and developing economies is the nature of their institutions, not the amount of capital invested (it is the former that should determine the latter).
1/4 The author says that "since 2015, the central bank has allowed the currency to trade more freely. The PBoC’s shift has enabled the renminbi to undertake the same signalling role that the yen historically played regarding the dollars prospects."
2/4 I disagree with much of this article, but especially the claim that the RMB began trading freely in 2015. In fact what happened is that the PBoC shifted from targeting USD to targeting a basket of currencies (the CFETS RMB Index). If you continue tracking the RMB against...
3/4 the dollar, it might seem that the RMB has become much more volatile, but most of that is simply USD volatility.
Against the basket, on the other hand, the RMB has been very stable: it is less than 1% higher today, for example, than it was four years ago. What is...
1/10
I agree, Adam, that what happened in Japan is a very important story, but I would add that your graph shows Japanese government debt, which is only half the debt story. In the 1980s, when Japan was still growing quickly, private-sector debt grew more rapidly than...
2/10
Japanese government debt. In the 1990s, however, when Japanese GDP growth had pretty much dropped to zero, private-sector debt began to shrink as a share of GDP, just as government debt began its rapid growth. tradingeconomics.com/japan/private-…
3/10
I think, in other words, that while there was growth in Japanese debt after 1990-92, there was also a lot of shifting of debt from private-sector to government balance sheets. The reason I think this is important is because of what it might tell us about China.
1/4 I think this is a little deceptive. While the RMB may have appreciated against USD during the past three months by 3.7%, this was partly because the dollar was weak. Against the CFETS basket, which is a better measure of the performance of...
2/4 the RMB, it still performed well, but it rose by 2.8% during the past three months. For what it's worth it rose by 2.7% against the BIS currency basket and 2.3% against SDR.
The point is that analysts who only look at RMB in USD terms may think the RMB has been far...
3/4 more volatile than it really is, but in fact over the past four years it has risen just 0.6% against the CFETS index, and has never been more than 3-4% above or below its current level.
I expect the RMB will remain stable or a little stronger over the rest of this...
1/5 It's not so much Atlanticism but international relations more generally that will remain in retreat no matter who wins the US election, and although the world tends to be obsessed with the US and with its bilateral relationships, this retreat won't...
3/5 intensify, and anti-foreign and anti-immigrant feelings rise, and I think this remains a global issue. Perhaps because of its obsession with the US and with, more recently, the Trump circus, much of the world (and the global press) seems to focus on bilateral problems the...