Too many people focus on the Washington-Beijing circus as if it were the only show in town, but while it is true that the US-China relationship will probably deteriorate no matter who the president is, this, as I discussed in my 2013 book, is...
only part of the story. It has to be seen more generally within the context of the bigger "deglobalization" story, in which anti-foreign and anti-immigrant feelings, along with geopolitical tensions, are rising everywhere.
3/8
It is this bigger story that explains why the US has turned against countries in Asia and Europe that could have been allies against China, why everyone in Europe hates everyone else, and why anti-immigration policies everywhere are such vote getters.
4/8
It also explains why China, one of the most aggressive beneficiaries of a faltering global system, is so unpopular, but it is nonetheless the peculiar blindness of Chinese analysts – even those who are supposed to be experts in foreign relations, as this article amply...
5/8
demonstrates – that while foreign perceptions towards China are plummeting everywhere, with anti-China feelings in many countries much worse than they are in the US, they cannot conceive of any explanation except dastardly foreign subservience to Washington within the...
6/8
larger context of a US-China conflict. In their views, Australian and Swedish anger towards China, for example, cannot possibly be caused by Chinese actions towards either of these countries. Even the foreign affairs of India – a country with a famously difficult...
7/8
relationship with the US and with an obvious domestic catalyst for their views on China – can only be understood by them as subservience either to Washington or to Beijing.
The truth, in my opinion, is that we had all better get used to a deteriorating global environment...
8/8
and understand that this will almost certainly continue until there is a major – and probably messy – adjustment in the global trade and capital regimes. Some form of deglobalization may be necessary, but deglobalizing worlds are always difficult and unfriendly ones.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
Many analysts are arguing that the surprise suspension of the Ant IPO was mainly, or at least partly, the consequence of Jack Ma’s angry speech two weeks earlier, but my understanding is that his speech was itself a response to regulatory...
concerns that were already being widely discussed.
If true, perhaps the IPO should've been withdrawn much earlier by Ant and its bankers, pending clarification of the new regulations. It may be that regulators were not the only ones to have handled this whole thing badly.
3/4
By the way this article explains that had the IPO occurred, Ant would have become overnight the most valuable bank in the world, which is ironic because the IPO was very pointedly organized not as a bank IPO but rather as a tech IPO.
Given how good Chinese infrastructure is, and how much it has over-invested in infrastructure in the past 5-10 years, it might at first seem surprising that fixed-asset investment in the transport sector nonetheless grew by 9.8% year on year in...
the first three quarters of 2020, but infrastructure spending in China is less about increasing economic efficiency and more about generating economic activity and subsidizing manufacturing. In that case the resulting increase in debt will have exceeded the...
3/4
resulting increase in the country's ability to produce goods and services.
Or to put it differently, debt will have risen faster than real debt-servicing capacity, which means that ultimately the debt must be serviced through real transfers from some sector of the economy.
Good article, in which Gavyn Davies is right to argue that government debt limits in the US are probably pretty far off, although I disagree that government debt sustainability is increased when interest rates are below the GDP growth rate.
This is a systemic fallacy. Low real interest rates are just another way to service the debt through real transfers, no different than inflation or taxes.
I think the problem with much of the discussion about whether or not Washington should run larger deficits is that...
3/5
it ignores the purpose of these deficits. As long as the fiscal deficit is used to fund productive infrastructure investment, or is used to prevent a larger contraction in GDP, or funds income redistribution that incentivizes further business investment by boosting...
Very interesting piece on the gradual and imperfect transition (“GDP adoption in China was an experimental – and ultimately unsuccessful – process of translation”) in China from the Soviet-invented Material Product System (MPS) of accounting for...
the size of the economy and its rate of growth to the more widely used System of National Accounts (SNA). For the latter the GDP calculation is the main indicator of aggregate economic production, whereas for the former it is NMP (net material production).
3/7
At the heart of these methods are different ways of measuring what counts as productive activity with, among other things, NMP reporting physical output numbers rather than the value of income flows. More output, not necessarily more value, increases the size of the economy.
Good article by Janan Ganesh, but while I agree that governance is what democracies are supposed to do best, I would also argue that democracies, as Churchill is supposed to have said about the US, do end up usually doing the right thing, but...
only after having tried out the alternatives. While non-democracies often go to their graves sticking rigidly to their institutions, healthy democracies are pragmatic and flexible, trying first one thing and, when that fails, trying something else.
3/7
This adjustment process may seem uglier and more dispiriting than the steadfastness of countries that don’t adjust as quickly, but for that reason, ironically, it most undermines the credibility of democracies just as they are proving their greatest worth.
It’s pretty well-known that while the balance sheets of China’s biggest banks, which account for just under 50% of total lending, combine questionable assets with cheap and stable funding, most of the other, smaller banks in China have...
terrible assets and very risky funding. This Bloomberg article does a very good job of explaining just how bad these can be, and how difficult it is for the regulators to solve a problem that has been festering for well over a decade.
3/7
Among other things the article points out that Chinese regulators lack a coherent strategy for dealing with the banks, and as a result have resorted to a crazy patchwork of one-off solutions for each of the at-least five banks that have been intervened since Baoshang, in...