The China-Latin America Finance Database (C-LAFD) has some useful data showing the total number, volume and kinds of loans from Chinese policy banks to Latin American and Caribbean governments and state-owned enterprises. Although this doesn't...
cover all Chinese investment in the region, it is probably a decent proxy: one of my former students covering Latin America at a policy bank told me that other Chinese investors pretty much watch what the policy banks do to get their cues on whether and how much to invest.
3/6
I put together this simple graph based on the C-LAFD data. It shows that total lending peaked out in 2010, partly on the back of a major iron-ore deal with Venezuela. Within 2-3 years, however, it was clear that this deal was running into serious problems, but high levels...
4/6
of lending to the region continued until 2015, around which time Venezuela was forced into restructuring its oil debt to China. After that, perhaps not surprisingly, total new lending to the region declined very sharply.
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According to the C-LAFB data, the biggest recipients of Chinese capital in the region have been Venezuela, by far ($62 billion), followed in order by Brazil ($30 billion), Ecuador, Argentina and Bolivia. Adjusted for the size of their economies, the biggest recipient by...
6/6
far is still Venezuela, although this is distorted by the collapse in Venezuela's economy, followed in order by Suriname, Ecuador, Jamaica and Bolivia.
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This article on the the population aspect of Guangdong's 2020-35 plan is very interesting. Even if Guangdong is successful in growing its population by the proposed 0.8% a year between now and 2035, at a time when China's population will...
grow annually on average by only 0.1% and, more importantly, its working-age population will contract by 0.5% a year, Guangdong's success can only come at the expense of China's poorer provinces.
This isn't necessarily bad. In principle China should benefit overall...
3/11
from greater labor mobility as workers move from slower-growing provinces to faster-growing ones (and Guangdong will not be the only wealthy province to try do this) but the amount by which it improves depends partly on the extent to which the hukou system is modified.
Although obviously each case must be evaluated separately, I broadly agree with @D_Brautigam's conclusion. While I have no doubt that China (like other countries) had planned to use development lending for geo-political advantage, I'd argue that...
Chinese lending to developing countries is characterized more by inexperience – veering at times towards incompetence – than it is by some master plan of debt-trap diplomacy.
Certainly the case I know best, that of Venezuela, is a story in which Beijing constantly...
3/6
over-estimated debt-servicing capacity (and willingness) and underestimated the risks that more experienced creditors were avoiding, and as a result is looking at pretty sizable losses that aren't even being compensated for by goodwill. If Beijing could turn back the...
Copper futures are up, presumably on confidence in a domestic economic recovery, although I wonder if they aren't up really for the same reason all other assets in China – and the rest of the world – are up: lots of liquidity and plenty of leverage.
China accounted for over half of global copper consumption in 2019, with construction of power facilities taking up 37% of the volume, the real estate sector accounting for 21% and consumer appliances 15% of the total. This year I expect consumer appliances to do very...
3/5
well as we get a partial recovery of last year's contraction in consumption, but for that reason I also think growth in infrastructure and real-estate investment will be weaker. The regulators have made it clear that they want to restrain the growth in the country's debt...
Beijing continues to take small steps to ease capital outflows. Clearly the country is having trouble digesting large inflows on the trade and financial accounts, but while the world – and China in the long run – would be much better off if it...
recycled these inflows by importing foreign goods, thus helping to add to global demand, in the short run this continues to be too difficult, and so China must recycle these inflows by acquiring assets abroad, in this case, by private Chinese individuals.
3/4
This is bad for the global economy, of course, but I think it is also making the Chinese financial system riskier. When rising financial inflows from foreign investors are netted against rising private Chinese acquisition of assets abroad, the inevitable result is a...
As Ant's retail lending contracts, "Chinese borrowers have turned to alternative lending platforms, many of which charge higher interest rates because they lack Ant’s economies of scale". These interest rates may be 5-15 percentage points higher.
This creates an interesting balance-sheet dynamic. If household debt levels are "manageable", higher interest rates discourage borrowing and slow the growth in household debt. If household debt levels are too high, however, and must be rolled over to be...
3/4
serviced, higher interest rates will increase the share of debt servicing that must be rolled over and will cause household debt to grow faster.
I don't know how you would go about finding out which is the case, but if I were the regulators I would want to know whether...
I don't have all the data yet, but I think I am a bit more skeptical about the "big spending" story than many others are. Total consumption at major retailers and restaurants during this year's Spring Festival was up 4.9% over the equivalent...
period in 2019, so there certainly was a partial recovery of consumption, but nominal GDP during that period was up at least 10%, which implies to me that the consumption share of GDP growth was lower than in 2019, even though we are all expecting it to be much higher...
3/7
this year than in previous years. So far this hasn't seemed to have happened.
More importantly, spending on travel collapsed. I would have expected this to provide a pretty substantial one-off boost to spending on other types of consumption. I might not be thinking about...