1/10
Guo Shuqing is right to worry about the impact on Chinese financial stability of a continued flood of foreign capital into China. Once foreigners comprise a significant share, the regulators will no longer be able to forcibly restructure...
reut.rs/3uL8JKc
Guo Shuqing is right to worry about the impact on Chinese financial stability of a continued flood of foreign capital into China. Once foreigners comprise a significant share, the regulators will no longer be able to forcibly restructure...
reut.rs/3uL8JKc
2/10
liabilities at will in order to address the huge imbalances, insolvencies and mismatches in the Chinese banking system. What is more, the risk of contagion will increasingly run both ways. Chinese markets are thoroughly speculative too, and the only reason they don’t yet...
liabilities at will in order to address the huge imbalances, insolvencies and mismatches in the Chinese banking system. What is more, the risk of contagion will increasingly run both ways. Chinese markets are thoroughly speculative too, and the only reason they don’t yet...
3/10
matter to the rest of the world is because foreign participation is still low. This will change in the next 1-3 years.
He is also right to worry that the more integrated Chinese financial markets are with the rest of the world, the harder it will be to run independent...
matter to the rest of the world is because foreign participation is still low. This will change in the next 1-3 years.
He is also right to worry that the more integrated Chinese financial markets are with the rest of the world, the harder it will be to run independent...
4/10
monetary policy while still hoping to manage the currency. But this is just basic central banking theory. Every student knows that once foreigners begin responding substantially to changes in domestic Chinese interest rates, China cannot tighten domestic money, for...
monetary policy while still hoping to manage the currency. But this is just basic central banking theory. Every student knows that once foreigners begin responding substantially to changes in domestic Chinese interest rates, China cannot tighten domestic money, for...
5/10
example, while holding the currency steady because the inflows themselves will force an expansion in the domestic money supply. Beijing seems to be learning what people like me have been explaining for years. You cannot get the geo-political benefits of an international...
example, while holding the currency steady because the inflows themselves will force an expansion in the domestic money supply. Beijing seems to be learning what people like me have been explaining for years. You cannot get the geo-political benefits of an international...
6/10
currency without incurring the economic costs: they're the two sides of the same coin. If China wants domestic financial stability – and given how terrible its financial system is, it really should – it can't have open capital markets with substantial foreign participation.
currency without incurring the economic costs: they're the two sides of the same coin. If China wants domestic financial stability – and given how terrible its financial system is, it really should – it can't have open capital markets with substantial foreign participation.
7/10
Finally he is also right to worry about the consequences of real estate speculation in China, although if he were willing to be honest publicly he’d admit that the problem is much wider than just in real estate. But there is nothing he or the regulators can do about it.
Finally he is also right to worry about the consequences of real estate speculation in China, although if he were willing to be honest publicly he’d admit that the problem is much wider than just in real estate. But there is nothing he or the regulators can do about it.
8/10
Chinese markets are highly speculative for structural reasons, not because of weak regulations. As Hyman Minsky would have pointed out, at this point the best the regulators can do is shift the risk from one sector to another, something they've been doing anyway for...
Chinese markets are highly speculative for structural reasons, not because of weak regulations. As Hyman Minsky would have pointed out, at this point the best the regulators can do is shift the risk from one sector to another, something they've been doing anyway for...
9/10
years, which is why there are few safe sectors left. As long as Beijing insists on an unrealistic growth model that requires higher GDP growth rates than the economy can sustainably deliver, the only way to meet growth targets is to encourage rapidly-rising debt and to...
years, which is why there are few safe sectors left. As long as Beijing insists on an unrealistic growth model that requires higher GDP growth rates than the economy can sustainably deliver, the only way to meet growth targets is to encourage rapidly-rising debt and to...
10/10
foster greater speculative activity. It’s not as if we haven’t seen this movie dozens of times in the past several decades, and by now we should know how it ends.
foster greater speculative activity. It’s not as if we haven’t seen this movie dozens of times in the past several decades, and by now we should know how it ends.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
