1/8
Interesting article. Certain government officials have been warning that Biden’s recovery plan for the US economy could inflate global asset bubbles, cause further financial market turmoil and lead to higher inflation, especially in China.
scmp.com/economy/china-…
Interesting article. Certain government officials have been warning that Biden’s recovery plan for the US economy could inflate global asset bubbles, cause further financial market turmoil and lead to higher inflation, especially in China.
scmp.com/economy/china-…
2/8
Beijing doesn't have a good track record predicting US interest rates and the dollar, but it is interesting that this has become such a concern recently. After all soaring debt, wasted investment and asset-price bubbles have been serious problems in China for many years.
Beijing doesn't have a good track record predicting US interest rates and the dollar, but it is interesting that this has become such a concern recently. After all soaring debt, wasted investment and asset-price bubbles have been serious problems in China for many years.
3/8
So what has changed? My suspicion is that what is really driving this may be rising concern among more sophisticated officials about the adverse impact of the existing surge in flows into China. So much money pouring into the country through the trade and financial...
So what has changed? My suspicion is that what is really driving this may be rising concern among more sophisticated officials about the adverse impact of the existing surge in flows into China. So much money pouring into the country through the trade and financial...
4/8
accounts must necessarily exacerbate the bubble conditions of the past several years, just as it also must necessarily undermine the ability of regulators to restructure domestic liabilities. Over the next year or two, in other words, it will become harder than ever for...
accounts must necessarily exacerbate the bubble conditions of the past several years, just as it also must necessarily undermine the ability of regulators to restructure domestic liabilities. Over the next year or two, in other words, it will become harder than ever for...
5/8
regulators to suppress financial instability.
Beijing has tried recently to manage the impact of inflows by encouraging outflows but, as I have explained elsewhere, when lower net inflows are caused by higher gross outflows, this only increases the balance-sheet mismatch...
regulators to suppress financial instability.
Beijing has tried recently to manage the impact of inflows by encouraging outflows but, as I have explained elsewhere, when lower net inflows are caused by higher gross outflows, this only increases the balance-sheet mismatch...
6/8
and makes China more susceptible to global liquidity shifts. If Chinese bond markets really were starting to play a global role similar to that of US and European bond markets – as so many fund managers are giddily proclaiming – inflows and outflows into China would be...
and makes China more susceptible to global liquidity shifts. If Chinese bond markets really were starting to play a global role similar to that of US and European bond markets – as so many fund managers are giddily proclaiming – inflows and outflows into China would be...
7/8
countercyclical, like in most highly developed financial markets, or at worst neutral. But in China they are more likely to be as procyclical as those of any other developing country, and so highly destabilizing.
I suspect that all these warnings by some officials...
countercyclical, like in most highly developed financial markets, or at worst neutral. But in China they are more likely to be as procyclical as those of any other developing country, and so highly destabilizing.
I suspect that all these warnings by some officials...
8/8
may be part of an attempt to change Beijing’s attitude towards the internationalization of China’s financial markets. If successful, regulators may even start to take initial steps later this year or next to discourage foreign financial inflows.
may be part of an attempt to change Beijing’s attitude towards the internationalization of China’s financial markets. If successful, regulators may even start to take initial steps later this year or next to discourage foreign financial inflows.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
