One of my favorite former students (from Tsinghua University) quit his job at a major SOE not too long ago and joined a large Chinese investment fund that purchases distressed assets. He recently wrote me an email discussing what he does. Among other things he says: “The distressed asset sector is really a dark side of …
Read More…Archive for August, 2007
Financial instability in China
I get a lot of emails and phone calls asking me what I think is the likelihood of a sharp financial “adjustment” in China, and what the impacts are likely to be. The first point to make is that it is a safe bet that China will experience financial instability, and not necessarily because …
Read More…Less dependent on the US?
An editorial in today’s South China Morning Post says: Another big unknown is whether countries in the region will, despite a slowing US economy, benefit from China’s rise as a growth engine. After almost 30 years of largely uninterrupted growth, the mainland has become a powerful economic force in its own right. Much of its …
Read More…Illegal banks
Black-market banking Aug 9th 2007 The Economist JUST over two years after a big unlicensed bank was last found in China, another surfaced this week. Last time the bank was based in Shanghai and operated in a small number of provinces. This time the illegal bank, which is based across the border from Hong Kong …
Read More…Industrial production is up 18% for July
More numbers have been released. In today’s South China Morning Post we read that: Mainland industrial output slowed more than expected last month after tax changes made exports less attractive, suggesting to some economists that the country’s politically sensitive trade surplus may shrink in coming months. Factories churned out 18 per cent more goods …
Read More…Comment on previous postings
I am not smart enough to figure out how the “Comments” section works, so I am just going to print part of Dan Berg’s very kind comment here: I would like to know your thoughts on (1) how you think the domestic “crunch” inside China will unfold; (2) assuming the U.S. imposes a tariff of …
Read More…Good for the US, less good for China
Brad Setser has an excellent and very thoughtful posting on his blog, called The Balance of Financial Terror. In discussing whether or not China can change its policy of accumulating dollars, he says “China would be better off financially if it let the RMB appreciate substantially, stopped financing the US and took large losses now rather …
Read More…July trade surplus at $24.4 billion
Last month’s trade surplus of $24.4 billion was the second highest ever recorded, after June’s $26.9 billion. It was 67% higher than last July’s surplus. Exports in July were $107.7 billion while imports were $83.4 billion. That brings the trade surplus for 2007 YTD to $136.8 billion. For the record China recorded a $23.8 billion surplus …
Read More…PBoC extends maturities
My very smart young assistant Shang Ning (a PKU junior), sent me the following note early this morning: “Right after the market closed yesterday, PBoC announced a new issue of Central Bank Notes on Aug 9th (today). The total sum is 57 Billion RMB ($7.5B). It is a much larger sum than in July, and since entering into …
Read More…The “nuclear threat” of Chinese reserves
A friend sent a story from which the following is excerpted. Unfortunately he did not send me the source, but it has been widely written up and discussed: China should use its massive holdings of foreign exchange reserves as a bargaining chip in its discussions with foreign governments, a senior advisor to Beijing said at …
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