The global slowdown and the huge uncertainty it has added to the process of evaluating the policy options available to the Chinese authorities could not have come at a worse time. Exporters are increasingly shrill about the deleterious impact of the rising RMB, although it seems to me that their real problem is partly slowing [...]
Stagflation revisited
Apr 22nd, 2008
In my January 17 posting I wondered whether China might experience stagflation in the near future. In my piece I defined the stagnation part of stagflation a little differently than its normal definition. Specifically: In China a “stagnant” economy is not one in that is recession. It is one in which employment growth fails [...]
Inflation projections and manipulated stock markets
Apr 21st, 2008
What is 2008 CPI inflation for China likely to be? Merrill says in an April 16 research report that they except it to be 6.9%, and most other bank researchers say it will fall between 6% and 7%. Are these numbers plausible? For the first three months of the year, inflation has been running [...]
More evidence of increasing risks
Apr 20th, 2008
This probably doesn’t need to be pointed out in my blog because I have been beating the idea to death, but sharp-eyed Logan Wright in his latest Stone & McCarthy report comes up with some pleasingly simple evidence that hot money is pouring into the country from every pore. In his words: Foreign direct [...]
The RMB and the euro
Apr 18th, 2008
Two days ago I was in Shanghai speaking at a conference organized by a French bank. For some reason I was included in the panel discussing opportunities for Chinese investors in the euro market. I suspect I was not the right person to have on that panel because my position on the subject is [...]
Money keeps pouring in
Apr 15th, 2008
The RMB broke through 7 today. This is pretty much a non-event, in my opinion, but it was treated as a symbolic milestone and some accounts claimed it had psychological importance. Since the rapid increase in the RMB is a pretty well-established trend by now, I think the only thing that will make me sit [...]
Have we begun the countdown to the maxi-revaluation?
Apr 14th, 2008
Today’s China Daily reports a speech made over the weekend by a senior central bank advisor at the Boao Forum for Asia, in Hainan. According to the article, Fan Gang, a member of the central bank’s monetary policy committee and someone whose concern about hot money has often been cited in this blog, said China [...]
So many questions about PBoC reserve growth
Apr 12th, 2008
The closer you look at the latest PBoC reserves numbers the more surprising they seem. Headline reserve growth of $154 billion in the first quarter of 2008 is an astonishing number by any standard and suggests that the PBoC’s ability to manage monetary policy must be under ferocious strain, but it turns out that net [...]
Am I surprised by the biggest yet jump in reserves?
Apr 11th, 2008
The PBoC announced that total reserves as of the end of March were $1.68 trillion, for total growth of $153.9 billion during the first quarter (compared to $94.6 billion in the last quarter of 2007). I think this is a record quarter, and there is a strong case to be made that the total amount [...]
The Great Wall of Chinese liquidity
Apr 8th, 2008
There has been a great deal of excitement and press coverage about the supervisory cooperation agreement signed yesterday between the China Banking Regulatory Commission and the Securities and Exchange Commission, which allows Chinese banks to conduct QDII investments for their clients in the US. This is, I think, the fifth such agreement, following those in [...]
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