In the past two weeks we have been treated with a mostly positive but nonetheless mixed bag of economic data from China. There has been good news, bad news, good news with worrying underlying trends, and bad news with silver linings. Analysts have announced that things are getting worse and that things are getting better. …
Read More…Category: Currency regime
Is loan growth in China slowing?
Most of this week’s very long newsletter focused on the NPC meeting in Beijing, the proposals to boost consumption (which I think will greatly disappoint), and the release of data by the National Bureau of statistics. Last week, for example, new lending numbers were released, and if it hadn’t been for rumors all the previous …
Read More…Currency manipulation
On Friday the US Treasury released its presumably semi-annual (it was due last October) report to Congress on currency issues, and in it refrained from calling any of the countries under review “currency manipulators.” Today’s People’s Daily had this to say : Major trading partners of the United States, including China, did not manipulate their currencies …
Read More…QE2 and the Titanic
China reported an October trade surplus of $27 billion Wednesday. This is a very big number and not one likely to soothe anger directed at China. It will be very hard for China credibly to argue that it is trying to contribute to global growth while pulling in more and more foreign demand. Here is …
Read More…What happens if the RMB is forced to revalue?
Because of US and European pressure Beijing may allow much faster appreciation of the renminbi than it likes over the next year, but this will almost certainly be accompanied with policies that reduce the adverse employment impact. In my opinion the most likely such policy involves credit. If Beijing expands cheap credit, however, it may …
Read More…The RMB and the magic of accounting identities
One nice things about writing a blog is that I don’t need to be topical. Not only can I write worriedly about rising contingent debt levels three or four years before they become obvious, but I can also revisit a controversy that took place March involving Paul Krugman and Stephen Roach. I revisit this old controversy …
Read More…What the PBoC cannot do with its reserves
It is a real toss-up as to which generates more bizarre comment in the international press: Beijing’s long-feared dumping of US Treasuries, or the use and value of the PBoC’s central bank reserves. The revelation last week that Chinese holdings of US Treasury obligations fell in December by $34.2 billion, to $755.4 billion, generated a …
Read More…Everyone wants to talk about currencies
I will be in NY and Boston during the first week of February and plan to meet a number of investors there to discuss China. I believe it becomes official on February 1, but I recently joined the Hong Kong subsidiary of one of China’s top broker/dealers, Shenyin Wanguo. I will continue teaching at Peking …
Read More…Currency depreciation and global imbalances
The US trade deficit unexpectedly narrowed in August, according to the Commerce Department in a report released yesterday. Exports were up slightly and imports down, mostly because of a reduction in oil imports, I think, but the trade deficit was still a hefty 3.6% of GDP. So does this mean that the rebalancing is grinding …
Read More…Can the RMB be more undervalued today than it was last year?
William Cline and John Williamson published on Vox an interesting piece earlier this month June 18), titled “Equilibrium Exchange Rates,” in which they try to “estimate a set of medium-run fundamental equilibrium exchange rates compatible with moderating external imbalances” for the 30 largest economies. They assume that a sustainable equilibrium trade balance for the US …
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