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Distortions in the Chinese Lending Environment (May 17) Things have been so busy this past week with various writing commitments and with the celebration of the third anniversary of my music club (four amazing shows with some of Beijing's greatest artists and a lot of support and coverage from local music scene participants an the press) that I have been neglecting my blog. For today's entry I don't have any major points to make but I did want to take a look at some of the anecdotal information we are getting about the bank-part of the fiscal stimulus package. The context is last week's post in which I argued that the almost certain reversal over the next few years of American ability to grow consumption at a faster rate than GDP will put huge pressure on the Asian development model, and will require Asian consumption to grow much faster than Asian GDP. ... The Death of the Asian Development Model (May 5) One of the few areas in which the Chinese fiscal stimulus package is unquestionably having a positive effect is on growth forecasts – although mainly because forecasts seem to be coincident indicators more than leading indicators. In the past couple of week Morgan Stanley raised its 2009 forecast for Chinese GDP growth from 5.5% to 7.0%, while Goldman Sachs upgraded growth forecasts from 6.0% to 8.3%. UBS has raised its forecast from 6.5% to between 7% and 7.5%. RBS has jumped from 5% to 7% and Barclays is up from 6.7% to 7.2%. On the other hand Standard Chartered, worried about the sustainability of the "rebound," has kept its 2009 GDP growth forecast at 6.8%, and the IMF is still at 6. ...
This is getting tiresome, so please let's declare the crisis over (Apr 20) I guess there is nothing like a summit meeting in the sunshine island of Hainan to bring out our optimism, but the speakers at the Boao Forum over the weekend seem to have been in fierce competition to see who could more forcefully declare the global economic crisis over, at least for China. One probable result of the forum, and Wen Jiabao’s comments that the stimulus has shown "better than expected" results, was that today the SSE Composite rose for the first time in three days, by a juicy 2.14%, to close at 2557.
During the forum SASAC chairman Li Rongrong said that more than 170 companies directly controlled or owned by the central government saw profits grow 26 per cent last month from a year earlier. ...
New Trade and Reserve Numbers From China (Apr 14) Exports in March dropped a less-than-expected 17.1% from the same time last year – below expectations of 20% and the 21.1% drop for the first two months of 2009. Most of the articles I read in the Chinese and foreign press including, not surprisingly, comments from the customs bureau, hailed this as a sign that the export slump is bottoming out. According to an article in Saturday’s South China Morning Post, for example:
Many economists said the export slump of the past five months was finally showing signs of abating, with the Administration of Customs describing the latest export figures as a "marked improvement". ...
Is Governor Zhou a closet Bernanke-ite? (Apr 12) I have recently finished reading Martin Wolf’s latest book, Fixing Global Finance, and I strongly recommend it for its very clear laying out of the global balance of payments issues behind the global crisis. I should warn my readers that Wolf and I have come to very similar conclusions about the underlying root causes of the crisis – we are both in agreement, for example, about the distorting effect of Asian policies to constrain consumption and boost investment in manufacturing output – but I am mostly impressed by the fact that we come to the same conclusion from such different angles. ...
Graduating this year? (Apr 12) Last week China Daily had an interesting article on job prospects for university graduates on the mainland. In 2006, as a reaction to rising unemployment among college graduates – even with GDP growth buzzing at rates above 12% – the government launched a program to help students find jobs as university teachers. The program has been expanded this year. According to the article:
Schools across China will hire 50,000 college graduates as short-term teachers this year to help ease employment pressure. That is almost triple the number of teachers hired last year. ...
The dollar must be replaced – yet again (Apr 12) Things have been so busy that I haven’t been posting as much as I would like. Besides my increased writing commitments and the constant barrage of news, I would like to mention that over the past weekend we completed the second annual festival of experimental and avant garde music, featuring the best Chinese composers and performers from all over the country, and several of my regular blog readers attended – thanks for that, even though this blog is no longer available inside the Chinese firewall. ... |
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