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Who Wins and Who Loses As China Rebalances

By | May 12th, 2016|Financial markets, growth, IMF, International Monetary Fund, Investment, technology, Uncategorized|

By Serkan Arslanalp, Thomas Helbling, Jaewoo Lee, and Koshy Mathai

Version in 中文  (Chinese)

China’s economy leaves nobody indifferent. The world is watching closely as the second largest economy in the world is shifting its growth model from an export-driven one to one centered on household consumption. As China’s economy slows and rebalances, its impact is being felt on an already fragile global economy, and particularly in the rest of the Asia region. Our recent studies show that while China’s rebalancing will adversely affect some Asian economies, it will also open opportunities for several others.

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Tackling China’s Debt Problem: Can Debt-Equity Conversions Help?

By | April 26th, 2016|Economic research, Finance, IMF, International Monetary Fund, unemployment|

By James Daniel, José Garrido, and Marina Moretti

Version in 中文 (Chinese)

China’s high and rising corporate debt problem and how best to address it has received much attention recently. Indeed, corporate debt in China has risen to about 160 percent of GDP, which is very high compared to other, especially developing, countries.

The IMF’s April 2016 Global Financial Stability Report looked at the issue from the viewpoint of commercial banks and resulting vulnerabilities. Its analysis suggests that the share of commercial banks’ loans to corporates that could potentially be at risk has been rising fast and, although currently at a manageable level, needs to be addressed with urgency in order to avoid serious problems down the road.  Indeed the success in addressing this issue is important for China’s economic transition and, given its size and growing global integration, the world’s economy at large.

Continue reading “Tackling China’s Debt Problem: Can Debt-Equity Conversions Help?” »

China’s Housing Market: Defying the Odds?

By | February 1st, 2016|Financial Crisis, IMF, International Monetary Fund, U.S.|

by iMFdirect

Housing is on everyone’s mind. The collapse of housing bubbles can be very costly.

  • In Japan, house prices rose by about 40 percent during the mid-1980s; the collapse was followed by a ‘lost decade’ in which incomes did not grow and house prices fell by over 40 percent.
  • In the United States, house prices increased by about 30 percent between 2001 and 2006; their collapse was followed by the global financial crisis.

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China and Africa: Will the Honeymoon Continue?

By | December 21st, 2015|Africa, growth, International Monetary Fund, Investment, Transition|

By Wenjie Chen and Roger Nord

(Versions in عربي中文, Français, Português, and Español)

China’s President Xi Jinping’s recent pledge of US$60 billion in financial support over the next three years illustrates the depth of the partnership between China and Africa.

However, China’s shift from an investment-heavy, export led growth strategy to an economic model that relies more on domestic consumption has led to a dramatic decline in commodity prices. Lower commodity prices and lower volumes of trade have hit sub-Saharan Africa’s commodity exporters hard. But over the medium term, this shift may offer sub-Saharan African countries the opportunity to diversify their economies away from natural resources, and create jobs for their young populations, provided they pursue the right policies to foster competitiveness and integrate into global value chains.

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Managing China’s Economic Transition

By | October 5th, 2015|Asia, Economic outlook, Emerging Markets, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund|

Changyong RheeBy Changyong Rhee

(Version in 中文 and Español)

From advanced economy financial markets to developing country commodity producers, the world has closely followed developments in China in recent months. After 35 years of extraordinarily rapid growth, the Chinese economy is undergoing a major transition from export-led growth to a model increasingly driven by consumption and services, with less emphasis on debt-financed public investment.

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With China Slowing, Faster Reforms Critical to Generate Jobs

By | September 16th, 2015|Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, growth, IMF|

By W. Raphael Lam, Xiaoguang Liu, and Alfred Schipke         

(Version in 中国)            

China is moving toward a “new normal” of safer and more sustainable growth.  To this end, ensuring its labor market stays resilient will be critical.  Reforms to contain vulnerabilities caused by buildup of credits may temporarily slow growth, and raise the unemployment rate, but supported through a strong safety net, these reforms will raise productivity, and facilitate more sustainable growth.

Despite the slowdown of the past few years, however, China’s labor market has remained resilient.  Efforts to maintain labor market stability are paying off, helped by an expanding services sector.

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Behind the News in Greece and China, Moderate Growth Continues

By | July 9th, 2015|Advanced Economies, Asia, Economic Crisis, Economic outlook, Emerging Markets, Europe, Financial Crisis, Globalization, growth, IMF, Inequality, International Monetary Fund, Latin America, Politics, Reform|

 By Olivier Blanchard

(Versions in Español and عربي)

Today we published the World Economic Outlook Update.

But first, let me talk about the elephant in the room, namely Greece.

The word elephant may not be right: As dramatic as the events in Greece are, Greece accounts for less than two percent of the Eurozone GDP, and less than one half of one percent of world GDP.
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Mind the Dragon: Latin America’s Exposure to China

By | November 11th, 2014|Advanced Economies, Asia, Economic outlook, Economic research, Emerging Markets, Globalization, growth, IMF, International Monetary Fund, Investment, Politics, Uncategorized|

By Bertrand Gruss and Fabiano Rodrigues Bastos 

(version in Español and Português)

China is still a distant and exotic country in the mind of many people in Latin America. Yet, with the Asian giant rapidly expanding its ties with the region (the share of exports going to China is now ten times larger than in 2000), their economic fates seem to be increasingly connected. And in fact, a sharper slowdown in China now represents one of the key risks Latin Americans should be worried about—and prepare for. So, what is at stake? How much do shocks to China matter for economies in Latin America?

In an earlier study presented in our April 2014 Regional Economic Outlook, we analyzed growth spillovers in a large model of the global economy, focusing on the link through commodity prices. Here, we complement that analysis by using a simple yet novel approach that exploits the reaction of financial markets to the release of economic data. We find that growth surprises in China have a significant effect on market views about Latin American economies.

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Does Raising the Minimum Wage Hurt Employment? Evidence from China

By | October 23rd, 2014|Advanced Economies, Asia, Economic outlook, Economic research, Emerging Markets, Employment, Fiscal policy, Global Governance, growth, IMF, Inequality, International Monetary Fund, Uncategorized, unemployment|

Prakash LounganiBy Prakash Loungani

(version in 中文)

Raising the minimum wage is a polarizing issue. One side worries that raising it will lower employment. The other side downplays the impact on employment and plays up the positive impact on the living standards of the poor. Both sides are able to cling to their beliefs as the evidence, much of which comes from high-income (“advanced”) economies, is mixed.

The majority of the global labor force, however, is in the emerging markets. Moreover, for a number of these countries, instituting a minimum wage or raising it is squarely on the policy agenda. But little is known about the impacts of minimum wages on employment and living standards in emerging markets.

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What’s Lurking in the Shadows of China’s Banks

By | September 15th, 2014|Asia, Economic research, Emerging Markets, Finance, Globalization, growth, IMF, International Monetary Fund, Uncategorized|

By Steven Barnett and Shaun Roache

(Versions in 中文)

“Shadow” banking: a surprisingly colorful term for our staid economics profession. Intended or not, it conjures images of dark, sinister, and even shady transactions. With a name like “shadow banking” it must be bad. This is unfair. While the profession lacks a uniform definition, the idea is financial intermediation that takes place outside of banks—and this can be good, bad, or otherwise.

Our goal here is to shine a light on shadow banking in China. We at the IMF have used many terms. Last year, we had a descriptive one, albeit a mouthful—off-balance sheet and nonbank financial intermediation. The April 2014 Global Financial Sector Report (GFSR) called it nonbank intermediation. This year our China Article IV report used the term shadow banking.

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