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China PMI Batters Global Markets…Are you kidding me?

By | February 3rd, 2014|Asia, Economic research, Emerging Markets, growth, IMF, International Monetary Fund, Investment, Uncategorized|

Steve BarnettSteven Barnett

(Version in  中文)

“Economic Shifts in U.S. and China Batter Markets” continuing “Stocks Slide Globally…Investors Head for Exits” read the front page headline in last week's New York Times. Not sure about the U.S. part, I’ll leave that to others. But, as for China, this seems quite a stretch. Could be the pundits are erring in blaming the market slide on China, or perhaps the markets are misreading news coming out of China.

The purported China trigger was a survey of manufacturers. The Purchasing Managers’ Index (PMI) fell somewhat, crossing the magic threshold from expansion to contraction. PMIs are useful, but let’s not get carried away. China’s PMI is not the best indicator for growth, the decline was rather small, and January and February data (because of the Lunar “Chinese” New Year) are hard to interpret.

Continue reading “China PMI Batters Global Markets…Are you kidding me?” »

China: Fastest Growing Consumer Market in the World

By | December 2nd, 2013|Asia, Economic Crisis, Economic research, Emerging Markets, Fiscal policy, growth, IMF, International Monetary Fund, Uncategorized|

Steve BarnettBy Steven Barnett

(Version in 中文)

It's the season for shopping. We have Cyber Monday in the United States and Singles Day in China (November 11 or 11/11). So, while we are pondering shopping, try to guess which consumer market is growing the fastest. The answer is…China!

China had the largest consumption increase in the world. This was true in 2011, true in 2012, and likely to be true again this year (see chart). Consumption in China is also generally thought to be weak. Indeed, the government and the IMF are calling for more consumer-based growth. How could consumption, in effect, be both weak and strong at the same time?

Continue reading “China: Fastest Growing Consumer Market in the World” »

China’s Growth: Why Less is More

By | October 29th, 2013|Asia, Economic outlook, Economic research, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Public debt, Uncategorized|

Steve BarnettBy Steven Barnett

(Version in 中文)

Less growth in China today will mean higher income in the future. So rather than worry, we should welcome the slowdown in China’s economy. Why? Because by favoring structural reforms over short-term stimulus, China’s leadership is illustrating their commitment to move to a more balanced and sustainable growth model.

Continue reading “China’s Growth: Why Less is More” »

A Wish List for China’s Third Plenum

By | October 22nd, 2013|Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Uncategorized|

ASinghBy Anoop Singh

(Versions in 中文 and Español)

Hard landing, soft landing, no landing, overheating. Pundits’ views on China’s economy bounce around—often rapidly—between these descriptions.

Just two short months ago, the dominant concern was about a sharp slowdown, below this year’s official growth target of 7½ percent. Now, these fears have retreated, pushed aside by talk of renewed momentum.

Our sense, here at the International Monetary Fund, has always been that economic growth will slightly surpass this year’s official target. But we have also cautioned that China’s economic challenges are growing, and that accelerating reform is critical for containing risks and achieving a smooth transition to sustainable growth.

The upcoming Third Plenum provides an opportunity for the new leadership to provide guidance on how they plan to meet these challenges.

Continue reading “A Wish List for China’s Third Plenum” »

Achieving China’s Great Promise

By | August 8th, 2013|Asia, Economic Crisis, Emerging Markets, Employment, Finance, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Public debt, Uncategorized|

Murtaza SyedBy Murtaza Syed

(Version in 中文)

Anticipation of the U.S. Federal Reserve’s exit from quantitative easing has dominated headlines in recent weeks. Half a world away, less conspicuously, but no less importantly, China, the globe’s second largest economy, is designing its own policy adjustments: firstly, unwinding the fiscal and monetary stimulus that helped shield it from the Great Recession and lifted global growth (but which also created some vulnerabilities), and secondly transitioning out of a growth model that has generated spectacular growth over the last three decades, but which is now running out of fuel.

Managed well, these twin adjustments would allow China to prolong its economic miracle in a sustainable way, with a significant positive impact for the rest of the world.

Continue reading “Achieving China’s Great Promise” »

Lurking in the Shadows—The Risks from Nonbank Intermediation in China

By | November 3rd, 2011|Asia, Financial regulation, International Monetary Fund|

One of my all-time favorite movies is “The Third Man” starring Orson Welles and Joseph Cotten. Perhaps the most striking part of the movie is the shadowy cinematography, set in post-World War II Vienna. Strangely, it springs to mind lately when I have been thinking of China. Many China-watchers looked on in 2009 as the government’s response to the global financial crisis unfolded, causing bank lending to expand by close to 20 percentage points in less than a year. At the same time, a less visible phenomenon was also getting underway. One that, like Orson Welles’ character in the movie, resided firmly in the shadows. Various types of nonbank financial intermediaries were gearing up to provide more credit. Talking to people in China, and looking at what numbers are available, one cannot help but have an uneasy feeling that more credit is now finding its way into the economy outside of the banking system than is actually flowing through the banks. This worries me for four broad reasons.

Darn Them Piggies! Pork Prices & the Inflation Outlook for China

By | September 11th, 2011|Asia, Economic outlook, Emerging Markets, IMF, International Monetary Fund, 中文|

It was pretty clear to me on a recent visit that China has become one of the biggest global markets for Angry Birds. The game was everywhere and around 100 million Chinese downloads are expected this year. It made me wonder if this was somehow linked to rising concerns over inflation and a way of getting back at those (increasingly expensive) mischievous green pigs. During the past year, views on China’s economy have yo-yoed from concerns about the recovery, to hand-wringing about inflation and overheating, and then back to talk of hard landing. Inflation peaked in July and was all set to quickly retreat in the latter part of this year. Unfortunately, just as China appeared to be heading out of the (inflationary) woods, pork happened. An ongoing (and literal) hog cycle caused pork prices to skyrocket. While the hog-cycle will soon turn and the effects should wash out reasonably quickly, the bad news is that the return to more normal times and lower inflation will be postponed once again.

Propping Up the Chinese Economy: Credit versus Fiscal Stimulus

By | December 12th, 2017|Asia, banking, China, Economic research, Finance, Financing, Fiscal, Fiscal policy, Fiscal Stimulus, Government, IMF, Investment|

By Sophia Chen and Lev Ratnovski

December 13, 2017

Version in 中文 (Chinese), Español (Spanish), 日本語  (Japanese)

Construction work Qingyuan , Guangdong, China : Fiscal stimulus is a powerful tool for growth (photo: Imagine China/Newscom).

Credit booms are addictive. Credit supports growth and the perception of wealth. Yet credit booms are risky, and are often followed by financial busts and economic slowdowns. The challenge is taming credit without hurting growth. Continue reading “Propping Up the Chinese Economy: Credit versus Fiscal Stimulus” »

James P. Walsh

By | December 5th, 2017|

Mr. Walsh is a deputy chief in the Monetary and Capital Markets department at the International Monetary Fund, focusing on issues related to monetary policy, and financial stability, particularly in Asia and the Americas. He is also Deputy Mission Chief for the joint IMF-World Bank Financial Sector Assessment of China. His previous assignments at the IMF as well as country surveillance work on various emerging markets in all regions of the world, including China and India. His analytical work has covered macro-financial linkages, inflation, financing infrastructure investment, and systemic financial risks, and he was co-editor of a book on Asian financial systems. He also worked in the IMF’s policy design department, assessing the IMF’s surveillance of developing economies.He has a PhD in economics from the University of Chicago and a BA in economics from the University of Pennsylvania.

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