China Economic Watch

An Estimate of Excess Borrowing by Chinese Corporations

Nicholas Borst — Fri, 17 May 2013 18:39:48 +0000

Earlier this week Standard and Poor’s released a headline-grabbing report on global corporate borrowing. The report estimates that there will be $53 trillion in new corporate borrowing between now and 2017. Of that $53 trillion, Chinese corporations will account for a whopping $17.6 trillion, 33 percent of the total. When you dig into the details you [...]

Is China’s Public Debt Level Sustainable?

Ryan Rutkowski — Mon, 06 May 2013 12:54:04 +0000

Public debt levels in China are an issue of ongoing concern. In particular after the 2009 stimulus concern over the sustainability of debt levels increased when China National Audit Office announced that local government debt rose from 17.7 percent of GDP in 2008 to 26.5 percent in 2009. A recent IMF working paper suggests these [...]

China’s Bank-Centric Shadow Banking System

Nicholas Borst — Thu, 02 May 2013 15:56:54 +0000

Part of the problem with tracking the development of shadow banking in China is that there is no commonly accepted definition of what constitutes shadow banking. The closest thing we have to an official definition is from the Financial Stability Board (FSB), which was tasked by the G-20 to monitor and propose reforms to the [...]

China’s International Investment Position in 2012

Thilo Hanemann — Thu, 25 Apr 2013 14:38:34 +0000

The People’s Bank of China recently released full year 2012 data on the nation’s Balance of Payments (BOP) and International Investment Position (IIP), which shows how the nation’s external balance sheet evolved in the course of the last year. China’s balance of payments shows a dramatic change in cross-border capital flows in 2012. The financial [...]

China Rebalancing Update—Q1 2013

Nicholas Borst — Wed, 24 Apr 2013 17:37:34 +0000

China’s first quarter economic data is out and it is now possible to do an update on the progress economic rebalancing. For an explanation of these indicators and why they are important, refer back to our original post on the topic. 1. Urban Disposable Income Growing Faster than GDP Urban disposable income growth dropped sharply in the [...]

China’s Not So Super Development Bank

Ryan Rutkowski — Wed, 24 Apr 2013 17:05:24 +0000

China’s largest policy bank, China Development Bank (CDB), was recently described as “China’s Superbank” by Henry Sanderson and Michael Forsythe. The title seems fitting since CDB’s long standing chairman, Chen Yuan, has often claimed that despite being a policy bank CDB offers a lending model superior to commercial banks. However, CDB may not be so [...]

Rewriting History: A SAFE Revision Reveals a Different Picture of Balance of Payments and a Mixed Message for Foreign Firms

Ryan Rutkowski — Thu, 04 Apr 2013 15:29:24 +0000

Revisions to economic statistics are common and often do not have a dramatic impact on the overarching trends, other times they are significant enough for analysts to change their perspective on what is happening in a country. The most recent revision to balance of payment data released by China’s State Administration of Foreign Exchange (SAFE) [...]

Shadow Deposits in the United States and China

Nicholas Borst — Thu, 04 Apr 2013 13:48:56 +0000

Shadow banking is a topic that conjures up images of back alley dealings and hidden accounts. While this may be true for small segments of shadow banking systems, much of shadow banking is out in the open and easily recognizable. For ordinary investors, the most visible form of shadow banking is shadow deposits. Shadow deposits [...]

China’s New Populist Urbanization

Nicholas Borst — Tue, 19 Mar 2013 13:56:21 +0000

Since Li Keqiang was tipped to succeed Wen Jiabao as China’s premier, analysts have been trying to come to a better understanding of Li’s thoughts on urbanization. This is because Li has prominently identified urbanization as the growth engine of the Chinese economy and one of the main focuses on the new administration. Li’s first [...]

Local Government Financing Vehicles Under Fire Again

Ryan Rutkowski — Thu, 14 Mar 2013 20:30:04 +0000

If anyone suspected the new Chinese leadership would relax controls on local government spending in 2013, they were wrong. CBRC is preparing to issue the third installment of the now annual guiding opinion on monitoring the risk of local government financing vehicles (LGFVs). When released, the new draft will strengthen provisions for controlling bank lending [...]