Yuan reaches 10 year high against strengthening dollar

The Dollar is rising and so is the Yuan!

Congress considers China ban on investment, key technology transfers

In anticipation of President Trump's return, Congress is considering a spending bill that includes a ban on technology transfers to and private investments with Chinese entities. The bill sets out broad prohibitions on outbound investment, and invokes national emergency powers under the International Emergency Economic Powers Act (IEEPA)

Weak Domestic Demand

Another weak economic report from China, where prices are hovering near deflation. Since late September, Beijing has ramped up stimulus announcements in a bid to prop up the faltering economy, including several interest rate cuts and loosened property purchase rules. On the fiscal front, the finance ministry unveiled a five-year

China is the big winner in the Ukraine-Russian war

China continues to benefit from Russia's desperate need for supplies to prosecute its quixotic war in Ukraine. Russia is unable to stop in its offensive goals (despite those goals repeatedly shrinking) because to do otherwise would be to acknowledge the failure of the entire enterprise. Which, in turn,

What the "Around 5%" growth target means

Xi Jinping, Paramount Leader of China, has often criticized the focus on growth rates, emphasizing 'quality growth' over a headline number, and this is a good point certainly. Still, the government is deeply committed to their process: Growth is targeted and achieved. This decision to aim for "

Housing Overhang

I enjoyed this excellent article from Architectural Digest on China's abandoned developments very much, it's a really great piece of reporting. The article spotlights a development of hundreds of mini-mansions in Shenyang, dating back to 2010. Construction stopped in 2012. They've been sitting there

Media-Driven 'Positivity'

Another day, another media-driven outrage in China. The government wants positivity, but the state media seems unable to deliver anything but anger and distrust. This time, it's all about Messi. The famous footballer didn't feel up for the match in Hong Kong, and the 'people&

Working together through hard times

In light of reporting that the US and China have had talks on fentanyl, I've been thinking about other areas that the US and China can work on. As China works through this economic rough patch, there would be big benefits in working together with global partners. The

Micro-enterprises then and now: Why I left China

I couldn’t help but laugh when I saw that China plans to encourage or subsidize small private businesses. The government’s attitude towards small businesses was very, very different back in 2013. The Bo Xilai case in 2012 had made it quite clear that China’s leadership was not

Liquidation, finally!

That Evergrande would end up in liquidation was never much in doubt, but here we finally are! Huge news out of Hong Kong, and the next few months will certainly be filled with interesting tidbits about the process unfolding. This is very much a story of how authoritarian governments don&

Political Imperatives

A lot of big news today on China's continuing economic problems. One thing I've been thinking about is the interesting news that China's football team was made to watch the confession video of their former coach. On the eve of the tournament, China’s

Krugman on China

Paul Krugman writes an excellent piece on China's economic woes. He hits most of the major issues, starting at the very top with bad leadership. Krugman writes that Xi Jinping is starting to look like a "poor economic manager". Over his 10 years in power, he&

Developing Domestic Demand

An interesting analysis from Andy Xie today, focusing on one of the ways China can begin to re-establish new sources of economic growth. In this case, solar power. I don't know if Andy's positivity on solar power is supported by current technology, but given the long-term

Falling pork prices are definitely 'helping' - Pork price declines enhance domestic demand

Deflation is such a negative word that journalists don’t think more deeply about the market forces at play. Here, CNBC warns that falling consumer prices are “not helping”: Plunging pork prices in China are pushing the world’s second largest economy closer to deflation, in what could be another

Semiconductors will not save China's Economy

As we move into 2024, a lot of critical decisions will be made. Resources are limited, and funds pushed in one direction means less funding for other things. The Chinese government really seems to be trying to have it both ways. A strong statement about Taiwan, claiming that 'reunification&

China's Growth Bubble

China has made incredible economic gains over the past two decades, modernizing much of its economy. However some portion of those gains only exist on paper. In a variety of ways, China has created artificial growth, an economic bubble or even multiple bubbles, which must eventually be recognized and resolved.

What 'houses are for living' means economically

The sentiment of Xi Jin Ping that 'Houses are for living, not for speculation' is a positive sign. What would the market look like if speculation could be curbed, and housing could be affordable? How we got here The housing market in China is in serious distress, and

Creative Destruction or Destruction

It is truly stunning to consider the corporate destruction of the past several years in China. Huge public entities in education like New Oriental and TAL Education have been kneecapped, with their business model simply put off limits. An entire industry, after-school tutoring, decimated by executive fiat. A message that

Reaction to the 'Optimist's View' on China

This piece is a reaction to Bob Davis' excellent article in Foreign Policy, laying out an optimistic view of China's current crisis, while grounding the discussion firmly in the facts on the ground. It is certainly important to explore both sides in a debate, as long as

Razing urban villages will not expand domestic demand

This article in the New York Times is quite interesting for what it says and does not say. The piece includes a lot of very interesting and useful facts, but fails to some extent to ask bigger questions. The biggest problem is that the government’s plan, as explained in

Recession in China

Andy Xie is always a pleasure to watch. On Bloomberg last week Andy strongly indicated that China was or would be in recession. He was remarkably upbeat, which implies that he expects the government to recognize the necessity of a recession and manage the economy down to a safer base.

Bubble China

China’s economy is in a very precarious position now. The proximate cause of this economic weakness is the unraveling of the housing market, with several large developers now bankrupt, and many smaller developers in dire straits. Deflation looms; it is likely inevitable. With the end of the debilitating Covid-Zero

Shadow bank Wanxiang next to fall

Another shadow bank falls, and with it thousands of unhappy clients. The pressure builds; when this class of people gets large enough there will be serious problems. It is notable that China’s domestic media is covering this story, and South China Morning Press made a video about some of

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