Is China’s High Savings Rate a Curse?

Is China’s High Savings Rate a Curse?The average savings rate in China is over 30 percent – that is above-average measured by any global average. In other words, a third of the income of a household does not flow back in the economy but stays blocked in a bank-account or somewhere else. Many, including the Chinese government, see this as a…

China’s Rising Pile of Infrastructure Debt

China’s Rising Pile of Infrastructure DebtWhile China’s emergence as the world’s second biggest economy has led many developing countries to Beijing as the panacea for all economic issues, especially those related to infrastructure development, the country’s leaders are awakening to a new reality: underperformance and debt heading for a crisis. A recent Oxford University titled “Does infrastructure investment lead to…

China’s Export Glut Threatens World Economy

China’s Export Glut Threatens World EconomyAt the height of the 2008 financial crisis, as the world peered into an abyss, China earned global gratitude by pumping a record amount of stimulus into its economy. Ironically, continued stimulus has left the Chinese economy with mounting debt and a production glut threatening world trade. Managing the asymmetry between leading markets and China…

A Cheaper Currency Can’t Rescue the Chinese Economy

A Cheaper Currency Can’t Rescue the Chinese EconomyThe latest figures show that China is putting paid to the simplistic story that a cheaper currency on its own boosts exports.  Don’t be fooled. The performance of the Chinese economy over the past year  is a demonstration of the truth of that. Since Aug. 11, 2015, when the People’s Bank of China, the central bank, abruptly…

Theresa May Dares to Risk Upsetting China

Theresa May Dares to Risk Upsetting ChinaAt last Britain seems to have a prime minister in Theresa May who means business, and is not primarily interested in playing to the gallery like her predecessor, David Cameron, and his Chancellor of the Exchequer henchman, George Osborne, did both at home and abroad. A Financial Times columnist has reported that Whitehall officials are saying it feels…

China Out-Pivots the US to the Middle East and Iran

China Out-Pivots the US to the Middle East and IranSince the signing of the controversial Iranian nuclear deal that lifted most international sanctions, China has emerged as a principal beneficiary. This is as much a result of aggressive Chinese push as it is difficulties faced by the West. China has pursued opportunities in the Iranian nuclear energy market, increased investment and expanded influence, with…

Potholes in China’s Silk Road

Potholes in China’s Silk RoadThe acknowledgement by Xu Shanda, a retired Chinese deputy director of the State Administration of Taxation, last week regarding potential losses of Silk Road projects has drawn widespread attention as it challenges the prevailing myth of an indomitable and inevitable system in which ultimately all roads will lead to Beijing. The Silk Road endeavor, expected to…

‘Make in India’ Resonates with Chinese Corporates

‘Make in India’ Resonates with Chinese CorporatesAs India and China squabble over Beijing squashing Delhi's move at the UN to ban Azhar Mazoor, the alleged mastermind behind northern India terrorist attacks, and New Delhi retaliates by threatening to stonewall the entry of Chinese companies into the country, the ground reality paints a far less acrimonious picture. Away from the geopolitical rancor,…

China’s Overseas Investments Come with Baggage

China’s Overseas Investments Come with BaggageWhile China’s huge overseas investment plans continue to attract attention from developed and developing countries alike, equally important is the skepticism prevailing about the profitability of these investments. They do not come merely as “investments” in the strict sense of the term. Certain repercussions follow, ranging from transfer of ownership of assets to potential political…

Flee from Chinese CDOs!

Flee from Chinese CDOs!China is about to go down exactly the same path that led to America's and thus the globe's financial meltdown of 2008.  In a nutshell, the China Banking Regulatory Commission wants China's banks to issue collateralized debt obligations (CDOs) to domestic as well as international markets.  Some RMB50 billion has been granted by the regulators already. CDOs basically…