China has many border disputes. However, Beijing’s recent decision to place an “Air Defense Zone” through part of the East China Sea which Japan and China both claim has been quite serious and a major source of conflict in the region. This zone covers the Senkaku/Daiyou islands, claimed by both nations and Taiwan, and the… Continue reading Air Defense Zone – Source of Asian Conflict?
The outcome of the Third Plenum is still largely up for debate. On Tuesday a “cryptic communique” was released outlining the results of the Plenum. The document, however, has puzzled most who read it as to what it says. Looking over the translated communique it is clear that much of the contents are in fact… Continue reading Third Plenum
In the US, Ben Bernanke is to be imminently replaced as Chairman of the Federal Reserve as his term ends January 31, 2014. In China, the governor of the People’s Bank of China (PBOC – China’s Central Bank), Zhou Xiaochuan, was supposed to retire once he reached the mandatory retirement age of 65this past March.… Continue reading China’s Central Banker: Zhou Xiaochuan
China has begun buying foreign assets, specifically high profile US real estate at an increased pace. While sometimes compared to Japan’s disastrous investment in high profile US assets prior to the asset bubble burst in Japan, China’s FDI seems more disciplined based on recent deals. These investments are necessary to soak up the massive amounts of foreign… Continue reading China: Investing Overseas
The BBC recently published an article about the transformation of the Chinese company Haier. The article opens by mentioning the sledgehammer on display in the company’s boardroom. I will come back to the symbolism of this momentarily. So the story begins: In 1984 the Qingdao Refrigerator Plant was a failure. It produced terrible products and… Continue reading The Story of Haier
Chinese rice production is expected to be down this year for the first time since 2003. The Wall Street Journal reports that as industry and urban areas take up more land and rice production moves to less productive northern land, yields are falling. This year yields are expected to be down 1.7% to 6.7 tons per… Continue reading Rice Production Drops
The Guardian reported that wine sales in China reached £27 billion in 2012, a 20 percent increase over 2011. This is a massive increase as consumption only grew a measly 0.6 percent worldwide. On the supply side worldwide, wine production dropped 6 percent that same year but grew in China. While imports consist of comprise 45%… Continue reading Wine Boom
The Chinese government has made significant efforts to stimulate urban growth. Chief among the advantages seen is that urban workers maker more than their rural counterparts, enabling them to spend more and stimulate the domestic economy. This growth must occur to fill the void as the comparative advantage of Chinese declines. Unfortunately, several massive projects… Continue reading Forced Urbanization?
Sara Hsu, in a post for the blog “Naked Capitalism,” asserts that borrowing is being used to prop up Chinese GDP statistics. Total debt of Chinese corporations, local, provincial, and state governments has reached 85 trillion yuan. Hsu, an Economics Professor in the SUNY system, argues local governments have wanted to appear to be stimulating growth… Continue reading China Bolstering GDP Through Debt?
There is some concern that China is in a credit bubble. Since the financial crisis, debt owed by Chinese individuals, corporations and governments has increased dramatically. Earlier this year, Fitch downgraded ratings of China’s sovereign debt. China’s debt-to-GDP ratio of almost 200% is now higher than the 176% figure Japan reached in 1990 before the country’s… Continue reading Impending Credit Bubble?