In The News

Bloomberg: China's Downgrade Could Lead to a Mountain of Debt

May 30, 2017
Moody’s Investor Services lowered China’s sovereign debt rating by one level in late May for the first time since 1989. The company cited high levels of corporate debt mostly held by state-owned enterprises as the cause. With an increase in the yield premium on bonds, Chinese companies face higher interest rates when borrowing money, indicating greater risk. Hence, raising capital for investments...

South China Morning Post: Risks Rising for China’s City Commercial Banks

Laura He April 11, 2017
“City commercial banks across China are increasingly relying on interbank funding and wealth management products as deposit substitutes– but growing investment holdings, waning liquidity and weakened capital buffers have rendered them more vulnerable to financial disruption, according to analysts at Fitch Ratings,” reports Laura He for South China Morning Post. Her article focuses on smaller...

Caixin: China Posts First Trade Deficit in Three Years

Fran Wang and Pan Che March 13, 2017
Political rhetoric blasting global trade from the United States and other countries may slow economic growth in the world’s second largest economy. “China recorded its first trade deficit in three years last month as imports surged on soaring commodity prices while exports declined, likely adding uncertainty to the country’s growth prospects,” reports a team from Caixin. “The surprisingly robust...

Project Syndicate: The WTO Reborn?

Arvind Subramanian February 23, 2017
The World Trade Organization, a multilateral trade group with 164 members, has been marginalized in recent years due to increasing preference for bilateral and regional deals, explains Arvind Subramanian, chief economic adviser to the government of India in an essay for Project Syndicate. He points to three developments that could prompt the world to reconsider multilateralism and revive the WTO...

The Weekly Standard: Of Debt and Detriment

Benn Steil and Emma Smith February 21, 2017
Macroeconomic theory predicts that indebted countries have negative net foreign investment income, while creditor countries have positive flows. The US and China, however, are bucking the trend due to the idiosyncratic natures of both their currencies and governments. One element is China’s willingness, and the world writ large, to accept low returns on the dollar in exchange for stability. About...

Project Syndicate: Brexit in a Brave New World

Daniel Gros February 7, 2017
Trade increases efficiency, reducing costs for all parties. Large economies have advantages with tariffs, and “The advantage of the larger economy is even greater when it comes to non-tariff barriers, which often result from differences in regulations and standards among trading countries,” explains Daniel Gros for Project Syndicate. “In most cases, the smaller country must simply accept the...

Foreign Companies Face New Clampdown for Getting Money Out of China

James T. Areddy and Lingling Wei December 8, 2016
China, less keen about the yuan becoming a global currency, abruptly applied a new limit for capital outflows. “China’s foreign-exchange regulator has instructed banks to sharply limit how much companies move out of the country and into their other operations around the world,” report James T. Areddy and Lingling Wei for the Wall Street Journal. “The recent moves effectively erode the yuan’s...