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The End of the Beijing Consensus
Can China’s Model of Authoritarian Growth Survive?
By YANG YAO, Deputy Dean of the National School of Development and the Director of the China Center for Economic Research at Peking University.
Summary:
Beijing’s ongoing efforts to promote growth are infringing on people’s economic and political rights. In order to survive, the Chinese government will have to start allowing ordinary citizens to take part in the political process.
3 February
China curbs companies’ capital raising
Chinese regulators have imposed a partial ban on listed companies raising capital from equity markets to repay bank loans or replenish working capital, amid a general tightening of liquidity and official curbs on soaring bank debt in the country.
13 January
China raises bank reserve requirements
China increased the required amount of deposits banks must keep as reserves in the clearest signal yet that the central bank is trying to tighten monetary conditions amid mounting concerns over inflation
12 January
Tom Friedman: Is China the Next Enron?
After visiting Hong Kong and Taiwan this past week and talking to many people who work and invest their own money in China, I’d offer Mr. Chanos two notes of caution.
First, a simple rule of investing that has always served me well: Never short a country with $2 trillion in foreign currency reserves.
Second … I am reluctant to sell China short, not because I think it has no problems or corruption or bubbles, but because I think it has all those problems in spades — and some will blow up along the way (the most dangerous being pollution). But it also has a political class focused on addressing its real problems, as well as a mountain of savings with which to do so (unlike us).
As China Rises, Fears Grow on Whether Boom Can Endure
(NYT) As much of the world struggles to clamber out of a serious recession, a gradual flow of economic power from West to East has turned into a flood.
China’s decisive government intervention in the economy, combined with the defiant optimism of its companies and consumers, has propelled an economy that until recently had seemed tethered to the health of its major export markets, including the United States. Yet China confronts a number of challenges about its recent surge, including whether its formula for growth is sustainable, and how it will manage its increasingly strained economic relations with the outside world.
Dollar has hit bottom, China says
(Globe & Mail/Reuters) Sovereign wealth fund strategist also argues gold is too expensive and says China may raise interest rates before U.S. does
An investment strategist at China’s $300-billion (U.S.) wealth fund said the world’s third-largest economy now had a say in the exchange rate of the U.S. dollar, which it expects to rise while the yen should fall further.
Google may exit China
(Reuters) Google is considering shutting down its China operations and website after hackers there coordinated a “highly sophisticated” cyber-attack on the Internet search giant and targeted at least a score of other major corporations, it says.  Full Article
Wariness persists as Chinese exports rise
(FT) Economists caution that the December trade numbers reflect a low base from the same month the year before, when China started to suffer in the global downturn. Chinese exporters also painted a mixed picture of their order books
11 January
(NYT Editorial) China’s economic strategy over the past two decades has been remarkably successful. By opening its doors to foreign investment and manipulating currency markets to keep the renminbi from rising against the dollar, it hitched itself to consumers in the industrial world and achieved spectacular growth. While the strategy is still working for China, it is exacerbating economic weakness around the globe. If China keeps it up, other countries are likely to use their last available weapon — protectionism — to stop the onslaught of artificially cheap Chinese goods. A trade war is easy to start and hard to contain. It could hit everybody’s exports, disrupting growth everywhere.
8 January
Corruption undermines China’s state-owned companies
(Monsters & Critics) China’s state-owned companies are being shaken by a series of financial scandals, as authorities find their hands tied by top managers’ connections. Former and current executives of some of China’s leading telecoms, nuclear and oil companies are under investigation for fraud or corruption China Finds Huge Fraud by Officials Chinese officials misused or embezzled about $35 billion in government money in the first 11 months of the year, according to a national audit released this week. NYT 12/30
7 January
Contrarian Investor Predicts Economic Crash in China
James Chanos, who predicted Enron’s collapse, insists that the economic boom in China is headed for a fall.
18 November 2009
China’s currency: A yuan-sided argument
Why China resists foreign demands to revalue its currency
(The Economist) Foreigners argue that a stronger yuan would not only help reduce global imbalances, such as America’s trade deficit, but would also benefit China. It would help China regain control of its monetary policy. By pegging to the dollar, it is, in effect, importing America’s monetary policy, which is too loose for China’s fast growing economy. A stronger yuan would also help rebalance China’s economy, making it less dependent on exports, putting future growth on a more sustainable path. Some Chinese economists warn that the benefits to America from yuan revaluation are much exaggerated. In particular, a stronger yuan would not significantly reduce America’s trade deficit. There is little overlap between American and Chinese production, so American goods cannot replace Chinese imports. Instead, consumers would simply end up paying more for imports either from China or other producers, such as Vietnam. This would be like imposing a tax on American consumers.
June 2009
Poorly Made in China - Book review
(UPI Asia)The premise of the analytical side of Poorly Made in China is that the so-called Chinese manufacturing miracle is based to a very large extent on Chinese firms cheating their American customers and business partners, either through bait and switch tactics, “quality fade” (a process of cutting corners and substituting cheaper components once the original order is won), siphoning margin from joint ventures, etc.
22 April
Honest Talk About Chinese Currency Manipulation
(RealClearPolitics) Last week, the Obama administration declined to cite China for currency manipulation despite the fact that most experts — including Treasury Secretary Timothy Geithner during his confirmation testimony — do not deny the obvious currency-rate fixing by China. Almost certainly, this decision reflected merely a tactical judgment not to offend China, given China’s vital role in the international economic recovery effort.
23 January 2009
Geithner on China’s Currency Manipulation
(Portfolio.com) Tim Geithner’s testimony about China’s currency manipulation is the top story in the world today, judging by the NYT’s front page. And he did indeed say three times in his written responses to the Senate Finance Committee that “President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency.”
July 2008
The 2008 Olympics’ Impact on China
(China Business Review) From new construction projects to attracting the spotlight, the Olympics will have a lasting effect on China
January 2008
China’s Economic Fluctuations: Implications for its Rural Economy - Book review
(Carnegie Endowment) Keidel updates his previous analysis to show that China’s recent inflation surge is the product of domestic rural structural problems, not excessive monetary growth linked to trade surpluses or foreign reserves. The fundamental response to China’s inflation risk should be to raise bank deposit and lending rates to match inflation; failure to do so in the past has caused damaging swings in inflation, output growth, and social unrest.
3 April 2006
Labor Shortage in China May Lead to Trade Shift
Persistent labor shortages at hundreds of Chinese factories have led experts to conclude that the economy is undergoing a profound change that will ripple through the global market for manufactured goods.
The shortage of workers is pushing up wages and swelling the ranks of the country’s middle class, and it could make Chinese-made products less of a bargain worldwide. International manufacturers are already talking about moving factories to lower-cost countries like Vietnam.
12 September 2004
In a Tidal Wave, China’s Masses Pour From Farm to City
For now, the government is encouraging migration to promote its immediate goal of providing cheap factory and construction labor and its long-term goal of urbanization. Every wealthy modern nation has had to shift from a rural-based economy to an urban one in order to prosper. China is trying to make this transition - which involves a fifth of the world’s population - in record time. How well, or poorly, the government handles this migration will determine whether these workers help create a middle-class society or just form a permanent underclass in a country that has already become sharply divided between rich and poor.
1 August 2004
Amid China’s Boom, No Helping Hand for Young Qingming
His dying debt was $80. Had he been among China’s urban elite, Zheng Qingming would have spent more on a trendy cellphone. But he was one of the hundreds of millions of peasants far removed from the country’s new wealth. His public high school tuition alone consumed most of his family’s income for a year.