Two research reports were delivered to my inbox recently. One discussing a country whose “export-driven economy” that is “no longer sustainable,” and another discussing the “one of the most domestically-oriented economies in the world” which is on a sustainable growth path, at least in the short term. Both reports were about China. During the endless […]
China will come close to eliminating income taxes (Chinese) as of September 1st 2011. According to new laws people will only have to pay income taxes if they earn over Rmb4545 (US$700) a month, and only a negligible amount up to Rmb10,000. By the taxation bureau’s own count there are only 24 million people in China with […]
An article in this week’s economist has done a fine job of picking up on a new trend in China bear analysis – the long time horizon. But some economists believe this is all too much. Among the bears is Michael Pettis of Peking University, who believes that investments are becoming increasingly inefficient and that […]
Within days after the media picked up the narrative that the Chinese “property bubble” is “popping,” a slew of economic data came out from China showing more or less the exact opposite. From the Wall Street Journal: After years of housing prices gone wild, China’s property bubble is starting to deflate. Residential prices are heading downward […]
This article on the decline of “the China Price” in the Economist has gotten a bit of attention recently. The article prominently features Bruce Rockowitz of Li & Feng, one of the largest global sourcing firm, whose ideas I think are worth treating a bit skeptically. For 30 years manufacturers in China helped to keep […]
I’m on vacation in Central Europe at the moment, and while I have had little time to work over the past few weeks, I would like to report on one conversation I had with Mojmir Hampl, Vice-governor of the Czech National Bank, and a prominent proponent of a certain sort of euro-skepticism which is common […]
China has started to have power shortages again. There have been a few different reasons mentioned in the reports i read, and all of them are somewhat concerning.
1. Coal prices have been going up, and the authorities, concerned with fighting inflation, have been holding down prices.
For many of those following economic news from China, the suicide of Han Jin, a vegetable farmer from the Shandong province, was somewhat hard to wrap your head around. Han didn’t kill himself because his land was being taken by the government, a common reason for protest suicide. He didn’t kill himself because food prices were too high, or rains were too bad, and he couldn’t feed his family.
Michael Pettis has a rather interesting article up on the website for the Carnegie Endowment for International Peace, discussing China’s banking system and how it needs to be reformed. While I agree with his general conclusion that the Chinese banking system is dysfunctional, I think he’s somewhat oversimplifying how the Chinese banking system works, which is leading him to exaggerate some of the macro-risks in the system.
This is why I’m not particularly concerned about food inflation in China:
All the soybeans in Iowa won’t be enough to meet the anticipated surge in China’s imports over the next four years as the nation feeds a record pig herd and drives bean prices to an all-time high.
China, which doubled meat consumption in the past two decades, may boost international soybean purchases 33 percent to 66.9 million metric tons by 2014, a 16.6 million-ton increase that is more than Iowa, the largest U.S. grower, produced last year, government data show. U.S. farmers are cutting back on planting, meaning prices will rise 21 percent to $16.80 a bushel by Dec. 31, a Bloomberg survey of 20 analysts shows.
Almost half the world’s pork comes from China, which has 689 million pigs and will be responsible for all of this year’s increase in global supply, the U.S. Department of Agriculture estimates. That’s adding to China’s dependence on raw-material imports from Brazil to Australia to the U.S., making it vulnerable to inflation that Premier Wen Jiabao has pledged to combat without derailing economic growth.