• The Urbanization Fallacy

    August 16, 2013

    Urbanization accommodates but does not cause growth and the current push for urbanization will only make China richer if it increases productivity by more than it increases debt

  • The Changing Debate Over China’s Economy

    August 07, 2013

    The Chinese growth model is not radically new. It is based primarily on the growth model developed by Japan in the twentieth century, and it has been implemented in various forms by many countries.

  • Beijing’s New Leaders Are Right to Hold Back

    July 10, 2013

    Further fiscal stimulus might create growth in the short term, but would be harmful for China in the future.

  • How Much Investment Is Optimal?

    June 10, 2013

    China’s low level of social capital constrains its ability to absorb additional capital stock productively, causing the country to over-invest.

  • Excess German Savings, Not Thrift, Caused the European Crisis

    May 21, 2013

    National savings represent a lot more than the thriftiness of local households, and as such it has a lot less to do with household or cultural preferences and more so with the policies or institutions that restrain the household share of GDP.

  • Investment and Consumption

    May 10, 2013

    The speed of China’s growth in the coming decade depends on whether or not it is possible to maintain current levels of consumption growth once investment growth is sharply reduced.

  • Feedback Loops

    April 29, 2013

    It may be useful to think about Japan as a model for understanding the adjustment process in China, since the Japanese model shows how risky it is to shift to a slow-growth model.

  • The Challenges for China’s New Leadership

    April 11, 2013

    China’s leadership is saying all the right things, but the political and economic challenges they face to achieve meaningful reforms remain daunting.

  • What I'll Be Watching in 2013

    February 14, 2013

    To assess China's rebalancing in 2013, look for how quickly growth slows, how much debt grows, and the movement of inflation and trade figures. Globally, keep on eye on Target 2, Spanish bonds, and Japanese debt.

  • Recognizing the Need for Economic Adjustment

    January 14, 2013

    Higher growth in China is no longer compatible with a strengthening balance sheet. Fortunately, the current Chinese leadership recognizes the need to implement informs and understands that it is going to be a politically difficult process.

  • The IMF on Overinvestment in China

    December 28, 2012

    A new report suggests that even under optimistic scenarios, it will be very hard to maintain a high rate of investment in China. The challenge is to find a readjustment strategy that does not lead to a sharp drop in GDP growth.

  • What is Globalization?

    June 11, 2012

    A new worldwide monetary contraction could reverse many of the advances in globalization that the international community takes for granted.

  • Predictions for the Rest of the Decade

    August 29, 2011

    The current cycle of globalization could end in a painful period of debt adjustment and payment imbalances across the globe, with a likely slowdown of growth in China, a possible abandonment of the euro, and the risk of increasing U.S. protectionism.

  • Is Loan Growth in China Slowing?

    March 24, 2011

    Ineffectual loan quotas have led Chinese banks to devise new, riskier lending mechanisms. This trend will continue as long as China maintains its loose monetary and credit policies.

  • Chinese Stock Markets and European Politics

    February 10, 2011

    Chinese growth may continue at a rapid pace this year, but a growing liquidity-induced bubble will eventually require major reforms.

  • Currency Manipulation

    February 04, 2011

    Although an appreciation in China's currency value could benefit the United States in theory, Chinese leaders would likely counterbalance such a rise with policies that could further damage both the Chinese and U.S. economies.

  • Chinese Growth in 2011

    December 19, 2010

    Although China's growth next year is likely to remain high, expectations for China's average growth over the next decade are being revised downward.

  • The Rough Politics of European Adjustment

    November 30, 2010

    European economic adjustment will be both economically and politically painful, but Europe's financial crises will continue to recur until real fundamental rebalancing occurs.

  • Will Beijing Raise Interest Rates to Combat Inflation?

    November 24, 2010

    China's interest rate hikes are primarily intended to rebalance China's overheated investment sector, but they will likely have little effect on the country's rising inflation.

  • Will Europe Face Defaults?

    November 24, 2010

    Europe's debt crises are likely to worsen, requiring many European countries to implement difficult long-term economic and political adjustments to recover from their fiscal woes.

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