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China Economic Watch

This blog monitors ongoing developments in China's economy, analyzes the impact of policy changes, and informs readers about new PIIE research on China.

Recent Posts

Nicholas Lardy: False Alarm on a Crisis in China

by | August 26th, 2015 | 11:30 am

Recent economic events in China have created turmoil in the global markets. Many economists believe that China is experiencing a financial and economic meltdown. Nicholas R. Lardy explains in an op-ed in today’s New York Times that this apparent meltdown is nothing more than a popular narrative, and that China’s economy is still holding up […]

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Retail Sales Numbers Are Not a Reliable Indicator for Consumption Expenditure

by Nicholas Lardy | August 21st, 2015 | 09:15 am

Some skeptics of China’s economic data argue that the moderating growth of retail sales shows that private consumption expenditures are weakening. However, retail sales are not a good proxy for private consumption for two reasons. First, as noted in a previous post, retail sales data include purchases by the government and other public agencies. Second, […]

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Skeptics of China’s GDP Growth Have Not Made Their Case

by | August 14th, 2015 | 11:03 am

Criticizing Chinese data has long been a pastime of those who are skeptical that China has racked up the strongest and longest period of economic growth in recorded history. The skeptics, quoted extensively in yesterday’s New York Times, are now arguing that the change in China’s exchange rate policy announced on August 11, which has […]

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China’s Mixed Motives in Devaluing Its Currency

by | August 13th, 2015 | 01:17 pm

PIIE President Adam Posen, in an interview with the Japanese newspaper Nikkei, says the People’s Bank of China’s (PBoC) decision to let the renminbi depreciate could be motivated by China’s desire to include it in the International Monetary Fund’s (IMF) Special Drawing Rights (SDR) basket. China may also be acting to prevent the economy from […]

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China’s Latest Currency Actions Are Market Driven

by | August 11th, 2015 | 04:12 pm

China’s central bank took a potentially major step toward a more market-determined exchange rate on August 11, when it announced a revision in the process for fixing the central parity exchange rate, the starting point for daily trading of the renminbi (RMB) in the onshore market. While the reform has set off alarm bells in […]

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How Global Is the Chinese Auto Sector?

by | August 11th, 2015 | 10:58 am

In 2014, the top selling vehicle globally was unsurprisingly, Japan’s well known Toyota Corolla. More surprising was the seventh top selling car, China’s Wuling Hongguang, manufactured by the joint venture of Chinese state-owned automaker SAIC and General Motors.

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Equity Series Part 6: The Equity Market’s Role in Cross-Border Capital Flows

by | July 23rd, 2015 | 07:08 pm

Read previous posts in this series on China’s equity markets by clicking here. As part of its goal to open its capital account, China has said that that it will continue to open up its capital markets to foreigners and to let Chinese households invest more abroad. This post looks at the different methods for […]

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China Chart of the Week: Stock Suspensions Ebb

by Huang Zixuan | July 17th, 2015 | 05:38 pm

As Chinese official took drastic measure over the last two week to slow the free fall equity market, the number of stocks that ceased trading activities spiked. At the peak on July 8th, 1347 stocks were suspended which represented 49% of the total number of stocks and 31% of market capitalization. Suspensions have since come […]

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Equity Series Part 5: Should US Investors be Worried About the China Equity Correction?

by | July 15th, 2015 | 06:14 pm

Read previous posts in this series on China’s equity markets by clicking here. The dramatic price declines in China’s domestic equity market have given rise to a number of questions about the possible impact on investors in the US. We would separate the risks to US investors into three categories: 1) direct holdings of Chinese […]

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Equity Series Part 4: The Equity Market Rally and Financial Sector’s Share of GDP Growth

by | July 13th, 2015 | 04:22 pm

Read previous posts in this series on China’s equity markets by clicking here. In our previous post, we looked at what the impact of the equity market drawdown could have on GDP growth. In this post, we will show that, apart from consumption, the equity market rally has had a non-trivial impact on growth via […]

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