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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

How the Yuan Crisis Could Forge a New Currency Order

by | February 11th, 2016 | 09:40 am

The pace of decline in China’s external currency reserves is accelerating, feeding panicky selling of the yuan and heralding a likely change in China’s exchange rate arrangements. Exchange rate pressures in China are spilling over to regional currencies and global stock markets. In January alone, China lost $99.5 billion of its dollar reserves trying to […]

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China’s Current Account in 2015: A Growing Trade Surplus

by | February 8th, 2016 | 05:01 pm

As a percent of GDP, China’s current account in 2015 was the largest since 2010 at 2.72 percent.  In dollar terms, the current account was a record $293 billion, mainly due to a swelling trade surplus of 3.42 percent of GDP (figure 1). This surplus was widely expected, as China’s total imports dropped 10 percent […]

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The SDR Goes the Way of the Renminbi

by | February 5th, 2016 | 04:58 pm

The International Monetary Fund’s decision to add the Chinese renminbi to the basket of currencies that compose the Special Drawing Right (SDR) at the end of November 2015 was no small choice. Set to take effect October 1 this year with a weight of 10.92 percent versus the total basket, the inclusion of the renminbi […]

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China Chart: Is China’s Stock Market Leading the S&P 500?

by | February 2nd, 2016 | 04:48 pm

The co-movement between the returns on Chinese and U.S. stock market has been evident in recent weeks. In the first two weeks of this year, the Shanghai Composite Index posted a cumulative loss of 18%, while the S&P500 index fell by 8%. Over the last month, the S&P500 index fell on as many trading days […]

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China’s Growth: Still Envy of the World Despite Slowdown

by | January 21st, 2016 | 03:57 pm

The latest release of Chinese economic data has been portrayed as unprecedented: The Wall Street Journal, BBC, CNN, and NPR all ran headlines announcing the “slowest growth in 25 years.” Such framing lends itself to overreaction, as it fails to convey that China in fact reached its target of annual inflation-adjusted output growth of “around […]

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China Chart: Stock market volatility in the past decade

by | January 8th, 2016 | 05:29 pm

The volatility of China’s stock market was a big story last year, particularly around the summer. Already the market has had a rough start to the year, with authorities twice halting trading in the first week of 2016. The chart below shows the number of days when Shanghai’s stock market declined by at least 5% over […]

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Financial Services in China

by and Nicholas R. Lardy | January 5th, 2016 | 01:59 pm

Financial services in China have expanded rapidly in recent years, raising their share of GDP from under 5 percent in the first quarter of 2007 to over 9 percent in the first half of 2015.  As a result of this rapid expansion, financial services accounted for fully one-third of the growth of the service sector […]

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Global Markets Overreact Once Again

by | January 4th, 2016 | 04:16 pm

China’s stock market opened the year with a bang, and not the good kind. The Shanghai stock index plunged 7 percent, triggering a global selloff in equity markets as investors again fretted about the health of the world’s second largest economy. The catalyst, once again, was investors’ focus on China’s waning manufacturing sector, which showed […]

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A Basket Case? The Future of the Renminbi Exchange Rate Regime: Part 2

by | December 22nd, 2015 | 12:35 pm

Things have been moving fast on the Chinese currency regime since August. The ultimate goal is clear: to eventually move to a market-based currency. But how to get there? Moving the link from the US dollar to a new basket and widening intervention bands would put the renminbi on the path to a more flexible […]

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Manufacturing Employment in China

by | December 21st, 2015 | 05:16 pm

There has been a substantial debate on the issue of whether the decline in manufacturing employment in the United States is the result of technological change, expanding trade, or other factors. My colleague Robert Lawrence finds that the decline in manufacturing employment in the United States, European Union, and Japan is largely, if not entirely, […]

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