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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

Taking Stock of the Shanghai FTZ after One Year

by | September 15th, 2014 | 02:31 pm

The Shanghai Free Trade Zone is fast approaching its one-year anniversary. Much of the recent commentary about the FTZ has been negative. It is obvious that the FTZ has not lived up to the extraordinarily high expectations many had when it was first announced.  However, as is typical with the Chinese pattern of reform, things […]

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China Chart of the Week: Staying the Course on Monetary Support

by | September 12th, 2014 | 04:56 pm

In several speeches earlier this week at the World Economic Forum’s summer forum in Tianjin, Premier Li Keqiang reemphasized the government’s commitment to support growth with structural reforms rather than further easing monetary policy. The Premier specifically pointed out that “As [China] is restructuring instead of expanding the money supply, current monetary policy remains sustainable.” […]

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Will Chinese Local Governments Now Turn to Bonds?

by | September 4th, 2014 | 05:24 pm

This week China revised its budget law for the first time since its inception 20 years ago. One of the more important changes is to formalize ongoing experiments in local government bond issuance. The change is certainly a breakthrough but the significance will ultimately depend on how much the central government allows local governments to borrow. […]

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China Chart of the Week: NPLs on the Rise

by | September 3rd, 2014 | 03:35 pm

Despite the tremendous ups and downs of the Chinese financial system during the past few years, the non-performing loan (NPL) ratio has remained almost unchanged. Between June of 2011 and June of 2014, the NPL ratio has only increased by 0.1 percent. The total renminbi amount of NPLs is actually growing quite rapidly, especially over the past […]

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China Chart of the Week: Let A Million Companies Bloom

by | August 29th, 2014 | 03:00 pm

Many China watchers were dismayed by slight weakness in economic data for July, adding to fears that China may still be struggling to overcome a slowdown in real estate investment. However, these concerns do not appear to be deterring people from starting new companies. The State Administration for Industry and Commerce (SAIC) shows that China […]

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China’s Embrace of Markets Is Responsible for its Growth

by | August 25th, 2014 | 01:36 pm

China’s long-term economic growth since reform began is largely the result of the emergence of a dynamic private sector. The de facto privatization of agriculture early in the reform period, via contracting to households and allowing the reemergence of rural markets, led to an unprecedented acceleration of farm output in the first half of the […]

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Does China have an SME Lending Problem?

by | August 22nd, 2014 | 11:40 am

Economies across the globe struggle with providing small and medium enterprises (SMEs) access to loans. Banks are often accused of favoring large customers at the expense of everyone else. China appears to be no exception as Premier Li Keqiang recently criticized Chinese banks for favoring large borrowers. While it’s true that SME financing is a […]

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China Chart of the Week

by | August 21st, 2014 | 03:22 pm

It has been exactly a century since the small country of Belgium was the subject of a furious international debate. Now, for those who watch international capital flows closely, one recent development that has sparked a much more pedestrian debate has been the remarkable increase in the size of Belgium’s US Treasury holdings over the past 18 […]

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China Chart of the Week

by | August 13th, 2014 | 12:05 pm

New figures from the National Bureau of Statistics revealed that fixed asset investment in China continued to decline, reaching the lowest level since December 2001. In particular, investment in the industrial sector and real estate development have fallen dramatically. China’s recent efforts at targeted stimulus may be responsible for averting an even more rapid decline. […]

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China Price Reform Update – 1H2014

by | August 6th, 2014 | 09:27 pm

Last November the Chinese Communist Party made an unprecedented step forward in market reforms when it made a commitment to allow the market to play a decisive role in resource allocation (使市场在资源配置中起决定性作用) by the end of 2020. In China the market determines all prices with a few important exceptions. For example, the price of petroleum, […]

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