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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

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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Equities Series Part 3: Effect of the Stock Market Correction on China’s Economy

by Jan Zilinsky | July 12th, 2015 | 10:10 am

Read previous posts in this series on China’s equity markets by clicking here. Are falling stock prices in China a sign of deeper economic frictions? Is a drag on the real economy inevitable? As Paul Samuelson said, “The stock market has predicted nine out of the last five recessions”—meaning that observers who are guided by […]

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China Chart of the Week: How Severe is the Price Correction of Chinese Stocks?

by | July 10th, 2015 | 05:13 pm

Given the fast growth of the size of Chinese stock market in recent years, those who are watching the price reversal of Chinese stocks are voicing concerns. To put these events in perspective, this week’s chart shows the trajectory of the Shanghai Composite Index since 2005, splitting the past decade into three shorter periods. The […]

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Equity Series Part 2: Are Chinese Equities Over-valued?

by | July 9th, 2015 | 11:22 am

Read previous posts in this series on China’s equity markets by clicking here. A fortnight ago, the answer to this question would have been an unequivocal yes. However, given the dramatic drawdown, the answer is now less clear. On the one hand, domestic equity valuations still stand above their historical median levels and at a […]

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Equity Series Part 1: Primer on China’s Stock Markets

by | July 8th, 2015 | 05:33 pm

Read previous posts in this series on China’s equity markets by clicking here. China’s stock market has been on a wild ride lately.  The Shanghai Composite Index, which closed at 5023 on June 5, a 146 percent rise from a year ago, has dropped over 30 percent in the past month.  Why? China’s government had […]

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Why China Wants a BIT with the United States

by | June 18th, 2015 | 07:40 am

Negotiations over a US-China Bilateral Investment Treaty (BIT) have entered a new phase with China’s formal submission of its negative list on June 12 and the upcoming September summit between President Xi and President Obama.  The BIT will be a focus of the annual Strategic and Economic Dialogue (S&ED) between China and the United States […]

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Pollute at Your Own Risk: the Political Economy of Environmental Protection in China

by | May 29th, 2015 | 03:34 am

At least one third of China’s 641 million internet users may have viewed the documentary Under the Dome, a viral condemnation of the government’s policies and the behavior of state-owned enterprises, mixed with pedagogical elements that explain the effects of pollution on human health. At one point in the documentary, Chai Jing, the investigative reporter […]

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