ECONOMICS OF DEVELOPMENT

Enter the Dragon

Yu Yongding and Yao Yang

Is China ready to become a consumer society? How will Chinese sovereign investment and the rise of Chinese multinational companies affect the world economy? Can China tackle pollution and yet maintain growth? Will the effects of China’s one-child policy come to haunt tomorrow’s leaders?

RECENT COMMENTARIES

FEATURED COMMENTARIES

Rattling the Renminbi

Yu Yongding Series: Enter the Dragon

2012-01-30

From July 2005 until this past December, China’s renminbi appreciated steadily. So why, if China was still running a decent current-account surplus and a long-term capital surplus, did the currency suddenly depreciate, forcing the PBoC to intervene to prevent it from falling further?... read

Comments: 3 Recommended: 0 Read: 7732

Europe on a Chinese Shoestring

Yao Yang Series: Enter the Dragon

2011-12-08

For months, EU leaders and IMF officials have been hoping that China would lend a hand to save the euro. But China will give nothing unless the EU makes certain concessions, including conferral of market-economy status.... read

Comments: 1 Recommended: 0 Read: 12248

The China Bears’ Feeble Growl

Yu Yongding Series: Enter the Dragon

2011-11-29

In recent months, bearish sentiment about the Chinese economy has surged. But, despite serious problems with local debt, housing prices, and underground credit networks, China's economy remains strong.... read

Comments: 0 Recommended: 0 Read: 9827

China’s Crippled Financial Sector

Yao Yang Series: Enter the Dragon

2011-10-21

Even in the best of times, it is difficult for China’s small and medium-size enterprises to get bank loans. But, with the current regimen of credit austerity making conditions for SMEs worse, the financial sector – the least reformed sector in China – now is suffocating the beating heart of the country’s economic dynamism.... read

Comments: 4 Recommended: 1 Read: 13546

The “Asset Crisis” of Emerging Economies

Yu Yongding Series: Enter the Dragon

2011-09-30

Rather than confronting a debt crisis, as in 1997-98, emerging-market economies now face an “asset crisis,” but they will suffer the same result: great capital losses on their foreign-exchange reserves. Indeed, the magnitude of the losses will be on par with that of Asian financial crisis, if not higher.... read

Comments: 4 Recommended: 0 Read: 14611

China’s $3.2 Trillion Headache

Yao Yang Series: Enter the Dragon

2011-08-18

While the downgrade of US government debt by Standard & Poor’s shocked global financial markets, China has more reason to worry than most: the bulk of its $3.2 trillion in official foreign reserves – more than 60% – is denominated in dollars. What's worse, from China's perspective, is that there is no short-run method to diversify these holdings.... read

Comments: 5 Recommended: 1 Read: 20685

China’s Inflation Muddle

Yu Yongding Series: Enter the Dragon

2011-07-27

Even as the debt crises in Europe and the US loom large and the global economic recovery falters, inflation is making a comeback. Indeed, emerging-market economies are bracing for a serious bout of it – and bout that China is already fighting.... read

Comments: 0 Recommended: 0 Read: 10788

When Will China’s Economy Overtake America’s?

Yao Yang Series: Enter the Dragon

2011-06-02

As China’s economy continues to grow and eventually matches US GDP, the demand that the Chinese assume greater responsibility for the global economy’s health will become stronger. By almost all recent estimates, they have little time to prepare.... read

Comments: 4 Recommended: 0 Read: 19119

The Renminbi’s Journey to the World

Yu Yongding Series: Enter the Dragon

2011-05-27

Though few have noticed, the Chinese renminbi is poised to become one of the three global settlement currencies, alongside the dollar and the euro. But there are serious risks in the renminbi's internationalization – especially for China itself.... read

Comments: 0 Recommended: 0 Read: 13357

China Should Import Deflation	Yao Yang
With China’s inflation – and inflation expectations – rising, how can price stability be maintained without threatening the country’s booming growth? It is not impossible, but it does require that the government overcomes its deep-seated suspicion of opening China’s markets to imports.... read

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Learning to Float

Yu Yongding Series: Enter the Dragon

2011-03-29

The economic and welfare costs of China’s exchange-rate policy are too high. It is time for China to consider allowing the renminbi to float freely, while reserving the right to intervene when it must, and tighten the management of cross-border capital flows.... read

Comments: 1 Recommended: 0 Read: 12732

Urbanizing China

Fan Gang Series: Enter the Dragon

2010-12-30

Most countries at a stage of development similar to China's experienced faster urbanization than industrialization. But the reverse is true in China, largely because the system of land tenure ensures that the reservoir of labor for industrialization and urbanization remains located in country villages, rather than in city slums.... read

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The Illusion of a Chinese Bubble

Fan Gang Series: Enter the Dragon

2010-02-25

Explosive growth in money supply and credit have inspired some China watchers to regard the country’s economy as a bubble, if not to predict a hard landing in 2010. But that judgment seems premature, at best, given the reasons behind the credit growth and the government's recent moves to address signs of overheating.... read

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The Chinese Economy’s Secret Recipe

Fan Gang Series: Enter the Dragon

2010-06-29

While most major economies in their early stages of growth suffered crises, China’s story seems abnormal (or accidental), and has elicited periodic predictions of an “upcoming crash.” But there is nothing more abnormal about China’s 30-year unbroken pattern of growth than effective macroeconomic intervention in boom times.... read

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The Roots of China’s Rapid Recovery

Fan Gang Series: Enter the Dragon

2010-01-31

For much of the world, China’s ability to shrug off the global financial crisis and maintain a strong growth trajectory in 2010 and 2011 seems too easy. But, while aggressive stimulus certainly helped, China's real salvation was cautious macroeconomic management well before the crisis hit.... read

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Urbanizing China

Fan Gang Series: Enter the Dragon

2010-12-30

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Renminbi and Reality

Fan Gang Series: Enter the Dragon

2010-03-23

The renminbi's exchange rate has once again become a target of the US Congress, but revaluation by China would only push up US inflation, as Vietnamese, Indian, and other low-cost producers fill the export gap. Only serious efforts by both sides to fix their domestic fundamentals, including over-consumption in the US, will imbalances be reduced in a sustained way. ... read

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The Making of China’s Trade Deficit

Fan Gang Series: Enter the Dragon

2010-04-23

The US Congress recently issued its loudest call ever to classify China as an exchange-rate manipulator, accusing Chinese leaders of maintaining the renminbi’s peg to the dollar in order to guarantee a permanent bilateral trade surplus. And yet, at around the same time, in March, China recorded its first monthly trade deficit in six years.... read

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Balancing China’s High Savings

Fan Gang Series: Enter the Dragon

2010-07-29

When a developing country has a high savings rate as a result of structural factors, as China does, the best strategy is not to reduce savings through dramatic exchange-rate appreciation, which may kill export industries overnight. Rather, savings should be channeled even more – and more efficiently – to domestic investment in order to avoid large external imbalances.... read

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China’s War on Inequality	Fan Gang
A major new target in the five-year plan that China just unveiled is to boost the growth rate for household income so that it equals the growth rate of GDP. The reason is simple: over the past 10 years or so, China’s household income grew more slowly than GDP, giving rise to significant structural problems.... read
China’s $3.2 Trillion Headache	Yao Yang
While the downgrade of US government debt by Standard & Poor’s shocked global financial markets, China has more reason to worry than most: the bulk of its $3.2 trillion in official foreign reserves – more than 60% – is denominated in dollars. What's worse, from China's perspective, is that there is no short-run method to diversify these holdings.... read

AUTHOR INFO

Yu Yongding

Yu Yongding, currently President of the China Society of World Economics, is a former member of the monetary policy committee of the Peoples' Bank of China and former Director of the Chinese Academy of Sciences Institute of World Economics and Politics.

Yao Yang

Yao Yang is Director of the China Center for Economic Research at Peking University.

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