Post by account_disabled on Feb 28, 2024 6:04:59 GMT
Some focus on China's debt-intensive structural imbalances. There are those, including me, who see the Japanization parallels of a balance sheet recession, with depressed asset values weighed down by excessive liabilities. Others take a political economy perspective and see China facing the classic impasse of autocracy. While each of these explanations rings partially true, the combination is not perfect. The modern Chinese economy is a combined system, one that reflects fragments of all these representations. The mix has changed considerably over time. From Mao Zedong's fascination with Soviet-style central planning to Deng Xiaoping's market-based reforms, China's economic dynamism has been shaped by profound transitions between these two extremes. Under Xi Jinping, the pendulum has swung back toward Mao's approach.
The reversal is far from complete. Xi's ruling, as expressed in his initial 2013 reform proposals, sought a combination of both: for markets to play a "decisive" role but for state ownership to remain "unwaveringly" strong. The mix Job Function Email Database is the problem. Depending on the metric, the state still controls at least 30-40 percent of the economy. That complicates the diagnosis of what ails the Chinese economy. The combination also poses a formidable challenge for policymaking: Choosing the right strategy is like taking a chance on a single number in a game of roulette. It follows that caution is needed in assessing the potential payoff of China's recent policy stimulus. The People's Bank of China has begun to reduce interest rates by a small amount. However, it is hard to believe this will gain much traction in a faltering Chinese economy already overly reliant on interest rate-sensitive investment in manufacturing capacity, infrastructure and construction.
Meanwhile, the China Securities Regulatory Commission has signaled its intention to boost investor confidence by extending trading hours, reducing transaction fees, encouraging share buybacks and potentially reducing “stamp taxes” on securities transactions. But this hardly makes up for the weak economic and earnings outlook in the worst-performing major stock market this year. At the same time, China's State Council is grappling with the latest problem in its real estate sector: liquidity pressures on Country Garden, the country's largest private homebuilder, and Evergrande's bankruptcy filing in the US. After its default on dollar-denominated debt in 2021, the new central bank governor has indicated that the PBoC would provide support for developers' "reasonable financing demands.
The reversal is far from complete. Xi's ruling, as expressed in his initial 2013 reform proposals, sought a combination of both: for markets to play a "decisive" role but for state ownership to remain "unwaveringly" strong. The mix Job Function Email Database is the problem. Depending on the metric, the state still controls at least 30-40 percent of the economy. That complicates the diagnosis of what ails the Chinese economy. The combination also poses a formidable challenge for policymaking: Choosing the right strategy is like taking a chance on a single number in a game of roulette. It follows that caution is needed in assessing the potential payoff of China's recent policy stimulus. The People's Bank of China has begun to reduce interest rates by a small amount. However, it is hard to believe this will gain much traction in a faltering Chinese economy already overly reliant on interest rate-sensitive investment in manufacturing capacity, infrastructure and construction.
Meanwhile, the China Securities Regulatory Commission has signaled its intention to boost investor confidence by extending trading hours, reducing transaction fees, encouraging share buybacks and potentially reducing “stamp taxes” on securities transactions. But this hardly makes up for the weak economic and earnings outlook in the worst-performing major stock market this year. At the same time, China's State Council is grappling with the latest problem in its real estate sector: liquidity pressures on Country Garden, the country's largest private homebuilder, and Evergrande's bankruptcy filing in the US. After its default on dollar-denominated debt in 2021, the new central bank governor has indicated that the PBoC would provide support for developers' "reasonable financing demands.
