China Economy

China’s Inflation Problem

China’s inflation rate has climbed to a twelve year high with consumer prices 8.5 per cent higher than they were a year ago. Much of this is the result of the spiraling cost of food (22 per cent higher over the last twelve months).

Revision: China and the UK Economy

Events and developments in one country inevitably have spill-over effects onto others. Your economics revision should consider some of these inter-relationships wherever possible. It will certainly help your analysis and evaluation. In this revision note we look at China

Revision note:
Revision_China_Effect.pdf

Chart of the Day: China’s imports of primary goods

We often read about the size of the ‘China effect’ on the demand for and prices of primary commodities traded around the world. This over-simplification ignores the impact that other emerging market economies are having on the consumption of primary products – indeed a much greater proportion of global economic growth is being provided by the resource-intensive emerging economies. Added together, the emerging economies account for 23% of global GDP whereas the US accounts for around 29%.

Chart of the Day: $6m per minute - hot money flows into China

The Chinese stock market is down and property prices have been falling in many of the major cities and the Chinese trade surplus is starting to diminish. But short term capital flows are surging into the Chinese economy at the moment - according to research from HSBC Global Economics,

Currencies hit the Headlines

Two currency movements are in the news today. Firstly the pound has fallen to an eleven year low against the Euro with one Euro now worth eighty pence. The second currency hitting the headlines is the Chinese renminbi which has appreciated beyond Rmb7 to the US dollar for the first time since 1994.

The Decoupling Debate

The D word - ‘decoupling’ - is at the heart of the debate regarding global economic prospects for 2008 and beyond.

The term refers to the shift by developing economies - and newly industrialising countries in particular - away from dependence on strong demand in the West for their products. 

Too hot to handle? China’s new export - inflation!

Much of the terrific economic growth of China over the last decade has been export driven. Double-digit annual increases in the volume of goods and services sold to the US and Europe and more recently to the rest of Asia has enabled China to grow it’s real GDP by more than 11% for the last 3 years. Cheap manufacturing exports from China drawn from using it’s enormous pool of low cost labour has allowed the global economy to benefit as this additional supply of low cost products has helped to bring down world inflation. But now the tide is turning and the massive container ships being loaded in ports around the country might well be sending us a unwelcome rise in cost-push inflation.

China’s economy at boiling point?

When is an economy over-heating? We hear this phrase a lot especially during a boom when we are told are growth is becoming unsustainable, unbalanced, excessive - sometimes all three! There is little danger of the UK economy over heating at present, if anything the risks of growth are firmly on the downside. But what about China? Deutsche Bank’s latest macroeconomic research hints that the rubicon has been crossed and that we can now describe China as an economy where boiling point has been reached.

Shopping in China

With continuing concerns in the UK, USA and other European economies such as Germany, the debate rumbles on as to whether countries such as China can provide the global demand necessary to keep world economic growth strong.

This week in The Economist, From Mau to the Mall examines prospects for the Chinese economy, and in particularly the balance of imports versus exports. China’s trade surplus is legendary, but data shows that imports (demand in China) are beginning to grow faster than exports (supply from China).

The significance of all this is that although China’s headline GDP growth is widely tipped to slow to 9-10% in 2008, if a bigger chunk of this growth comes from domestic consumption and investment, then in absolute dollar terms China could well contribute more to global demand this year than in 2007.

The full article can be found here.

What does China Think?

Whilst listening to the recent podcast of Start the Week, my attention was drawn to a book published at the end of the week entitled What does China Think by Mark Leonard. This looks a fascinating read, one I will try and squeeze in before next half of term kicks off! I was particuarly drawn to the random fact that because Shanghai is growing so rapidly maps of the city have to be changed every 2 weeks!!