China

China’s central bank appears increasingly likely to ease its monetary stance in the fourth quarter, according to Goldman Sachs, as economic momentum slows and policymakers face mounting pressure to support growth. The forecast includes a 10-basis-point policy rate cut and a 50-basis-point reduction in the reserve requirement ratio, which could come as year-on-year growth slows sharply towards 4 per cent from a high base last year, a note released on Saturday said. “But the data-dependent nature of PBOC decision-making leaves open the risk of no action if full-year growth stays on track for the ‘around 5 per cent’ target,” analysts said in the note. The projection followed the central bank’s third-quarter Monetary Policy Committee meeting held on Tuesday, when officials mainta...

China’s industrial policy is not well understood. The fiscal price tag, highlighted in the latest IMF report that Alphaville covered on Tuesday, is eye-poppingly large at around 4.4 per cent of GDP. And the Fund reckons it costs the country a further 2 per cent points of GDP each year in lost productivity. The impact of Chinese industrial policy on the world economy is so large that Donald Trump’s tariffs are, by comparison, a minor nuisance. America’s roughly 8 per cent share of world imports is less than half of China’s share of world exports. And the industrial policy-export nexus is not only aggravating China’s own domestic systemic problems, but becoming increasingly problematic for a growing number of countries. © Brad Setser/Council for Foreign RelationsThe economist Barr...

Competition in China is often far more cutthroat than in the United States. America has a handful of carmakers; China has more than 100 electric vehicle makers struggling for market share. China has so many solar panel makers that they produce 50 percent more than global demand. About 100 Chinese lithium battery producers churn out 25 percent more batteries than anyone wants to buy. This forces Chinese manufacturers to innovate, but it also leads to price wars, losses and bad debt — and that’s becoming a problem. China is heading toward deflation, the often catastrophic downward spiral of prices that sank Japan in the 1990s. Its leaders are blaming a culprit they call “involution” (“neijuan” in Mandarin), a term that has come to mean reckless domestic competition. They want to r...