China may experience an economic crash within the next 2 years according to indicators showing similarities to pre-crash Japan. China's debt levels, property prices, and equity market movements match those of Japan prior to its 1990s crash. However, China is less likely than Japan to get stuck in a long recession due to higher urbanization potential, a larger services sector, and more favorable demographics. Even if China crashes, it has structural advantages that will help it recover faster than Japan.
Frequent u-turns in the Fed’s policy stance, central banks’ lack of monetary policy credibility, currency wars and gyrations in macro data are being blamed for financial market volatility and record lows in government bond yields. The forthcoming EU referendum has also buffeted UK financial markets.
But on the whole, financial markets and macro data have since 1 April showed a far greater degree of stability than in preceding quarters.
US interest rate, equity and currency markets have weathered the gyrations in the Fed’s policy stance and the ebbs and flows in US data. German and Japanese government bond yields have fallen but ultimately been less volatile than in Q1. The World Equity Index has also been constrained in a reasonably narrow range, thanks at least in part to signs that global GDP growth stabilised in Q1.
This relative stability has not been confined to the dollar. So far, Q2 2016 has been the least volatile quarter since January 2015 – as defined by the low-high range using daily data – for most major nominal effective exchange rates (NEERs). These include developed and EM currencies, as well as commodity and non-commodity currencies. Among G7 currencies, the euro NEER has been particularly stable in a 2.1% range.
The picture is also one of relative calm in emerging markets, with the pick-up in foreign capital inflows in April and June and in commodity prices since March helping to stabilise EM currencies without central banks having to draw on still significant FX reserves.
Commodity prices, including crude oil, have risen sharply so far in Q2 but their volatility has remained in line with historical standards, particularly in recent weeks. This has contributed to greater stability in commodity currencies, with the exception of the Australian dollar.
If anything, this lack of directionality has forced financial market players to be light-footed and adopt short-term tactical strategies. The question now is whether this relative calm is here to stay or whether it augurs more violent corrections as was the case earlier this year.
The UK referendum on EU accession has the potential to be far more destabilising to financial markets than the BoJ’s policy meeting on 16 June and in particular the Fed’s meeting the day before. While UK markets would likely feel the brunt of a decision to leave the EU, the euro would also likely weaken and global equity markets conceivably sell off.
The Fed’s policy meeting on 27th July could also prove disruptive at a time of potentially reduced summer-liquidity.
The document provides an overview of economic indicators and financial markets in November 2009. It notes that while the investment model showed weakness in October, the markets have rebounded. GDP growth was reported at 3.5% for Q3 2009, indicating the recession had ended. Manufacturing and services were growing, though consumer spending was lagging. Unemployment remained high at 9.8%, dampening consumer confidence. Global markets were mixed for the month.
While “Keep your eyes on the stars and your feet on the ground” sounds like a social media cliché, it was President Theodore Roosevelt who first uttered the phrase. It was good advice at the turn of the 20th century, and it still holds true today. As with catchphrases, economic cycles ebb and flow with time. Our 3rd Quarter Economic Update takes an interesting look at domestic and global economic health, and world markets.
The legacy of the dovish fed is set to continue this weekHantec Markets
After the FOMC monetary policy decision and Yellen’s press conference, the Fed made a staggering climb-down on its monetary policy. Has the Fed now got a credibility issue?
The document provides a global economic report covering indicators for major economies including the US, Canada, Europe, China, and others. It includes sections on stock market performance, US economic indicators such as employment and business activity, global financial markets, and economic data from other regions. Overall, the report analyzes the current state of the global economy and key metrics for assessing economic growth and recovery.
The Federal Reserve is unlikely to hike its policy rate from 0.25-0.50% at its 16th March 2016 meeting and may have little choice but to revise down its expectations to around 3 hikes for 2016 in its accompanying projections. In the 16th December “dot-chart”, the median expectation among the 10 voting Federal Open Market Committee (FOMC) members and 7 non-voting members was for four hikes this year (the weighted average was for a slightly less hawkish 91bp of hikes).
Frequent u-turns in the Fed’s policy stance, central banks’ lack of monetary policy credibility, currency wars and gyrations in macro data are being blamed for financial market volatility and record lows in government bond yields. The forthcoming EU referendum has also buffeted UK financial markets.
But on the whole, financial markets and macro data have since 1 April showed a far greater degree of stability than in preceding quarters.
US interest rate, equity and currency markets have weathered the gyrations in the Fed’s policy stance and the ebbs and flows in US data. German and Japanese government bond yields have fallen but ultimately been less volatile than in Q1. The World Equity Index has also been constrained in a reasonably narrow range, thanks at least in part to signs that global GDP growth stabilised in Q1.
This relative stability has not been confined to the dollar. So far, Q2 2016 has been the least volatile quarter since January 2015 – as defined by the low-high range using daily data – for most major nominal effective exchange rates (NEERs). These include developed and EM currencies, as well as commodity and non-commodity currencies. Among G7 currencies, the euro NEER has been particularly stable in a 2.1% range.
The picture is also one of relative calm in emerging markets, with the pick-up in foreign capital inflows in April and June and in commodity prices since March helping to stabilise EM currencies without central banks having to draw on still significant FX reserves.
Commodity prices, including crude oil, have risen sharply so far in Q2 but their volatility has remained in line with historical standards, particularly in recent weeks. This has contributed to greater stability in commodity currencies, with the exception of the Australian dollar.
If anything, this lack of directionality has forced financial market players to be light-footed and adopt short-term tactical strategies. The question now is whether this relative calm is here to stay or whether it augurs more violent corrections as was the case earlier this year.
The UK referendum on EU accession has the potential to be far more destabilising to financial markets than the BoJ’s policy meeting on 16 June and in particular the Fed’s meeting the day before. While UK markets would likely feel the brunt of a decision to leave the EU, the euro would also likely weaken and global equity markets conceivably sell off.
The Fed’s policy meeting on 27th July could also prove disruptive at a time of potentially reduced summer-liquidity.
The document provides an overview of economic indicators and financial markets in November 2009. It notes that while the investment model showed weakness in October, the markets have rebounded. GDP growth was reported at 3.5% for Q3 2009, indicating the recession had ended. Manufacturing and services were growing, though consumer spending was lagging. Unemployment remained high at 9.8%, dampening consumer confidence. Global markets were mixed for the month.
While “Keep your eyes on the stars and your feet on the ground” sounds like a social media cliché, it was President Theodore Roosevelt who first uttered the phrase. It was good advice at the turn of the 20th century, and it still holds true today. As with catchphrases, economic cycles ebb and flow with time. Our 3rd Quarter Economic Update takes an interesting look at domestic and global economic health, and world markets.
The legacy of the dovish fed is set to continue this weekHantec Markets
After the FOMC monetary policy decision and Yellen’s press conference, the Fed made a staggering climb-down on its monetary policy. Has the Fed now got a credibility issue?
The document provides a global economic report covering indicators for major economies including the US, Canada, Europe, China, and others. It includes sections on stock market performance, US economic indicators such as employment and business activity, global financial markets, and economic data from other regions. Overall, the report analyzes the current state of the global economy and key metrics for assessing economic growth and recovery.
The Federal Reserve is unlikely to hike its policy rate from 0.25-0.50% at its 16th March 2016 meeting and may have little choice but to revise down its expectations to around 3 hikes for 2016 in its accompanying projections. In the 16th December “dot-chart”, the median expectation among the 10 voting Federal Open Market Committee (FOMC) members and 7 non-voting members was for four hikes this year (the weighted average was for a slightly less hawkish 91bp of hikes).
The document provides a quarterly market review and commentary on global economic and investment trends in Q1 2016. It summarizes that equities seesawed amid recession fears and dovish central bank policy shifts. Safe haven assets like US Treasuries and gold rallied. Central banks in Japan and Europe took further stimulus measures with negative interest rates, but their effectiveness is uncertain given still tepid growth and inflation. The outlook remains volatile given political and economic uncertainties.
The US economy grew modestly in 2015 while global economic growth was the weakest since the financial crisis. US stock markets posted small gains for the year, but non-US developed and emerging markets largely declined. Commodity prices, especially oil, fell sharply. Central banks diverged in their monetary policies, with the Fed raising rates in December while other major banks eased policies. Market volatility increased during the year due to concerns over China's economic slowdown and currency devaluation.
This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets. The report also illustrates the impact of globally diversified portfolios and features a quarterly topic.
Trade negotiations and the Fed meeting key this weekHantec Markets
As signs that the global cyclical slowdown continue, it is a crucial week for markets with another meeting between the US and China on trade, Fed monetary policy, more Brexit debate and Non-farm Payrolls. We consider the latest outlook for forex, equities and commodities.
The document is a monthly report from Laird Research that provides economic data and analysis from around the world. It includes indicators for the US economy, global financial markets, key interest rates, inflation, and employment, business activity, consumption and housing data for the US. It also includes indicators for Canada, Europe, China, and other regions. The report finds that the US economy continues to grow while Europe faces challenges from fiscal austerity, and that lower oil prices are slowing growth in Canada but not creating a manufacturing boom.
Trump's tariffs driving a significant impact through marketsHantec Markets
The document provides a weekly economic and market outlook. It summarizes key economic data and events for the week, including the important US ISM non-manufacturing data on Monday. It then analyzes the outlook and risks for foreign exchange markets, equity indexes, commodities, and bonds. The author expects safe haven currencies like the yen and Swiss franc to perform well due to dovish central bank policies. Equities face downside risks from slowing global growth and trade tensions. Gold is seen as continuing to rise on falling real yields and trade uncertainty.
The Fed left its policy rate unchanged at 0.25-0.50%, as expected, and the 10 voting Federal Open Market Committee (FOMC) members and 7 non-voting members halved their median expectations of rate hikes in 2016 from four to two in their updated projections (see Figure 1). The Fed’s statement, projections and press conference had an undeniably cautious tone, with clear focus on global risks. The rally in US equities (to a new 2016-high) and 2-year rates (to a March low) and further depreciation in the dollar post meeting clearly indicate markets’ dovish interpretation (see Figure 2).
Alfred Wegener hypothesized that the Earth was once made up of a single large landmass called Pangaea. Wegener proposed the Continental Drift Theory which stated that the Earth's continents were joined together before drifting to their current positions.
La catedral de Reims se construyó entre 1211 y 1311. Fue diseñada originalmente por Jean d'Orbais y luego continuada por otros tres arquitectos, Jean-le-Loup y Gaucher de Reims. Es una de las catedrales góticas más importantes de Francia, conocida por ser el lugar de coronación de los reyes franceses.
The document provides a quarterly market review and commentary on global economic and investment trends in Q1 2016. It summarizes that equities seesawed amid recession fears and dovish central bank policy shifts. Safe haven assets like US Treasuries and gold rallied. Central banks in Japan and Europe took further stimulus measures with negative interest rates, but their effectiveness is uncertain given still tepid growth and inflation. The outlook remains volatile given political and economic uncertainties.
The US economy grew modestly in 2015 while global economic growth was the weakest since the financial crisis. US stock markets posted small gains for the year, but non-US developed and emerging markets largely declined. Commodity prices, especially oil, fell sharply. Central banks diverged in their monetary policies, with the Fed raising rates in December while other major banks eased policies. Market volatility increased during the year due to concerns over China's economic slowdown and currency devaluation.
This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets. The report also illustrates the impact of globally diversified portfolios and features a quarterly topic.
Trade negotiations and the Fed meeting key this weekHantec Markets
As signs that the global cyclical slowdown continue, it is a crucial week for markets with another meeting between the US and China on trade, Fed monetary policy, more Brexit debate and Non-farm Payrolls. We consider the latest outlook for forex, equities and commodities.
The document is a monthly report from Laird Research that provides economic data and analysis from around the world. It includes indicators for the US economy, global financial markets, key interest rates, inflation, and employment, business activity, consumption and housing data for the US. It also includes indicators for Canada, Europe, China, and other regions. The report finds that the US economy continues to grow while Europe faces challenges from fiscal austerity, and that lower oil prices are slowing growth in Canada but not creating a manufacturing boom.
Trump's tariffs driving a significant impact through marketsHantec Markets
The document provides a weekly economic and market outlook. It summarizes key economic data and events for the week, including the important US ISM non-manufacturing data on Monday. It then analyzes the outlook and risks for foreign exchange markets, equity indexes, commodities, and bonds. The author expects safe haven currencies like the yen and Swiss franc to perform well due to dovish central bank policies. Equities face downside risks from slowing global growth and trade tensions. Gold is seen as continuing to rise on falling real yields and trade uncertainty.
The Fed left its policy rate unchanged at 0.25-0.50%, as expected, and the 10 voting Federal Open Market Committee (FOMC) members and 7 non-voting members halved their median expectations of rate hikes in 2016 from four to two in their updated projections (see Figure 1). The Fed’s statement, projections and press conference had an undeniably cautious tone, with clear focus on global risks. The rally in US equities (to a new 2016-high) and 2-year rates (to a March low) and further depreciation in the dollar post meeting clearly indicate markets’ dovish interpretation (see Figure 2).
Alfred Wegener hypothesized that the Earth was once made up of a single large landmass called Pangaea. Wegener proposed the Continental Drift Theory which stated that the Earth's continents were joined together before drifting to their current positions.
La catedral de Reims se construyó entre 1211 y 1311. Fue diseñada originalmente por Jean d'Orbais y luego continuada por otros tres arquitectos, Jean-le-Loup y Gaucher de Reims. Es una de las catedrales góticas más importantes de Francia, conocida por ser el lugar de coronación de los reyes franceses.
Kylie Higgins has over 15 years of experience in IT, business analysis, and project management. She has worked in both government and commercial sectors. Her experience includes concept development, stakeholder engagement, software development, database design, and project management. Currently she works as a senior business analyst at SA Power Networks where she works on multiple projects involving internal IT, external suppliers, and business areas.
Este documento compara y contrasta diferentes enfoques educativos basados en tecnología para el siglo XXI. Brevemente describe los entornos personales de aprendizaje, sistemas de gestión de aprendizaje, y cursos masivos en línea abiertos, destacando sus ventajas como la flexibilidad y acceso global, pero también desventajas como altas tasas de abandono y dificultades de evaluación.
Zona Intangible petroleras Yasuni by Joselyn YaguanaJoselyn Yaguana
El documento describe el Bloque 31 ubicado en la provincia de Orellana en la Amazonía ecuatoriana. El 70% del bloque se encuentra dentro del Parque Nacional Yasuní. El bloque está habitado por la comunidad Huaorani de Kawimeno. En 1996, el bloque fue adjudicado a Pérez Companc S.A. En 1999, se declaró la Zona Intangible para proteger a los grupos Huaorani aislados de Tagaeri-Taromenane. En 2004, se formó una comisión interministerial para proponer los límites de
El documento describe la evolución de la investigación y la innovación en el Sistema Sanitario Público de Andalucía desde 2006 hasta la actualidad. Se ha pasado de una situación inicial con bajos niveles de publicaciones científicas e inexistencia de transferencia de tecnología, a contar actualmente con una amplia red de infraestructuras de investigación biomédica, un fuerte incremento de la inversión y producción científica, y numerosos resultados en transferencia tecnológica como patentes, spin-offs y acuerdos con empresas
Herbert Edwards has over 20 years of experience exceeding annual revenue goals in business software, IT services, and data solutions. He has a track record of leading high-performing sales teams to achieve multi-million dollar quotas. His expertise includes technical consultative sales, cloud solutions, contract negotiation, market segmentation, and client needs assessment.
Haifa Munir Ahmad AL Bakri is a Jordanian national born in 1974 in Kuwait. She has a Master's degree in computer technology from Garrington University in America and a Bachelor's degree in Engineering Geology from Yarmouk University in Jordan. She has over 10 years of experience teaching geology, physics, mathematics, and science in schools in the UAE and Jordan. She is skilled in Arabic, English, computer software, and has experience in research, exhibitions, workshops, and lectures related to geology, astronomy, and education.
Aprender las vocales es fundamental para el desarrollo de la lectoescritura y permite que los estudiantes progresen de manera integral con la ayuda de las tecnologías de la información y la comunicación. El documento propone colorear cada vocal con un color diferente, escribir la vocal inicial que corresponde a cada imagen, y unir con una línea la vocal a la imagen correspondiente, para practicar y evaluar el reconocimiento de las vocales.
Este documento resume la normatividad aplicable al proceso de habilitación de prestadores de servicios de salud en Colombia. Describe las leyes, decretos y resoluciones que rigen aspectos como instalaciones físicas, recursos humanos, medicamentos, procesos asistenciales, entre otros. El objetivo es que el verificador conozca toda la regulación relevante para realizar correctamente su labor de inspección y garantizar el cumplimiento de los requisitos exigidos.
Irena Sendler era una trabajadora social polaca que salvó a 2500 niños judíos del gueto de Varsovia durante la Segunda Guerra Mundial escondiéndolos y sacándolos del gueto. A pesar de sus heroicas acciones, Irena Sendler nunca recibió el Premio Nobel de la Paz a pesar de haber sido nominada.
Comunicado alianza AFUSBIF, AFUSUP y AFSVSvidasindical
Las asociaciones de funcionarios de las Superintendencias de Pensiones, Valores y Seguros y Bancos e Instituciones Financieras anuncian la formación de una Alianza Estratégica de Cooperación e Integración. La alianza busca enfrentar los desafíos que impone su función de servidores públicos y apoyar iniciativas de modernización y reforma regulatoria de los mercados, siempre resguardando los intereses de los ciudadanos. Solicitan una reunión con los futuros ministros de Hacienda y Trabajo para estable
Aranca Views | China – The Japan of the ‘80s?Aranca
China’s recent strong growth is similar to those behind Japan’s economic performance in the 1980s. The Aranca article focuses on the factors where China differs from Japan and some striking similarities in the two economies.
1) The global investment landscape may realign in 2016 as major central banks change course, with the US expected to raise rates, Japan potentially tapering QE, and China's reforms promoting growth.
2) China has successfully rebalanced its economy away from heavy industry and towards services, accounting for half of GDP, but headlines still focus on declines in manufacturing.
3) Infrastructure investment in China has stabilized and signs point to a potential cyclical upswing in housing, which could drive broader economic growth and commodity demand in the coming year.
This document discusses top trends to watch in 2015 in the Asia Pacific real estate market according to a Cushman & Wakefield report. The key points are:
1) Regional economic growth is expected to moderate around 5.0-5.3% as China's growth slows, but domestic demand and policy support will help other economies.
2) Office leasing activity is projected to rebound across many markets in the region due to improving fundamentals, with emerging markets seeing the strongest gains. Vacancy rates may rise in some emerging cities.
3) Non-central business district office locations will continue attracting tenants by offering lower rents and desirable locations compared to prime CBD areas.
China - A Country in Transition to a New Normaltutor2u
This is a revision presentation on key developments in the Chinese economy - designed for A level economics students preparing for their exams in June 2016
http://pwc.to/1lN91cC
Comme tous les mois, l’équipe d’économistes de PwC publie une note sur la situation macro-économique mondiale. Ce mois-ci, focus sur l’accroissement des inégalités dans les pays matures ; les incertitudes concernant la croissance chinoise ; et les prévisions de croissance pour la Grande-Bretagne.
geopolitics of china, political weight index, governmental weight index, budget, budget per capita, china political economy
http://iilss.net/
http://maynter.com
Global aging demographics will place sharply higher demands on global capital markets in coming decades. The number of retirees is projected to more than double by 2050, growing from 8% to 18% of the world's population. This will require massive increases in retirement income - S&P Capital IQ estimates over a 20-fold increase for India and over a 15-fold increase for China. With retiree populations increasing 40-205% across countries by 2050, retirees will become a much larger portion of capital market participants globally. Meeting these retirement income needs will depend on growth in personal savings, financial market capitalization, and reasonable average returns.
Is There a Bubble in the Chinese Asset Market?neerajjain09
The document discusses whether there is a bubble in the Chinese asset market by comparing China's economic growth and development to Japan's experience prior to its financial crisis in the 1990s. It notes that both countries experienced rapid growth and loose monetary policy that led to a surge in asset prices. However, China's growth has been steadier and driven more by domestic demand rather than speculation. In the short term, continued growth is expected to absorb price increases, but over the longer term, there are signs a real estate bubble may be forming if current trends continue without adjustments.
China's Current Challenges – A Dummies GuideAmir Khan
China's economy has been slowing in recent years due to both cyclical and structural factors. Some of the key structural challenges include demographic changes as China ages, excessive debt accumulation, and diminishing returns from investment and catch-up growth. These challenges are of global concern given China's large role in the world economy. Policymakers are trying to stabilize growth through fiscal and monetary stimulus, but reforms to address underlying issues face limitations.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The document provides an overview and outlook of the Singapore residential property market in 2015. It finds that the market will likely remain weak in 2015, with private home prices expected to soften by 4-6% and HDB resale prices by 6-8%, due to three main factors: 1) the government is unlikely to ease property cooling measures as the market correction has not been significant enough; 2) there remains weak demand and massive upcoming supply, which could increase vacancy rates above 10%; and 3) the threat of rising interest rates from an expected US rate hike makes mortgages more expensive and lowers rental returns. The outlook paints a bleak picture for the residential market in 2015.
China in 2010 displaced Japan to become the second biggest economy in the world. Both countries are the first and second largest economies in the Asia region and both also are part of the world factory, centred in China, that it is Asia, especially East Asia.
Both nations have a long historical relationship but complicated by issues that have to do with Japan invasion of China in the first half of the XX century and now the growing assertiveness of China in the region. Both are the engines of growth in the East Asa region. Japan used to be the largest but now China is becoming it. China is already the biggest trade partner of most countries in the region and its investment is increasing, even if still is behind Japan in this field.
So, a stable relationship between China and Japan is a condition for the continuous growth of the East Asia region. In this article a review of China Japan relation will be done. First trade relationship between China and Japan will be seen, then investment, then exchange of people, then economic aid, and last the political relations mong them will be assessed. A conclusion will follow.
- The document is a 2016 outlook report from First National Bank's wealth management division.
- It predicts another year of low stock market returns and increased volatility as the Federal Reserve raises interest rates.
- The US economy is expected to continue expanding at a moderate 2.5% pace, supported by a strong job market but facing headwinds from weak business investment and slowing growth in emerging markets like China.
- Inflation is predicted to remain moderate due to factors like the strong dollar and low commodity prices.
The China Compass is a dynamic presentation of the latest macroeconomic data for a wide range of indicators for China, as well as other major world economies. It presents a comprehensive picture of the ever-changing and evolving Chinese landscape and contains up-to-date statistics, topical themes and insights. It is presented in a reader-friendly format as a useful desk reference for executives with a China agenda.
The China Compass - Figures, Forecast and Analysis - January 2014Daniel Galvez
The China Compass is a dynamic presentation of the latest macroeconomic data for a wide range of indicators for China, as well as other major world economies. It presents a comprehensive picture of the ever-changing and evolving Chinese landscape and contains up-to-date statistics, topical themes and insights. It is presented in a reader-friendly format as a useful desk reference for executives with a China agenda.
Since our last edition, developed economies have slowly recovered from the after-effects of the global financial crisis, leading to a brighter global economic outlook. However, with China's GDP growth easing to 7.8% in 2012 and 7.7% year-on-year in the first three quarters of 2013, corporations and governments alike are grappling with the realisation that China's era of double-digit growth is over, and are searching for clarity to appropriately shape their future agenda with and in China.
Internally, China's fifth generation of leaders led by President Xi Jinping must convince an immense bureaucracy to implement an ambitious economic blueprint for the next decade. The blueprint includes long-anticipated economic and social reforms aimed at keeping China's increasingly complex economy on a path of sustainable growth.
The theme for this edition is 'China's Ongoing Transformation', which covers China's changing political, economic and social patterns.
The China Compass - Figures, Forecast and Analysis - January 2014William Dey-Chao
The 7-member Standing Committee of the Politburo is the highest decision-making body in China
Source: PRC government website; The Beijing Axis Analysis
The Beijing Axis 13
The new leadership has outlined an ambitious reform agenda to shift China
towards a more sustainable growth model
Key Elements of China’s Reform Agenda
Political Reforms
Economic Reforms
Social Reforms
- Rule of law
- Constitutional reform
- Separation of powers
- Grassroots democracy
- Transparency
- Anti-corruption drive
- Market-based allocation of
resources
- Interest rate liberalisation
- Exchange rate flexibility
- SOE reform
- Private
The document provides an outlook for 2016, summarizing that:
1) China has committed to ensuring 7% growth for the immediate future through government intervention, but rebalancing away from investment is necessary long-term which will slow growth rates.
2) In Europe, GDP growth has accelerated from under 1% to 1.6% since late 2014, supported by ECB monetary easing expanding credit.
3) In the US, growth in construction employment and spending is contributing to a 5% rise in personal consumption and will likely continue supporting the economy in 2016.
The document discusses business relationships and the use of technology. It talks about how business should focus on treating partners as equals rather than customers, and using technology like social media to strengthen relationships rather than isolate people. It suggests becoming an expert at connecting people using technology to both increase the number of connections and enhance their quality.
http://pwc.to/1h2k2l4
Après cinq années de crise, de récession et de croissance décevante, nous pensons que les pays développés peuvent maintenant approcher de la "vitesse de libération" nécessaire pour une reprise durable.
1. China
China: Not the
Next Japan
April 2016
CAFE
MONTHLY
“Our greatest glory is not in never falling, but in rising every time we fall.”
- Confucius
2. MENU OF THE MONTH
The China Observers
Chua Jie Xuan
Foo Cai Yu Inez
Lam Qi Koi
Roy Yeo Fu Qiang
Tian Chang
Table of Contents
China: The Next Japan?
Our Central Theme.........................................................................................................1
China: A Crash in Sight
Over-reliance on Credit for Economic Growth...............................................................2
Growth in Property Prices Similar to Levels in Japan in 1990s ......................................3
Matching Movements in Equity Market ........................................................................4
China: A Different End in Sight
High Urbanization Potential to Stimulate Growth .........................................................5
Service Sector Growth Potential to Aid Recovery..........................................................6
Aging Population Drags Recovery ..................................................................................7
Conclusion: China Not the Next Japan
China Still has 2 Years to Go...........................................................................................8
Even If China Crashes, It will Recover.............................................................................8
3. 2016 MONTHLY REPORT: CHINA Page | 1
COVER STORY
A steep increase in real estate prices coupled with a strong equity market rally in
China seem to resemble conditions not different from what Japan witnessed
before the start of the “Lost Decade”. As a result, economists have issued
warnings that China will be the next Japan. In this feature, we will examine the
arguments put forth by proponents of this, and point out how China will not
necessarily go down the same path as Japan.
China: The Next Japan?
Our Central Theme
China has come a long way and grown to be the second largest
economy in the world since Deng Xiaoping’s reforms in 1978.
However, the slowdown in economic growth and the rising debt in
the market in recent years have brought in a wave of uncertainty
over the economic health of China. Increases in asset prices and an
equity market rally that resemble conditions observed in Japan
before the lost decade have caused economists to put forth a theory
– China will be the next Japan.
As much as there is a possibility of a crash looming ahead for China,
our team believes that there is still 2 years to go. Furthermore, unlike
Japan, China will have the necessary infrastructure and policies to
recover from any possible crash.
This issue consists of two core segments: (1) indicators showing how
long it will be before China crashes, and (2) factors why we believe
China will be able to recover even if it were to crash.
4. Page | 2 2016 MONTHLY REPORT: CHINA
Over-reliance on Credit for Economic Growth
Prior to the crash in 1990, Japan accumulated a high level of debt at
around 214%. This was the result of a loose monetary policy. Similarly,
recent monetary easing in China has caused debt in China to reach levels
similar to that of Japan prior to the crash.
Graphically, it can be seen from Figure 1 that China’s Debt to GDP ratio in
2015 is at 209% and is equivalent to that of Japan in 1989, a year before
the collapse of the Japanese asset price bubble. Drawing upon this
reference, proponents may argue that given the rising trend of China’s
debt now, it is likely that China will reach the peak of the crisis by the end
of 2016, slightly lesser than a year from now.
Figure 1: Japan vs China, Corporate and Household Debt / GDP
Comparing Japan and
China’s Debt/GDP Ratio, it
seems that a crash in China
is due to occur in 2016.
COVER STORYCOVER STORY
China: A Crash in Sight
With high credit reliance, turmoil in the equity market as well as overvalued
properties, China today does seem to possess some traits similar to Japan in the
1980s. These similarities underlie proponents’ call that China is the next Japan.
We will use these indicators to project when China will head into a crash.
Figure 1: China vs Japan, Corporate and Household Debt % of GDP
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998
100
140
180
220
100
140
180
220
2007 2009 2011 2013 2015
China Japan
Source: Bank For International Settlements
1 year
5. 2016 MONTHLY REPORT: CHINA Page | 3
COVER STORY
Figure 2: China vs Japan Asset Prices
China: A Crash in Sight
Growth in Property Prices Similar to Levels in
Japan in 1990s
As evident in Figure 2, Japanese asset prices increased 60% to its peak in
1990 as a result of an expansionary monetary policy which financed real
estate development. The same trend is observed in China where the recent
interest rate cuts in 2015 contributed to a rise in housing prices. The growth
of the property bubble was further accelerated as the Chinese government
reduced property transaction taxes and cut down-payment requirements.
With reference to Figure 2, it can be deduced that China’s current 50%
growth in property prices is comparable to the situation of Japan in 1990, 1
year before the collapse of the asset price bubble. Going forward, the easing
requirements to buy property may contribute to further increases in China’s
property prices. With the upward trajectory of housing prices, China may
head into the peak of the crisis in 2017.
1982 1984 1986 1988 1990 1992
100
120
140
160
180
100
120
140
160
180
2005 2007 2009 2011 2013 2015 2017
China Housing Price Japan Land Price
1
year
Source: Thomson Reuters Datastream
Year2005=100
Year1982=100
6. Page | 4 2016 MONTHLY REPORT: CHINA
Matching Movements in Equity Market
The recent market correction in 2015 for China resembles the pattern observed
in Japan in 1988. This period is highlighted in the shaded region in Figure 3
where there is a dip in the equity market after a relatively long period of
stability. Relative to their respective base years, the period saw China rise by
130% and fall 80%, whereas Japan increased by 180% and decreased by 30%.
As such, the matching movement and pattern in the equity market seems to
show that China has another 3 years to go before it crashes, assuming that it will
crash when it rises to a similar level seen in Japan in 1990.
Figure 3: Shanghai SE Index vs Nikkei 225 Index
COVER STORY
China: A Crash in Sight
Source: Thomson Reuters Datastream
1980 1982 1984 1986 1988 1990 1992
0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
2009 2011 2013 2015 2017 2019 2021
Shanghai SE Index Nikkei 225 Index
Year2009=100
Year1980=100
3 years
7. 2016 MONTHLY REPORT: CHINA Page | 5
COVER STORY
Favourable demographic
trends and strong growth
potential serve to kick start
China’s recovery should it
crash.
COVER STORY
Despite indications that the Chinese economy may crash, further analysis shows
why China might not be the next Japan from a recovery standpoint. Unlike Japan
which has been trapped in a recession for decades, China will have significant
potential for recovery due to structural traits different from that of Japan.
China: A Different End in Sight
High Urbanization Potential to Stimulate Growth
China’s urbanization rate today is still far below that of Japan in 1990 as
illustrated in Figure 4. At its current level of 55%, China has another 25% of
headroom to grow in terms of urbanisation to reach Japan’s level in 1990.
Such a low urbanisation rate in China represents vast potential for growth as
labour inflows into urban areas will contribute to increased consumption.
Moreover, with the lifting of Hukou restrictions which allow the relocation of
rural workers into cities, more will be able to enjoy higher wages and
education. This contributes to a higher skilled labour force and increases
production efficiency. All of the above provide opportunities for growth and
the potential to help China to recover from the recession.
Figure 4: China vs Japan Urbanisation (%)
1976 1978 1980 1982 1984 1986 1988 1990
60
65
70
75
80
20
40
60
80
100
2000 2002 2004 2006 2008 2010 2012 2014
China Japan
25%
Source: Thomson Reuters Datastream
8. Page | 6 2016 MONTHLY REPORT: CHINA
COVER STORYCOVER STORY
China: A Different End in Sight
Service Sector Growth Potential to Aid Recovery
China’s service sector remains smaller than that of Japan in 1990 as seen in
Figure 5. Compared to Japan’s service sector which made up 60% of its GDP in
1990, China’s service sector only contributes to 48% of its GDP. To reach
Japan’s level in 1990, China has another 12% to go. This provides ample room
for China’s continued growth in the service sector.
Growth in the service sector allows job creation and employment opportunities
for unskilled workers. It is also considered an indicator of economic progress.
The increasing trend highlights China’s focus of shifting labour towards the
higher value-added service sector as a key driver of future economic growth.
Figure 5: China vs Japan, % share of GDP for Service Sector
1976 1978 1980 1982 1984 1986 1988 1990
35
40
45
50
55
60
65
35
40
45
50
55
60
65
2000 2002 2004 2006 2008 2010 2012 2014
China Japan
12%
Source: Thomson Reuters Datastream
9. 2016 MONTHLY REPORT: CHINA Page | 7
COVER STORYCOVER STORY
1976 1978 1980 1982 1984 1986 1988 1990
8
10
12
14
16
18
8
10
12
14
16
18
2000 2002 2004 2006 2008 2010 2012 2014
China Japan
5%
Source: The World Bank
Figure 6: China vs Japan, Dependency Ratio, Old (%)
China: A Different End in Sight
Aging Population Drags Recovery
An aging demographic has contributed to sluggish recovery for Japan since its
crash in 1990 as it poses challenges related to declining consumption levels and
a general fall in workforce productivity. Such an aging population is seen from
the rising old age dependency ratio in Japan which measures the number of
elderly people as a share of those of working age (Figure 6).
However, an analysis of Figure 6 shows that there is a gap of approximately 5%
between China’s current old age dependency ratio, and that of Japan in 1990.
The younger demographics in China imply higher consumption and productivity
levels. Moreover, with the relaxation of the one-child policy, the dependency
ratio will not likely increase at a pace as significant as that seen in Japan post-
1990.
As a result, even if China were to suffer from an economic crash today, it
remains better positioned in avoiding the deflationary spiral seen in Japan.
10. Page | 8 2016 MONTHLY REPORT: CHINA
COVER STORY
Indicators Years to Reach Japan’s Level
Credit Situation 1
Property Valuation 1
Equity Market 3
Average 2 (Rounded up)
Even If China Crashes, It will Recover
Assuming that China was to go into a recession, we believe that it will be able
to recover faster than Japan.
Factors Difference in Potential Compared to Japan’s Level in 1990
Urbanisation 25%
Service Sector
Growth
12%
Aging Population 5%
Japan has largely been unable to restart its economy due to underlying
structural problems that will take years to resolve. However, given China’s
current rate of urbanisation, service sector growth, and more favourable
demographics as compared to Japan, there exists potential for China to tap
on by implementing suitable economic policies to drive growth.
Conclusion: China Not the Next Japan
China Still has 2 Years to Go
Purely using Japan as a basis for comparison and assuming that the economic
crash will happen when the economic indicators reach levels seen in Japan in
1990s, our analysis shows that China will need another 2 years before it
crashes.
11. 2016 MONTHLY REPORT: CHINA Page | 9
Contact Details
Chua Jie Xuan
Foo Cai Yu Inez
Lam Qi Koi
Roy Yeo Fu Qiang
Tian Chang
Address: Centre for Applied Financial Education (CAFE)
Nanyang Business School
Nanyang Technological University
50 Nanyang Avenue
Singapore 639798
Tel: (65) 6790-4250
Disclaimer
This report was produced by students of the Platform-Based Learning track in Banking and Finance under the
Centre for Applied Financial Education (CAFE) at the Nanyang Business School in the Nanyang Technological
University, Singapore.
This report may not be reproduced (in whole or in part) or delivered or transmitted to any other person without
prior consent from CAFE.
This report does not constitute a personal solicitation or a recommendation to buy/sell any securities or take into
account investment objectives, financial situations, or needs of the reader.
Information and opinions contained in this report are published for reference only and are not to be relied upon
as authoritative or without the reader’s own independent verification, or taken in substitution for the exercise of
judgment by the reader.
JCHUA026@e.ntu.edu.sg
IFOO001@e.ntu.edu.sg
QLAM001@e.ntu.edu.sg
RYEO004@e.ntu.edu.sg
TIAN0068@e.ntu.edu.sg
12. Page | 10 2016 MONTHLY REPORT: CHINA
REFERENCES
Blomström, Magnus. 2003. Structural Impediments to Growth in Japan.
Accessed 3 March, 2016.
http://www.nber.org/chapters/c9570.pdf.
Creehan, Sean. 2015. Why We Shouldn’t Invoke Japan’s “Lost Decade” as
China’s Future. 10 August. Accessed 3 March, 2016.
http://www.frbsf.org/banking/programs/asia-program/pacific-
exchange-blog/why-we-shouldnt-invoke-japans-lost-decade-as-
chinas-future/
Dexter Roberts, The Chinese Can’t Kick Their Savings Habit, (Bloomberg),
May 1, 2015, http://www.bloomberg.com/news/articles/2015-05-
01/chinese-consumers-cling-to-saving-suppressing-spending
Economist, The. 2014. End of the golden era. 31 May. Accessed March 3,
2016. http://www.economist.com/news/finance-and-
economics/21603021-chinas-property-market-cooling-long-last-
end-golden-era.
Fortin, Aurélien. 2009. “Japan's changing labour market and how it is
affecting its growth model.” September. Accessed 3 March, 2016.
https://www.tresor.economie.gouv.fr/file/327023.
Fukao, Kyoji. 2014. The Structural Causes of Japan’s Lost Decades.
Accessed 3 March, 2016.
http://iao.cnrs.fr/documents/doc/Fukao2014worldklems.pdf.
Lam, Raphael W. 2015. “China’s Labor Market in the “New Normal”.” July.
Accessed 3 March, 2016.
https://www.imf.org/external/pubs/ft/wp/2015/wp15151.pdf.
Stephen Roach, Will China’s Shift to a Consumer-Oriented Economy
Succeed, January 28, 2016,
http://www.pbs.org/newshour/making-sense/will-chinas-shift-to-
a-consumer-oriented-economy-succeed/
Tsutsui, W. M. (1999). Banking in Japan: Japanese banking in the high-
growth era, 1952-1973. London: Routledge.
Yip, P. S. (2008). Exchange Rate Systems and Policies in Asia. World
Scientific.