China

China’s 3 trillion dollar question

We face the same scenario year after year: the Christmas holidays have only just ended, the New Year hangover is cured and the first resolutions for the New Year thrown overboard, when China attracts attention with alarming headlines. Unlike the doomsday mood of January 2016, the current uncertainty is no more than a storm in a teacup. Rather than being worried about the global implications of a hard economic landing in China, markets are currently more concerned about the lack of success in the relentless battle to stem the outflow of capital. China’s most recent reserves data are rubbing salt in the wounds again this year and bringing China’s intervention policy to the international stage. Even though China’s reserves just about managed to stay above the psychologically important USD 3,000bn mark, the question is how far can they fall before the situation becomes precarious. The ARA (Assessing Reserve Adequacy) is…

Trend reversal on the horizon for emerging markets – positive effect for developed countries

The global economy simply does not want to swing into motion; global trade is stagnating. The central banks are doing what they can to support economic development. Calls are now growing loud for governments to push start the economy through higher public spending. However, in the absence of any perceptible economic recovery in the large emerging markets, the successes of these measures will be short lived. In spite of this, a trend turnaround is slowly emerging in these countries, which should improve the global economic outlook. Economic development in most of the big emerging markets has been anything else but positive in the last two years. The crisis in for example Brazil, Russia and South Africa took its toll on the glowing reputation of the „growth markets“. Even China, which has been the driver of global growth for a long time now, cannot avoid the trend towards consistently lower overall…

China: High industrial sentiment – just a flash in the pan?

The latest survey findings in China were a real surprise this morning: The sentiment figures polled by private service provider Markit for manufacturing made a real leap in July and, starting from the relatively low level of 48.6 points, jumped two full index points to 50.6 points. In other words, for the first time in one and a half years the indicator is now back above the growth threshold of 50 index points, and last saw such a strong surge back in summer 2013. Almost all the sub-components of the purchasing manager index improved on the month, and most of all the sub-indices for production output and new orders. So is everything in fine fettle in China? We did not expect a rise in the indicator, but would not take the current surprising brightening in sentiment to mean that we should opt for a more upbeat assessment of China’s economic…

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