Xi’s 2022 GDP target will be moment of truth 20 Dec 2021 One of the Chinese president’s signature policy initiatives was to curb property-related risks. That implies slower but higher quality growth: 4% or so in 2022. Outside advisers are pushing for more. The final economic decision will signal the extent of Xi Jinping’s power.
Take China’s easing signals with a grain of salt 7 Dec 2021 Beijing is flagging a fresh focus on economic stability as growth slows, dropping tough talk about tech monopolies while pumping $188 bln into banks. Some battered sectors will get political breathing room, but this probably isn’t the sort of stimulus investors are looking for.
China property market faces more nationalisation 6 Dec 2021 Evergrande, the country’s most indebted developer, has admitted it might formally default. With $10 bln in property bonds maturing in January alone, officials are under pressure to keep the sector from collapsing. The most expedient solution is to put more housing in state hands.
Bigger China property risk would be Xi blinking 11 Nov 2021 Worries about real estate contagion are growing, including at the U.S. Fed. Direct foreign exposure to the sector is limited, but it could drag down trade and investment portfolios. If Beijing relaxes its hard line, however, there’s a danger it will aggravate global inflation.
China property chaos unearths insurance landmines 10 Nov 2021 The $2 bln developer Yango is scrambling to avoid default. But a 2020 share sale to backer Taikang Life puts it on the hook to pay out generous dividends. Such opaque debt-like equity deals with insurers are common in the sector. They threaten to undermine restructuring efforts.
Chancellor: Japan tortoise will outpace U.S. hare 3 Nov 2021 When it comes to future investment returns, that is. Japan’s disdain for shareholders is largely to blame for its underperforming stock market. But now it’s America that is embracing stakeholder capitalism while Japan is slowly tilting towards the interests of equity owners.
Rishi Sunak bets on Goldilocks economy 27 Oct 2021 The UK finance minister is relying on tax hikes and an economic rebound to spend more while shrinking the budget deficit to 3.3% of GDP in the next fiscal year. Hopes of pre-election giveaways hinge on easing supply disruptions, lower inflation and solid growth. It’s a long shot.
Turkey goes deeper into parallel monetary universe 23 Sep 2021 Ankara cut its main policy rate to 18% from 19%, kowtowing to President Erdogan just as other central banks take the opposite tack. A weaker lira and soaring energy bills add to the economy's inflation pains. With two years to another election, there’s little respite in sight.
Rishi Sunak pays if BoE inflation bet goes awry 22 Sep 2021 Surging prices mean the UK finance minister has to pay more interest on outstanding debt. Blame Britain’s love of bonds tied to inflation. The bill will be even bigger if price pressures are more stubborn than the Bank of England expects, forcing hasty monetary policy tightening.
Kiwis show world how to deliver sharp policy jolts 14 Jul 2021 New Zealand’s central bank is suddenly halting bond buying in a sign that it may soon raise interest rates. It’s a contrast to the long advance notice that Fed Chair Jay Powell or ECB boss Christine Lagarde need to give investors. The country’s relatively healthy finances help.
Biden places $4 trln bet on outsmarting the rich 29 Apr 2021 The U.S. president’s education, childcare and infrastructure sprees are supposed to juice economic growth, while being paid for by taxing the wealthy and companies. How well that works depends on whether plutocrats behave as planned. They have a big incentive to act differently.
Turkey’s soft capital controls are transitory fix 29 Mar 2021 Subtle curbs that make it harder to sell the lira will slow its fall. They won’t be enough if the central bank’s new boss starts cutting rates under political pressure. President Tayyip Erdogan can impose tougher restrictions but will hurt the economy if he is too heavy-handed.
China’s dovish target hides hawkish fist 10 Mar 2021 China won’t sweat meeting its 6% GDP growth target this year given 2020’s low base plus ample fiscal support. The low bar gives President Xi Jinping room to keep up pressure on bad debt and crack down on misbehaving industries. For investors that means more volatility.
Chancellor: A bear market in bonds is beckoning 2 Mar 2021 Bond bull runs tend to last for decades, making it nearly impossible to accurately predict a turning point. But recent fixed-income extremes, together with the complacent attitude of central bankers and investors, suggest history’s greatest bond boom has passed its sell-by date.
The Exchange: The post-pandemic global economy 2 Mar 2021 Policymakers will face tricky choices about when to withdraw massive policy support as economic recovery kicks in. BNP Paribas’ group chief economist, William De Vijlder, joins Swaha Pattanaik to discuss their options, the focus on inclusive growth and the outlook for inflation.
The Exchange: Tobias Harris 23 Feb 2021 The biographer of former Japanese Prime Minister Shinzo Abe speaks with Pete Sweeney about the country’s struggles. Harris argues Abe’s successor Yoshihide Suga could push harder on clean energy and economic reform. And if the Olympics get cancelled, most Japanese won’t mind.
Cash handouts are Biden rescue plan’s weak link 4 Feb 2021 The Democratic president’s proposal to send $1,400 to millions of Americans is a big sticking point to a deal with Republicans. Compromising on who qualifies might help clinch an accord. Being pickier about eligibility will also prevent the wealth gap from growing even wider.
Biden’s relief package comes with political price 1 Feb 2021 Democrats want to go it alone on a $1.9 trln economic rescue. With a workaround they can probably pass some measures, like direct payments to households, even if Republicans protest. Minimum-wage hikes, though, may be out of reach. And the effect will be more ugly partisanship.
The Exchange: Too much stimulus stores up big risk 26 Jan 2021 That’s the view of Oliver Baete, CEO of Allianz. Markets are pricing in vaccination perfection, as they’ve grown dependent on central bank and government largesse, he tells Rob Cox. But for the $97 billion German insurer, there’s still opportunity to be had in the year ahead.
Janet Yellen will bring back benign dollar neglect 30 Nov 2020 President-elect Joe Biden’s Treasury secretary pick is going to have less sway over the currency than she did as Fed boss. Yellen is likely to stick to bland mantras and focus on getting fiscal policy right. That will be a welcome change from the tack taken under Donald Trump.