Banking Across Borders: Are Chinese Banks Different?

Chinese banks have become the largest cross-border lenders to emerging markets and developing economies (EMDEs). Despite their different ownership structure, their type of global reach resembles that of advanced economies’ (AE) banks, with distance to their borrowing EMDEs less of a barrier than that of other EMDE banks and more like U.S. or European banks. While bilateral trade, FDI, and portfolio investment...

How Does Monetary Policy Affect the Asset Management Industry? Evidence from China’s Fund Managers

We conduct a novel systematic textual analysis of the discussion in the quarterly reports of China fund managers, from which we infer their near-term expectations for Chinese monetary policy. We show that this aggregate index of manager expectations performs well as a forecast of Chinese monetary policy, that fund managers act on these expectations, and that correctly anticipating shifts in policy improves fund...

Post-COVID-19 Reconfiguration of the Global Value Chains and China

The Growth and Geography of RMB Trading

The 2019 Bank for International Settlements Triennial Foreign Exchange Survey reveals two different trends in RMB trading in 2016–2019 compared to the previous three year interval—a slowdown both in growth and in geographic diffusion. Regarding the first trend, we argue the rapid growth of RMB trading into 2014 relied on a gradual appreciation trend that encouraged a one-sided RMB internationalization. Global trading in RMB resumed its growth in 2017...

Taxation Trends and Challenges in a Digital Economy — Implications for the People’s Republic of China

The digital economy is growing rapidly across the globe and, among developing countries, the PRC is a leader. Despite its promise, the global digital economy also poses many challenges, including tax base erosion and profit shifting. Given the initial efforts by the PRC to address these challenges, this post recommends that the country continues...

China’s Digital Economy: Opportunities and Risks

China’s digital economy has expanded rapidly in recent years, including both the emergence of new digital industries and the digitalization of traditional sectors. This brings significant opportunities but also potential risks. The blog discusses the pros and cons of digitalization and how the government can do better in maximizing the benefit while minimizing the risks.

The Impact of US-China Trade Tensions

US-China trade tensions have negatively affected consumers as well as many producers in both countries. The tariffs have reduced trade between the US and China, but the bilateral trade deficit remains broadly unchanged. While the impact on global growth is relatively modest at this time, the latest escalation could significantly dent business and financial market sentiment, disrupt global supply chains, and jeopardize the projected recovery in global growth in 2019.

China’s High Savings: Drivers, Prospects, and Policies

China’s high national savings rate—one of the highest in the world—is at the heart of its external/internal imbalances. High savings finance elevated investment when held domestically, and lead to external imbalances when they flow abroad. Today, China’s higher savings, compared to the global average, mostly emanate from the household sector, due to demographic...

The US-China Trade War Is Based on Misleading Statistics

General Motors and Apple sold more cars and iPhones in China than in the US, but their sales were not counted as US exports to China, as these were made and sold in China. Policymakers should look at both trade and local sales by foreign firms (the FDI channel) to gauge bilateral economic balance. We estimate that US firms sold more goods and services to China than Chinese firms sold to the US in 2017, once the FDI channel is taken into account.

Assessing China’s Financial Risk: Evidence from the Stock Market

VoxChina welcomes views from industry reports and policy reports.This piece summaries the views about China’s financial risk from - Hao Zhou, the PBC School of Finance at Tsinghua University, Haibin Zhu, J.P. Morgan and Xiangpeng Chen, the PBC School of Finance at Tsinghua University.