Baltic Business Research

Sammanfattning  

Finansmarknaderna har blivit oroliga över Kinas obalans. Dessa obalanser innebär dock definitivt ingen nyhet – trots alltmer kortsiktig inverkan på de globala finansmarknaderna. En mer noggrann Kinaanalys har forsummats alltför länge utanför Kinas gränser eller påverkats för mycket av västerländska industriledares ensidiga syn på de egna (potentiella) marknadsutsikterna. Den nya 5-årsplanen – som nyss presenterades vid den Nationella folkkongressen – ligger visserligen rätt i sina makroekonomiska målsättningar och strategier. Här handlar det dock mycket om den ekonomiska politikens effektivitet, vilken uppenbarligen lämnar en del att önska.

—————————– 

1.   Currently, I daily can find comments on global financial markets that in one way or another refer to uncertainty and increasing imbalances in China. This leads me to three conclusions, both with a positive and a negative bias.

2.   The three conclusions can be summarized as follows (more about these issues can be found in my previous blogs and papers):
–  Financial markets have finally found out that an analysis that only looks at fast GDP growth sooner or later will miss increasing imbalances, coming from credit booms, increasing inflation, asset prices bubbles, etc.
–  Financial markets outside China are starting attempts to improved understanding of the Chinese economy. This is positive. But it may delay the deregulation of Chinese capital controls even further – and China’s way to reformed and modernized domestic financial markets with satisfying transparency.
–  Since financial markets react first now on bad news from China and most problems like the ongoing credit boom, exploding apartment prices in the metropolitan areas, and inflation – though they were obvious for quite some time – we finally get the confirmation that the macroeconomic analysis of China was insufficient in the past. 

3.   The growing importance of China and the analysis of this economic superpower also mean that Western and others (financial) institutions must receive the resources and priority for deepened analyses of China. On average, these skills of most Western banks’ analysts  and financial managers are still – more or less – on a beginner’s level.

4.   Some more comments seem to be necessary these days. Having seen all these increases of banks’ cash requirements at the central bank PBoC and various interest rate hikes, it’s really obvious that the Chinese leadership is concerned about the growing imbalances in the economy – but also that the efficiency of policy tools remains quite limited. Some important explanations are insufficient monetary policy tools of the PBoC, limited central political influence on provincial and local levels and poor transparency in policy effectiveness even for the Chinese.

5.   Finally, some words about the new 5-year plan that was presented last week at the National People’s Congress. According to my understanding, it’s a document of optimism, self-criticism and concern. Optimism is about all the objectives until 2015, in certain cases too optimistic. However, the open descriptions of many problems should be recognized. In this respect, transparency has increased markedly in the past decade. My doubts are very much about three issues.                      

First, it seems to be very unclear how China should reduce its average GDP growth rate to 7 % in the next five years without  some kind of economic crisis. Growth reduction plans  to around 8% have been tried several times in the past five years – but without success. 

Second. It looks difficult to achieve the political leadership’s objective of both further urbanization and the environmental goals.

Third. Restructuring the economy from export-led and investment-led to more consumption-led growth definitely needs more than words and plans. It needs the people’s confidence in improved social welfare.  But this will be more the mandate of the next political generation that will take over in two years. Obviously, the time horizon for a clearly visible consumption-led economy will be more than five years.