Föhrenbergkreis Finanzwirtschaft

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Posts Tagged ‘Geng’

Moving From Debt to Equity in China

Posted by hkarner - 1. Juni 2016

Photo of Andrew Sheng

Andrew Sheng

Andrew Sheng, Distinguished Fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission, and is currently an adjunct professor at Tsinghua University in Beijing. His latest book is From Asian to Global Financial Crisis.

Photo of Xiao Geng

Xiao Geng

Xiao Geng, Director of the IFF Institute, is a professor at the University of Hong Kong and a fellow at its Asia Global Institute.

MAY 31, 2016, Project Syndicate

HONG KONG – A spate of recent commentary has been warning of the vertiginous rise in China’s debt, which jumped from 148% of GDP in 2007 to 249% at the end of the third quarter of 2015. Many are anxiously pointing out that China’s debt is now comparable to that of the European Union (270% of GDP) and the United States (248% of GDP). Are they right to worry?

To some extent, they are. But while observers’ concerns are not entirely baseless, it is far too early to sound the systemic-risk alarm. As a recent HSBC report points out, the reasons for China’s rapid accumulation of debt, which is concentrated in the corporate and local-government sectors, suggest that the situation is not nearly as dangerous as many are making it out to be. Den Rest des Beitrags lesen »

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Plan B for the Global Economy

Posted by hkarner - 1. April 2016

Photo of Andrew Sheng

Andrew Sheng

Andrew Sheng, Distinguished Fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission, and is currently an adjunct professor at Tsinghua University in Beijing. His latest book is From Asian to Global Financial Crisis.

Photo of Xiao Geng

Xiao Geng

Xiao Geng, Director of the IFF Institute, is a professor at the University of Hong Kong and a fellow at its Asia Global Institute.

MAR 30, 2016, Project Syndicate

HONG KONG – In March, meetings of the G-20, the Chinese National People’s Congress, and multiple think tanks all reflected a growing awareness of the risks to the global economy posed by deflation and intensifying financial instability. In mitigating these risks, the path that China takes will be particularly important. But avoiding a hard landing in China is a necessary but insufficient condition for global recovery.

Contrary to the advice of many Chinese economists, the country’s policymakers have opted not to follow the conventional Western approach of using flexible exchange rates as the main shock absorber for volatile capital flows and thereby freeing monetary policy to provide liquidity for domestic structural adjustments. This satisfied both Western economists and global financial markets, which breathed a collective sigh of relief when Chinese leaders reaffirmed their commitment to maintaining a stable renminbi. Den Rest des Beitrags lesen »

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China in the Debt-Deflation Trap

Posted by hkarner - 24. September 2015

Photo of Andrew ShengAndrew Sheng, Distinguished Fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission, and is currently an adjunct professor at Tsinghua University in Beijing. His latest book is From Asian to Global Financial Crisis.

 

Photo of Xiao GengXiao Geng, Director of the IFF Institute, is a professor at the University of Hong Kong and a fellow at the Asia Global Institute at HKU.

SEP 24, 2015, Project Syndicate

HONG KONG – In the wake of a global stock-market sell-off triggered by economic turmoil in China, the US Federal Reserve has just decided to postpone raising interest rates. Indeed, China is facing the huge challenge of dealing with the risk of a global debt-deflation trap.

In 1933, Irving Fisher was the first to identify the dangers of over-indebtedness and deflation, demonstrating their contribution to the Great Depression in the United States. Forty years later, Charles Kindleberger applied the theory in a global context, emphasizing the problems that arise in a world lacking coordinated and consistent monetary, fiscal, and regulatory policies, as well as an international lender of last resort. In 2011, Richard Koo used Japan’s experience to highlight the risks of a prolonged balance-sheet recession, when over-stretched debtors deleverage in order to rebuild their balance sheets. Den Rest des Beitrags lesen »

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Piketty with Chinese Characteristics

Posted by hkarner - 6. Juli 2014

Date: 05-07-2014
Source: Project Syndicate

ShengANDREW SHENG

Andrew Sheng, Distinguished Fellow of the Fung Global Institute and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission, and is currently an adjunct professor at Tsinghua University in Beijing. His latest book is From Asian to Global Financial Crisis.

GengXIAO GENG

Xiao Geng is Director of Research at the Fung Global Institute.

HONG KONG – In his bestselling book Capital in the Twenty-First Century, Thomas Piketty argues that capitalism aggravates inequality through several mechanisms, all of which are based on the notion that r (the return on capital) falls less quickly than g (growth in income). While debate about Piketty’s work has focused largely on the advanced economies, this fundamental concept fits China’s recent experience, and thus merits closer examination.

Of course, a large share of China’s population has gained from three decades of unprecedentedly rapid GDP growth. The fixed-capital investments that have formed the basis of China’s growth model largely have benefited the entire economy; infrastructure improvements, for example, have enabled the rural poor to increase their productivity and incomes.

As the investment rate rose to almost half of GDP, the share of consumption fell to as little as a third. The government, recognizing the need to rebalance growth, began to raise the minimum wage in 2011 at nearly double the rate of real GDP growth, ensuring that the average household had more disposable income to spend.

But property prices have risen faster than wages and profits in manufacturing, causing the return on capital for a select few real-estate owners to grow faster than China’s GDP. The same group has also benefited from the leverage implied by strong credit growth. As a result, China’s top 1% income earners are accumulating wealth significantly faster than their counterparts in the rest of the world – and far faster than the average Chinese. Den Rest des Beitrags lesen »

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