Gao Xiqing used to head China Investment Corp., the country’s sovereign fund. He’s a lawyer trained at Duke University. He was on a panel at the Council on Foreign Relations on April 19 and his comments are the most insightful I’ve seen in some time from someone in the higher levels in China. And quite honest. At one point, when asked about conflict between the Central Committee and the State Council, he said “I understand this is open to the media?…so I personally do not have a comment.” I interviewed him one-on-one a few years ago and he was quite straightforward.

I am frequently asked what data points to monitor to gage the likelihood of a hard landing, or at the least a credit crisis that alters the trajectory of China’s economy. There is no easy answer. Two years ago, many investors thought rapidly rising interbank rates were a strong negative indicator for China’s economy. But the interbank market is a relatively small tool utilized by the PBOC; the rates were useful merely because they are accessible on the Bloomberg Terminal. So what measures can we examine?

Serious Firepower China surprised the markets Monday by cutting the Required Reserve Ratio by 0.5 ppt, injecting Rmb 700 billion into the market. This was a desperate measure. There are several reasons why the PBOC chose to do this now. 1) Short Term Injections Too Expensive. The PBOC had been relying on Short and Medium […]

Shadow banking in China continues to be promoted by the state. But it is taking a new form, hidden in the dark recesses of the balance sheets of the banks.