Is China regressing to the mean?
By Barry Eichengreen via Caixin | A view that Chinese growth must slow because of experiences elsewhere may be ignoring the country’s uniqueness and technological advances.
World economy
Three things to look out for at this weekend’s G20 summit
MADRID | By Sean Duffy | This weekend´s G20 summit in Brisbane takes place against the backdrop of growing economic uncertainty. With the Eurozone on the verge of deflation, leaders are likely to focus on the ECB´s next move, as the world –and financials– await some tangible prospect of growth outlook. Corporate taxation –brought on the table again after the Luxleaks scandal– and climate change also likely to feature, despite the claims of host Australia.
How are investors positioned and where is money flowing?
ZURICH | UBS analysts | The US continues to come top of the class in economic terms which, combined with the effect of central bank policy divergence, is clearly driving global flows. Country- specific equity ETF flows in October show that the US saw by far the largest inflows last month followed by the UK, Korea and Australia. Europe was once again a laggard in both economic terms and in flows: Germany, Spain, Italy, and Sweden, saw net outflows in October due to these growth concerns. Within BRIC, China saw the largest outflow since April last year as growth concerns continue to persist but Brazil, India and Mexico saw inflows.
Economic integration (particularly in Europe) provokes nationalism
WASHINGTON | By Pablo Pardo | Since the inception of constitutions in modern nation-states, none have undergone such turbulence as those drawn up in Europe. The raison d’être of the European Union is to avoid further turbulence in the future. It is no coincidence that the violent conflicts that have broken out in Europe since World War Two have been outside the EU, in former Yugoslavia, Ukraine, Russia, and Georgia.
Will China repeat Japan’s mistake in overseas property investment?
BEIJING | By Li Junjie via Caixin | Those who study the overseas investments of Chinese enterprises are starting to get jitters. Japanese companies went on a foreign real estate buying spree in the 1980s that ended in serious losses, and the question now is whether China will repeat the same mistake.
China: ‘Singles Day’ sees record e-sales, but also some mudslinging
Economic surprises explain (nearly) everything
By UBS Global Macro Team | Our proprietary surprise indices for growth and inflation are still enjoying very tight correlations with the prices of a wide range of global financial assets. The gyrations of our global and regional growth indices for instance closely track equity markets, both developed and emerging. Global growth surprises (excluding the US) closely track – and often lead – the US dollar and oil prices. Eurozone growth surprises closely track – and often lead – the euro. And global inflation surprises closely track the price of gold.
China fighting the elements
The Communist Party slows down Beijing to ensure a pollution-free capital during the APEC Summit (Nov 9-11). Information about the world’s second economy is often distorted due to a lack of understanding of China and the nuances within. With the attention of the international community and foreign media on the country, the APEC Summit constitutes a golden opportunity for the country.
In-depth: Republican US Congress? Big budget showdown unlikely
WASHINGTON | BNP Paribas analysts | Republicans won control of US Congress this week. Latest projections suggest the GOP has taken over the Senate. Given that the Republicans are very likely to retain a working majority in the House, we can expect the party to control both houses of Congress at least until the end of 2016. A severe budget showdown is unlikely.
Progress in fiscal reform is key to transforming China
BEIJING | Via Caixin | Changes to China’s tax and fiscal framework have become the vanguard for the “deep and comprehensive” reforms the country has pledged in an effort to overhaul its economy and society. On June 30, the Communist Party’s top leaders endorsed a slate of tax and fiscal reform measures to be put in place by 2016, so a modern tax system could be up and running by 2020. In August, the National People’s Congress Standing Committee adopted the revised Budget Law.