Pieter Bottelier 's articles

Economy: soft landing;collapse;crisis;exit
China's Economy: Slowdown, but no Crisis or Collapse, Ahead
Economic rebalancing seems to be underway – it is too early to tell, but 2009 may turn out to have been turning point.
June 3rd,2010
Zhou Xiaochuan's Proposal and the Future of the RMB
It seems likely that the current international crisis will promote the international use of the RMB and accelerate movement toward full RMB convertibility. Once that has milestone has been reached, which could happen relatively soon - say 5-10 years - the main obstacle to the use of the RMB as an international reserve currency will have been removed. If by then no agreement has been reached on Zhou Xiaochuan's proposal for international monetary reform, or possible variants thereof, it is likely that we will see the spontaneous emergence of the RMB as a reserve currency, but that would also require – in addition to full convertibility – substantial further development of China's domestic capital markets.
April 10th,2009
US-China: an Informal G-2 for Global Leadership
The present international financial and economic crisis underlines the extent to which China has become integrated into the global economy and the critical importance as well as the symbiotic nature of bilateral US-China economic relations. Economic complementarities across the Pacific are indeed striking.
March 9th,2009
China's Economic Downturn: Employment is The Critical Issue
The first victims of this slump were not the SOEs-they enjoyed fat profits in earlier years and are encouraged by the government to avoid lay-offs as much as possible and accept lower earnings instead-but the thousands of SMEs that supply them or serve as sub-contractors. However, if the recession lasts much longer or intensifies, even SOEs may begin to lay off workers as profits disappear.
March 7th,2009
What Else Can China do?
In the interest of its own long-term development and financial stability, China should continue to modernize its financial system, strengthen its regulatory framework, and open the capital account step by step until full convertibility is within reach. In the long-term (10-20 years) if all goes well, the RMB Yuan could become an international reserve currency. Intermediate steps in that direction include the promotion of Panda bonds and the facilitation of RMB transactions in Hong Kong and other major Asian cities.
December 21st,2008
Current Review:
G20 Summit: the Start of a Long Process towards a New Order
The G-20 meeting in Washington later this week is important, but it will at best be the start of a long process. The IMF will almost certainly emerge as a more important multilateral institution than it has been in the past ten years. In some ways we are back to 1944 when allied financial leaders got together in Bretton Woods (New Hampshire) to figure out how to deal with the financial and economic devastation left behind by the Second World War. More accurately, we are back to the many preparatory months that preceded the historic 1944 Bretton Woods meeting. China, along with other major emerging market economies, should also have a much larger voice in the IMF. Globalization has suffered a set-back, but in rearranging the global financial system, we should be careful not to throw out the baby with the bath water.
November 12nd,2008
China's Excess Liquidity Trap
In spite of the fact that average per capita income is still very low (about $2,500 in 2007), China has become a super well-funded country. Household deposits in the banking system are very high and increasingly liquid; large enterprises are on average very profitable and cash-rich; the government ran a budget surplus in 2007; the country is a net exporter of capital and has more foreign exchange reserves than it knows what do with.
August 19th,2008
Gas and Power Prices Increase to Spillover
Direct plus indirect effects of the recent price adjustment could easily exceed 0.5% of the urban CPI after a few weeks or months....and more price increases are to come, of course, not only for petroleum products, but also for vegetable oils, dairy products, noodles and other food items that had been temporarily price-controlled.
June 22nd,2008
Economy: international challenges
China's "Catch-22" Situation
Although China's exchange rate is undervalued and should be allowed to appreciate faster, the question remains: How can countries like China be expected to fully play by current international rules if those rules may be the source of international financial instability?
January 21st,2008
Economy: best Christmas reading about China in 2008
Can China's Growth Trajectory Be Sustained?
To address domestic economic and social imbalances in a more systematic way, the government launched a number of policies and programs which together are known as efforts to pursue "Scientific Development" aimed at creating a "Harmonious Society". Most of these policies and programs are fairly recent and have yet to show results.
December 25th,2007
Economy: Capital Market and Real Estate
Dealing with Asset Bubbles
Controlling asset price bubbles fueled by excess liquidity in the hand of the public is always much more difficult than controlling bank liquidity and bank lending, but it should not be impossible.
December 13rd,2007