Follow the Money

A recent white paper from Lazard points out that emerging market sovereign bond holdings are often fairly concentrated among a handful of big players.  The main impediment to collective action may be less that bond holders are dispersed, and more that a handful of big holders all compete against each other and the benchmark.

Is China’s surplus with the United States back at a record level? It depends. In China’s data, China’s exports to the United States and its surplus with the United States are at all-time highs. The United States’ import data, however, shows fewer imports from China than China reports exports—which is interesting, because the norm has long been the other way around.

China’s second quarter balance of payments data points to a significant increase in the foreign asset accumulation of the state banking system. That at least raises the question of whether China’s authorities are resisting pressure on the yuan to appreciate.

Joe Gagnon and Fred Bergsten have called the years from 2003 to 2013 the decade of manipulation, as a host of Asian countries protected their competitive position of their exporters by intervening massively in the foreign exchange market. Is a new decade of manipulation about to start, as Asian exporters once again try to keep their currencies from rising? 

Global trade imbalances are, once again, largely the result of Chinese and American trade imbalances. China's surplus has increased even as the pandemic has reduced global trade, as has the U.S. deficit.

There is, now, I hope a growing recognition that tax avoidance has a significant impact on the structure of global supply chains—some “supply” chains also function as tax chains, with transfer pricin…

If nothing changes, China’s massive trade surplus will soon be an even bigger political and economic issue…as global trade imbalances are once again being made in China.