Much has been said about China, a populous country that has drawn both envy and admiration across the globe as it achieved decades of rapid economic growth by incorporating market-friendly reforms into its centrally-planned economy. In recent years, the narrative has turned increasingly negative, if not outright scornful, no thanks to China’s failure to articulate many of its policies to the Western world.
Fears of “devaluation” and economic “hard landing” have resonated in all corners of the globe. Since last year, the turmoil behind the Great Wall has started affecting even the US Federal Reserve’s policy-making.
A research note from American investment bank Bank of America Merrill Lynch last Feb. 22 reflected this confusion about China’s policy: “Renminbi internationalization or capital controls? Easy monetary policy or a strong currency? Preserving forex reserves or a new wave of overseas FDI (foreign direct investments)? More competitive private sector or bigger SOE (state-owned enterprises) oligopolies? Financial repression for households—zero percent real deposit rates—or a rising household income to GDP (gross domestic product) ratio that would raise the consumption to GDP ratio? Many questions but few answers.”
A group of economists, who came together to form the Asian Shadow Financial Regulatory Committee (ASFRC), is calling for greater sobriety in looking at this turmoil behind the Great Wall. ASFRC is a pool of experts, mostly from the academe, that seeks to translate concepts drawn from academic literature into concrete policy recommendations.
BUSINESS
BUSINESS
BUSINESS
Orville Jose Solon, dean of the UP School of Economics, where the 27th meeting of the ASFRC was recently held, described ASFRC as the guys who don’t need to be billeted in five-star rooms with a picturesque view of the ocean to do their brainstorming. The group offers unsolicited views, which don’t necessarily represent those of the institutions its members are affiliated with.
The group believes China is actually suffering more from a PR (public relations) rather than a real economic crisis, aggravated by investors’ tendency to scrutinize this Asian economic giant using “Western” lens.
