Lewis Turning Point

Ambrose Evans-Pritchard of the Telegraph had an interesting post out yesterday on demographic trends in China. He writes that the working-age population in China is now shrinking as China ages quickly, in part due to the one-child policy.…

In recent months, we have seen a precipitous drop in Chinese trade growth. This comes from both the export and the import side. What's happening? A large part of it is wages. As I indicated two years ago in a post on the Lewis Turning…

The immediate problem is the excess capital investment and the costly maintenance of the projects it has spawned. Longer-term, Asia's growth prospects look good.

There is a difference between economic growth from mere factor mobilisation and economic growth from increased productivity. One requires a lot more capital investment and debt than the other. If and when capital investment growth slows,…

Is China currently rebalancing? The currency has been appreciating, the PBoC has hiked interest rates four times, and wages have been surging. Because of all of this I am often asked if China has finally begun the long-waited rebalancing…

As labour costs in China rise, economists are beginning to think about replacing labour with capital, something we have already seen as a major factor in suppressing wage gains in developed economies. This is also in line with what…

The Financial Times is reporting that China is attempting to address its wealth gap through a number of measures, the principal one of which is raising the tax exemption on income. As welcome as such a move is for consumers facing…

On Saturday I wrote about the Scylla and Charybdis of anchoring inflation expectations, geared toward developed economies in North America and Europe. You tighten too aggressively and you get unwanted disinflation or deflation. You remain…

Andy Lees of UBS's London-based Equity Derivatives group had an interesting post this morning on the push in China to maintain sufficient energy resources in order to maintain economic growth. He writes: Yesterday China gave the…

I caught this at the bottom of Andy Lees' morning note: China – To limit inflation China will impose price controls on food according to the NDRC, and will severely punish anyone found speculating on corn or cotton. “The policies that…