• Current Reports  

    Published on May 27th, 2015

    The cacophony emanating from China can be disorientating. On the one hand, China’s domestic stock markets are in the throes of a vigorous bull run. Locally-listed equities are up 140% in the last 12 months, with repeated government support measures and rising openness to international fund flows sustaining the momentum. On the other hand, China’s economic growth continues to slow, while the geopolitical drumbeat is increasingly daunting. With tensions in the South China Sea mounting, the Communist Party yesterday published a white paper outlining its doctrine of “active defense”, while state media warned that conflict with the US could be “inevitable” if Washington does not accommodate China’s rising power in East Asia. How should investors navigate these cross-currents?...
    Published on May 27th, 2015

    The cacophony emanating from China can be disorientating. On the one hand, China’s domestic stock markets are in the throes of a vigorous bull run. Locally-listed equities are up 140% in the last 12 months, with repeated government support measures and rising openness to international fund flows sustaining the momentum. On the other hand, China’s economic growth continues to slow, while the geopolitical drumbeat is increasingly daunting. With tensions in the South China Sea mounting, the Communist Party yesterday published a white paper outlining its doctrine of “active defense”, while state media warned that conflict with the US could be “inevitable” if Washington does not accommodate China’s rising power in East Asia. How should investors navigate these cross-currents?...
    Published on May 26th, 2015

    Germany has economic problems that most countries would die for—low unemployment and steadily rising real wages mean that policymakers must respond to bottlenecks such as labor shortages (see Germany Normalizes). The longer-term worry is that these “gaps” will become permanent as high-growth Germany must also grapple with Japanese-style demographics. The fear is that its post-2010 expansion could be a swan song before the structural growth rate ebbs, and a “new normal” imposes itself...
    Published on May 26th, 2015

    What is Xi Jinping up to? Since coming to power in late 2012, the new general secretary of the Communist Party has delivered one surprise after another, shaking up China’s bureaucracy, reorienting its ties with other countries, and last week launching a blueprint for industrial supremacy dubbed “Made in China 2025.” But while Xi acts like a man in a hurry, it is also true that economic reform has proceeded more slowly on his watch than many observers had hoped. And his aims can seem contradictory: Xi and his comrades have tightened online censorship while calling for better internet access, and praised private entrepreneurs while strengthening big state-owned enterprises. To make sense of these confusing signals, we advise abandoning attempts to fit Xi into neat boxes labeled “reformer” or “conservative,” and instead take him essentially at his word...
    Published on May 26th, 2015

    A surprising facet of the post-2010 euro crisis period has been the degree to which the political center in the European Union has held. Despite record unemployment in the struggling South, extremist movements have mostly been contained to the fringes. So it is ironic that just as the long anticipated cyclical recovery arrives, the political tide looks to be turning the other way. Voters in this weekend’s Spanish regional elections gave the main two parties a thumping in favor of upstarts which oppose austerity, corruption, and to one degree or another, the authority of Brussels...
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