TOKYO — There’s no shortage of reasons to worry “irrational exuberance” is coursing through Japan’s stock market. They include the high odds Japan entered 2024 in recession, fallout from China’s economic slowdown, reforms failing to keep pace with investor enthusiasm and a dearth of confidence at Bank of Japan headquarters that the economy is ready […]

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Moody’s Investors Service was something of a thorn in global policymakers’ sides in 2023. From Beijing to Washington, the ratings giant fired any number of shots across the bows of the biggest economies. In mid-November, it lowered America’s credit outlook to "negative” from "stable", pointing to political polarization in Congress as the US national debt […]

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The startling divergence between China’s 5.2% growth and cratering stock market is putting Asia’s biggest economy in global headlines for all the wrong reasons.

Given the chaos of 2023 — a massive property crisis, record youth unemployment, trade headwinds from Washington and deflationary pressures — China’s ability to top 5% growth year on year is impressive indeed. But the stock market continues to stumble, a rout that shows few signs of slowing.

So how bad could things get? In the first two weeks of 2024, global funds sold more than US$1.1 billion of mainland stocks. China’s CSI 300 index this week fell to its lowest levels since 2019, losing more than 25% over the last year. That’s the mirror image of the 24% rally in the S&P 500 over the same period.

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If there’s any surprise over the fact that China dethroned Japan in 2023 to become the world’s top automaker it relates to how fast that happened. Overall, auto exports jumped 58% last year from the prior one, topping 4.91 million units, says the China Association of Automobile Manufacturers. Along with deploying its increasing strength in […]

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As 2024 gets underway, reasons to worry about China’s economy are almost too numerous to count: sub-trend growth, a deepening property crisis, falling exports, record youth employment and deflationary pressures. As investors try to control the inclination to panic, it’s quite striking who isn’t: People’s Bank of China Governor Pan Gongsheng. One expression of this […]

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TOKYO — For the Bank of Japan and US Federal Reserve, what a difference a week makes. As 2023 ended, the BOJ was almost universally seen as “tapering” on the way to exiting quantitative easing (QE). Governor Kazuo Ueda’s team was viewed as setting the stage for a pivot that would send the yen skyrocketing. […]

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TOKYO — In the closing weeks of 2023, US Republicans ratcheted up demands that President Joe Biden keep a hard line on China. Biden, of course, is way ahead of the party that his predecessor Donald Trump hopes to lead to victory in November. Since January 2021, Biden has limited Beijing’s access to technology vital […]

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TOKYO – For all the questions surrounding the US Federal Reserve, the real drama this year concerns the People’s Bank of China and Bank of Japan. It falls to PBOC Governor Pan Gongsheng in Beijing to stabilize Asia’s biggest economy and battle deflationary forces without re-inflating asset bubbles. Over in Tokyo, BOJ Governor Kazuo Ueda is under […]

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TOKYO — The next blow to the collective Japanese psyche will be falling behind Germany to become the fourth-biggest economy. Yet, 12 years on, Tokyo is still grappling with having watched China surpass it in gross domestic product terms. It was in 2010 and 2011 that banner headlines proclaimed the changing of the guard, when […]

The post How Japan is willingly ceding the future to China appeared first on Asia Times.

The large waves of foreign capital suddenly racing China’s way are raising a vital question for 2024: is sentiment toward Asia’s biggest economy swinging back toward positivity? Investors will be and already are debating this very question now that China has racked up a nearly six-fold increase in foreign buying of bonds in November from […]

The post China can accelerate surge in foreign bond inflows appeared first on Asia Times.

Today’s extreme focus on the Bank of Japan is pivoting to how the People’s Bank of China plays the economic minefield that lies ahead in 2024.

Over the next 12 months, China will stress test Asian economies as rarely before. Beijing’s dueling priorities of stabilizing growth and reducing the frequency of boom/bust cycles will center on the actions of Governor Pan Gongsheng at PBOC headquarters.

Since taking the PBOC’s reins in July, Pan has been a study in monetary restraint. Even as the all-important property sector stumbles, Pan’s team has avoided channeling giant waves of liquidity into the market. Targeted blasts, yes. But Team Pan is foregoing the powerful easing moves that traders came to expect from previous PBOC leaders.

One reason is that the yuan is under growing pressure in global markets. Nothing would get China closer to this year’s 5% growth target faster than a lower exchange rate. Pan, though, is prioritizing yuan stability over stimulus in ways that continue to confound hedge funds betting on a weaker currency.

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The Bank of Japan’s decision to leave interest rates unchanged on Tuesday (December 19) has more to do with events in 1999 than 2023.

Twenty-four years ago, the BOJ became the first major central bank to slash borrowing costs to zero. Over the next two years, in 2000 and 2001, it pioneered quantitative easing (QE).

Two-plus decades of free money has a way of warping economic dynamics. Over time, Japan gave new meaning to the concept of “economic capture” as the public and private sectors grew dependent upon QE.

The post Bank of Japan’s Ueda can’t quit QE, either appeared first on Asia Times.

TOKYO – That loud ticking sound emanating from the Japanese capital is Fumio Kishida’s political clock counting down toward zero.

Approval ratings in the neighborhood of 30% tend to spell the end of Japanese governments. Prime Minister Kishida's is now below 20% – and dropping as the economy sinks into recession and inflation outpaces wage growth.

The rising odds that Kishida will soon be shown the door is stellar news for Xi Jinping’s China and a dismal turn of events for Joe Biden’s White House.

Since grabbing the premiership in October 2021, Kishida has been as close an ally to US President Biden as any. And a pivotal one, representing a key pillar of Biden’s “Indo-Pacific strategy” to encircle an ascendant China.

The post Kishida’s sub-20% approval rate is good news for China appeared first on Asia Times.

Amid considerable doom and gloom in China’s economy, President Xi Jinping has at least one 2023 milestone to celebrate: a near-doubling of the yuan’s role in global payments. The yuan’s 3.6% share might not sound too impressive considering the US still commands 47% of payments. But the rate of increase from 1.9% over the last […]

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Moody’s Investors Service is busily and provocatively poking not just one bear — but the two biggest creatures in the global economic kingdom.

Last month, the agency’s analysts threatened to yank away Washington’s last remaining AAA credit rating. That broadside exacerbated the rise in US 10-year bond yields to 17-year highs.

This week, it was Beijing’s turn to hear Moody’s growl. On Tuesday (December 5), Moody’s cut its outlook on the Chinese government's debt to “negative” from “stable” as Asia’s biggest economy grapples with an economic slowdown and deepening property crisis.

The post Moody’s warns US, China it’s time to change their ways appeared first on Asia Times.

TOKYO – It’s no coincidence that the price of gold has never been higher at a moment of maximum peril for the US dollar. That’s giving rise to new bouts of PTSD for an Asia region that remembers all too well how sudden shifts in the global reserve currency can torpedo economic fates.

The fact that even Bitcoin is back in the game – topping US$43,000, up more than double this year – will hardly calm nerves in the halls of power from Beijing to Jakarta and trading pits from Tokyo to Mumbai.

Ostensibly, the dollar is sliding because the US Federal Reserve is believed to be done raising interest rates to tame inflation. The real problem, though, is a trifecta of concerns that are moving to center stage – and in the process setting Asia up for a rough 2024.

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At a moment of peak uncertainty about the direction of China’s economy, People’s Bank of China (PBOC) Governor Pan Gongsheng is surprising many by speaking in unusually direct terms.

Some of the ambiguity of the “Xi Jinping thought” era is a government big on soaring reform rhetoric and fuzzy on nuts-and-bolts specifics. It’s here where Pan’s burst of economic realpolitik is both refreshing and telling.

The bottom-line message: kindly give China some space and tolerance to pull off modern history’s greatest effort to transition away from property and infrastructure to new drivers of economic growth. Oh, and that period of 8-10% annual growth? It’s not coming back.

The post PBOC’s Pan telling hard, uncomfortable truths appeared first on Asia Times.

Xi Jinping’s first public visit to Shanghai in three years signals a new effort to boost China’s private sector. Yet even more important, Xi’s team in Beijing chose this week’s occasion to unveil a series of reforms that are a bigger deal than might meet the eye.

The stocks of Shanghai-centered tech companies like Semiconductor Manufacturing International Corp, Hua Hong Semiconductor Ltd. and Will Semiconductor Co. rallied on the news Monday.

The visit, coupled with new policies to level playing fields and increase private companies’ access to capital, is seen by some as Xi following through on vows made in California earlier this month to make life easier for China’s beleaguered entrepreneurs.

The post Xi’s big push to reverse China’s massive capital flight appeared first on Asia Times.

In the homestretch of 2023, China is calming fears for the year ahead that it might engage in a race to the bottom on exchange rates.

In recent days, China’s biggest state-owned banks bought the yuan in unison to support the currency. By swapping yuan for dollars in onshore markets and selling those dollars in spot markets, major banks are reassuring traders worried Beijing might chase the falling Japanese yen lower.

There are a few possible explanations for why China is putting a floor under the yuan. One is to reduce default risks among property developers servicing offshore debt. Another is to avoid fresh trade tensions with Washington. Beijing also wants to stanch the capital outflows now making global headlines.

The post Yuan rally thickens China’s capital flight plot appeared first on Asia Times.

As China shows sparks of recovery, it’s best not to get too excited about the improving health of Asia’s biggest economy. That’s especially true if you’re Xi Jinping and Li Qiang. The green shoots seen in October data on China’s retail sales and manufacturing are indeed a relief to global investors and Asian policymakers. The […]

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