Emerging markets face what some economists are calling a trilemma. They cannot simultaneously target exchange-rate stability, conduct an independent monetary policy, and have full financial integration. So what to do? This column looks at how Asia’s giants are responding – and in different ways.
Rajeswari Sengupta, Joshua Aizenman, 15 November 2011
Yuhan Zhang, 13 November 2011
China’s growth since the 1980s has been phenomenally high. This column argues that it has been driven not by exports, as widely believed, but by investment. It adds that this strategy makes China’s economy unsustainable as it creates significant overcapacity in a range of sectors and leads to increasing debt. China’s road towards more consumption-driven growth will be far from smooth.
Kavaljit Singh, 31 October 2011
In 2007 China set up its sovereign wealth fund, the China Investment Corporation, with an initial capital fund of $200 billion. Since then, Asia’s other emerging economic power – India – has been wondering if it should follow. This column argues that such a move is ill-advised and that India has more worthy investment opportunities at home.
Jeffrey Frankel, 10 October 2011
Over the last few years, use of China’s currency for international trade has been growing steadily. Some argue this is the start of a journey that will see the renminbi displace the dollar and become the international reserve currency within a decade. This column asks whether such prophecies are realistic by looking at how other international currencies established themselves.
Ganeshan Wignaraja, 29 September 2011
With the global economy in the treatment room, Asia’s economic giants are under examination as among the few exciting sources of world trade and growth. This column summarises the results of research on reforms, regionalism, and exports in China and India. It finds that China is likely to remain ahead in world trade in the next decade, although India has the opportunity to narrow the gap using policy measures.
Thomas Farole, 28 September 2011
As competition for FDI and trade share intensifies in a tightening global environment, more and more countries are looking at the potential of special economic zones to kickstart growth. But China aside, do these zones work? This column asks: what have we learned from the experiences of developing countries over recent decades?
Zhihong Yu , Markus Eberhardt, Christian Helmers, 27 September 2011
The number of domestic patent filings in China increased at an annual rate of 35% from 1999 to 2006. But the reasons behind this ‘patent explosion’ are unclear. By compiling a new dataset of 20,000 Chinese manufacturing firms, this column shows that the explosion has been ignited by the ICT sector.
Debin Ma, 14 September 2011
Recent research stresses the key role of a nation’s 'legal origin' – for example, common law versus civil law regimes – in determining economic performance. This column explores the much-overlooked origin of Chinese law and the role it is playing in the country’s development.
Piyush Chandra, 04 September 2011
As tariffs have decreased around the world, many countries have started using other measures of protection, such as antidumping duties. This column explores China's imposition of such duties during 1997-2009. It finds that China’s antidumping duties disproportionally targeted high-income countries and were almost all in five sectors – chemicals, paper and pulp, plastics and rubber, steel, and textiles.
Heleen Mees, 08 August 2011
As fears mount of another phase in the global crisis, this column points out that despite the growing uncertainty, US Treasury and German Bund yields have actually declined in recent weeks. The reason, it argues, is the global saving glut theory.
Christian Dreger, Yanqun Zhang, 15 July 2011
For a while now, analysts have been arguing there is a bubble in China’s property market. Using records from 35 major cities this column finds evidence of a housing bubble. It compares house prices to cointegrated fundamentals and finds that property in China is in general overvalued by around 20% – and even more so in the boom towns.
Helmut Reisen, Jean-Philippe Stijns, 12 July 2011
Many discussions of official development assistance express concerns about China's growing investment and involvement in Africa economies. This column, summarizing the 2011 African Economic Outlook report, emphasizes the benefits of emerging economies' increasing presence in Africa, including the opening of African policy space due to Western donors' decline in relative influence.
Olaf Unteroberdoerster, Jade Vichyanond, Adil Mohommad, 12 June 2011
Persistent global imbalances are raising concerns about the sustainability of the global recovery and economic growth in general. This column argues that a proper appreciation of the influence of exchange rates and demand on global imbalances requires taking into account an important feature of Asia’s trade – cross-border supply chains or “vertical integration”.
Aaditya Mattoo, Francis Ng, Arvind Subramanian, 21 May 2011
With the Doha Round on the brink of failure, the blame game is moving into high gear. This column argues that the political perception of China’s export competitiveness and its exchange-rate policy are a real problem. In effect, the whole basis for exchanging trade policy concessions is being undermined because a de facto trade policy instrument – the exchange rate – is seen as nullifying these concessions while remaining beyond the scope of multilateral negotiations and discipline.
Alyson Ma, Ari Van Assche, 18 May 2011
Why do firms offshore manufacturing to China? This column uses data from China’s processing trade regime to argue that a hidden driver is the country’s geographic proximity to its East Asian neighbours.
Uri Dadush, Bennett Stancil, 09 May 2011
Between 2000 and 2009, developing countries added almost $5 trillion to their foreign-exchange reserves – a number deemed too high by many, prompting accusations of protectionism. But this column argues that developed countries are equally to blame – as well as failures in international coordination. It concludes that remedies therefore require action by both groups.
Anne Krueger, 28 April 2011
The Doha Round is in peril. This essay argues that if the impasse is intractable, world leaders face three choices: to quickly finish the low-ambition package on the table, to explicitly terminate the Doha Round, or to let it die a slow death. It says the last option would be by far the worst – even if it is the most likely.
Muhammad Chatib Basri, 28 April 2011
The Doha Round of trade negotiations began nearly ten years ago with a focus on lowering trade barriers, particularly for the sake of developing countries. Today, the Doha Round is stuck in limbo. This column argues that both developed countries as well as developing countries stand to gain from moving the discussions forward – particularly those in the Asia Pacific region.
Philip Levy, 28 April 2011
The Obama Administration seems to view Doha delay as a minor issue since they view the export gains from the current package as small. This column argues that this calculation is based on a false premise that the status quo would continue even if the Round dragged on for years. Nations respect the WTO’s Dispute Settlement Mechanism verdicts in order to remain as members in good standing; this allows them to reap the benefits of the WTO as a negotiating forum. If the WTO collapses as a negotiating forum, nations may move towards a crass calculus that assesses verdicts only on the basis of the threats that back them. This would be a deeply regrettable move away from a rules-based global trading regime.
Peter Drysdale, 07 May 2011
Discussions on breaking the impasse between the US and China are continuing following last month’s landmark meeting of WTO members. This column – written by the intellectual father of APEC – argues that allowing Doha to languish for years is deeply dangerous. Part of an eBook posted in April, the column asserts that failure to conclude Doha this year would put a dagger at the heart of the multilateral system. With the rise of China, the decline of US trade leadership, turmoil in the Middle East, and a damaged and imbalanced global economy, the world needs multilateralism more than ever.