Managing The Dragon

The recent declines in China’s stock market have triggered speculation that the Chinese economic miracle may be finally coming to an end. Combined with a declining growth rate in the country’s gross domestic product (“GDP”), many China observers worry that that the $4 trillion loss in stock market value since June will derail the government’s […]

China took one more step last week towards internationalizing the yuan, ultimately leading to the day when the Chinese currency will be a substitute for the U.S. dollar in all of China’s trade with other countries. Last Friday, China and Brazil agreed on a currency swap deal that will allow the central banks of each […]

One of our readers made a very thoughtful comment on our recent article regarding the internationalization of the yuan, which some now refer to as the “redback.” My reading of China’s monetary policy is that the country is more concerned about domestic inflation and the stability of the yuan than it is of the yuan’s appreciation […]

The students at Far Hills Country Day School (“FHCDS”) were excited to finally be able to open the red packets, or “hongbaos,” that we had distributed before my presentation. They were even more excited to find the Chinese money inside. Most of the packets contained a 1 yuan bill, but a few lucky kids found […]

China is adeptly using its $3.2 trillion of foreign currency reserves to extend its influence slowly but surely to all parts of the world. In our recent post on the subject, we noted that two Chinese policy banks lent more to emerging markets in 2009 and 2010 than the World Bank. The impact of the […]

Throughout history, generals have tended to prepare for the next war by fighting the last one, failing to take into account the fact that circumstances seldom remain constant. In this vein, a top U.S. defense official recently warned that China’s military buildup is “potentially destabilizing” in the Pacific. Michael Schiffer, the deputy assistant secretary of […]

No, I’m not talking about the meal of steamed dumplings and buns, rice noodle rolls, steamed vegetables, egg tarts and other Chinese delicacies that is so popular in Hong Kong. I’m talking about the $31 billion of RMB-denominated “dim sum” bonds that may be issued in Hong Kong this year. What’s a dim sum bond? […]

Last week’s G-20 meeting in Seoul, South Korea was intended to be the venue where President Barack Obama would turn up the heat on China to revalue its currency against the dollar. That’s not exactly what happened. In advance of the meeting, the Federal Reserve announced that it would buy $600 billion of Treasuries to […]

The currency war is heating up, and battle lines are being drawn. The U.S. Dollar Index is near an all-time low, and the Federal Reserve is preparing another round of quantitative easing, flooding the world with even more greenbacks. Japan has looked on in alarm as the rise in the value of the yen is […]