https://www.scmp.com/rss/321733/feed Stephen S. Roach, a faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China (Yale University Press, 2014) and Accidental Conflict: America, China, and the Clash of False Narratives (Yale University Press, 2022). en https://assets.i-scmp.com/static/img/icons/scmp-meta-1200x630.png https://www.scmp.com Stephen Roach Stephen Roach The Chinese planning season is in full swing. Ahead of the formal release of the 15th five-year plan (running from 2026 to 2030) next March, early signs coming out of the just-completed fourth plenum of the Communist Party suggest that it will be more of the same: a focus on continuing China’s extraordinary industrial and technological ascendancy, driven by what President Xi Jinping has called “new productive forces”. That would be a mistake in the following sense: China’s techno-industrial... https://www.scmp.com/opinion/china-opinion/article/3330572/time-china-set-explicit-household-consumption-target?utm_source=rss_feed https://www.scmp.com/opinion/china-opinion/article/3330572/time-china-set-explicit-household-consumption-target?utm_source=rss_feed Tue, 28 Oct 2025 08:30:08 +0000 Stephen Roach Stephen Roach China’s leaders are hard at work putting the finishing touches on the country’s 15th five-year plan. Meanwhile, since the beginning of his second term, US President Donald Trump has issued 205 executive orders and signed only a handful of bills into law. The comparison is striking: while China has a strategic planning process, the United States has neither a plan nor a strategy. The planning exercise is a foundational pillar of the People’s Republic of China. The first plan ran from 1953 until... https://www.scmp.com/opinion/china-opinion/article/3326934/why-china-plans-while-trumps-america-can-only-react?utm_source=rss_feed https://www.scmp.com/opinion/china-opinion/article/3326934/why-china-plans-while-trumps-america-can-only-react?utm_source=rss_feed Fri, 26 Sep 2025 06:02:13 +0000 Stephen Roach Stephen Roach The outbreak of a new war in the Middle East, together with a destructive tariff war, makes for a lethal combination in a sluggish world economy. Notwithstanding the tentative ceasefire, the odds of imminent global recession have increased sharply. One shock was bad enough. US President Donald Trump’s tariffs imply downside risks to global growth. But the potential for a second shock – a war between Israel and Iran that has now ensnared the United States – compounds the problems for an... https://www.scmp.com/opinion/world-opinion/article/3315724/twin-shocks-israel-iran-war-trump-tariffs-bring-global-recession-closer?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3315724/twin-shocks-israel-iran-war-trump-tariffs-bring-global-recession-closer?utm_source=rss_feed Wed, 25 Jun 2025 08:39:33 +0000 Stephen Roach Stephen Roach There is an inherent flaw in US President Donald Trump’s trade policy. While it is all but impossible to know where Trump will settle on most issues – from taxes to immigration – two key objectives of his trade strategy are now coming into focus: setting a global minimum tariff and imposing a special penalty on China. The flaw lies in the combination. For argument’s sake, consider the possibility that a blanket 10 per cent tariff on all US trading partners is America’s new norm. Trump has loudly... https://www.scmp.com/opinion/world-opinion/article/3311907/inherent-flaw-trumps-trade-policy?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3311907/inherent-flaw-trumps-trade-policy?utm_source=rss_feed Tue, 27 May 2025 08:30:07 +0000 Stephen Roach Stephen Roach Nearly five years ago, I warned that stagflation was only a broken supply chain away. A temporary outbreak did indeed occur in the immediate aftermath of the Covid-19 shock, as a surge in inflation coincided with an anaemic recovery in global demand. But, like the pandemic, that economic disruption quickly subsided. Today, a more worrisome form of stagflation is in the offing, threatening severe and lasting consequences for the global economy and world financial markets. An important difference... https://www.scmp.com/opinion/world-opinion/article/3307869/rate-trumps-going-global-recession-will-be-hard-sidestep?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3307869/rate-trumps-going-global-recession-will-be-hard-sidestep?utm_source=rss_feed Fri, 25 Apr 2025 12:30:08 +0000 Stephen Roach Stephen Roach The world’s major growth engines are about to run in reverse. The policies and uncertainties of US President Donald Trump’s second administration have hit a sluggish global economy with a transformational exogenous shock. Risks are especially worrisome in both the United States and China, which have collectively accounted for a little more than 40 per cent of cumulative global gross domestic product growth since 2010. America is now the problem, not the solution. Long the anchor of the... https://www.scmp.com/opinion/world-opinion/article/3303897/no-economy-safe-trump-upends-rules-based-order?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3303897/no-economy-safe-trump-upends-rules-based-order?utm_source=rss_feed Wed, 26 Mar 2025 12:30:08 +0000 While China has left its official growth target unchanged at around 5 per cent, the tone of the work report from this year’s “two sessions” was different. The balance has shifted from a standard recapitulation of notable accomplishments to an unusually candid assessment of the multiplicity of problems that China now faces. This was buried in the middle of a long report prepared by China’s National Development and Reform Commission, which emphasised “the negative impact of the external... https://www.scmp.com/opinion/china-opinion/article/3302345/china-knows-economic-challenges-lie-ahead-it-ready-them?utm_source=rss_feed https://www.scmp.com/opinion/china-opinion/article/3302345/china-knows-economic-challenges-lie-ahead-it-ready-them?utm_source=rss_feed Mon, 17 Mar 2025 21:30:08 +0000 “I alone can fix it,” Donald Trump proclaimed in 2016, when accepting the Republican nomination for US president. Fix what, exactly? Among other problems, “the economy, stupid”, to borrow the famous mantra from Bill Clinton’s 1992 presidential run. Last year, Trump once again campaigned on the premise the US economy was “in crisis” and a “disaster”. He began his second term with a solemn promise to usher in “the golden age of America”. But Trump’s bleak diagnosis of the US economy is not... https://www.scmp.com/opinion/world-opinion/article/3300685/fixing-trumped-crisis-trump-may-end-creating-one?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3300685/fixing-trumped-crisis-trump-may-end-creating-one?utm_source=rss_feed Sun, 02 Mar 2025 05:30:08 +0000 China’s engineering prowess has been nothing short of extraordinary. From world-class infrastructure and eco-friendly cities to space systems and high-speed trains, China’s impressive accumulation of state-of-the-art physical capital has played a dominant role in driving its economy. But China’s physical engineering accomplishments on the supply side have not been transferable to social engineering efforts on the demand side, especially in stimulating consumer demand. The disconnect arises out... https://www.scmp.com/opinion/china-opinion/article/3291661/why-china-will-struggle-boost-consumption?utm_source=rss_feed https://www.scmp.com/opinion/china-opinion/article/3291661/why-china-will-struggle-boost-consumption?utm_source=rss_feed Fri, 20 Dec 2024 08:30:08 +0000 I saw nothing but denial in my recent post-US-election tour of Asia, with stops in Hong Kong, Shenzhen, Beijing and Singapore. Taking a cue from surging global equity markets, Asians are making every effort to wish away problems at home and abroad. Nowhere is this more evident than in China. President Xi Jinping has long stressed his preference for the “good stories of China”. Amid the most serious Chinese economic slowdown since the 1970s, government attempts to put a positive spin on the... https://www.scmp.com/opinion/asia-opinion/article/3288290/why-asia-denial-over-trumps-threat-and-its-own-economic-problems?utm_source=rss_feed https://www.scmp.com/opinion/asia-opinion/article/3288290/why-asia-denial-over-trumps-threat-and-its-own-economic-problems?utm_source=rss_feed Wed, 27 Nov 2024 10:45:07 +0000 And so, the blame game begins. Predictably, it didn’t take long for the second guessers of the hindsight machine to throw grenades at Kamala Harris and the Democrats. The media is hyperventilating over what quickly has been dubbed another American seismic political shock. Note, however, that Donald Trump’s apparent 2.5 percentage point margin of popular vote victory is far from historic. It is time to move on. Acceptance, as they say, is the first step on the road to healing. That’s true not... https://www.scmp.com/opinion/world-opinion/article/3285939/trump-20-likely-be-worse-china-and-global-economy?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3285939/trump-20-likely-be-worse-china-and-global-economy?utm_source=rss_feed Mon, 11 Nov 2024 12:30:07 +0000 The Big Lie has become bigger. The false claim of a stolen 2020 US presidential election embraced by former president Donald Trump and his cult has brought about the end of fact-based accountability. This is having profound and lasting implications on a deeply troubled Sino-American relationship. Sinophobia is a visible manifestation of how the Big Lie has corrupted norms of the American body politic. Irrational fears of China have taken on a life of their own. That includes any of a number of... https://www.scmp.com/opinion/world-opinion/article/3284260/how-election-lies-and-china-fears-lead-bad-outcomes-us?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3284260/how-election-lies-and-china-fears-lead-bad-outcomes-us?utm_source=rss_feed Tue, 29 Oct 2024 12:30:07 +0000 Other than a few glib remarks, surprisingly little was said about China at this month’s US presidential debate. Former president Donald Trump asserted that his proposed import tariffs would punish “China and all of the countries that have been ripping us off for years”. Vice-President Kamala Harris, for her part, disparaged China’s pandemic response, stating that President Xi Jinping “was responsible for lacking and not giving us transparency about the origins of Covid”. The failure to focus on... https://www.scmp.com/opinion/china-opinion/article/3280000/why-china-missing-us-presidential-election-debate?utm_source=rss_feed https://www.scmp.com/opinion/china-opinion/article/3280000/why-china-missing-us-presidential-election-debate?utm_source=rss_feed Thu, 26 Sep 2024 12:30:08 +0000 Fifty years ago this month, Richard Nixon resigned as US president. With all eyes on November’s presidential election, the anniversary provides an occasion to consider the inherent contradictions of American political leadership. Nixon’s abuses of executive power contrasted sharply with his foreign policy achievements. As an avowed anti-communist, he surprised the world by going to China in 1972. Nixon’s triangulation strategy effectively isolated the former Soviet Union, ultimately helping to... https://www.scmp.com/opinion/world-opinion/article/3275132/kamala-harris-could-be-next-richard-nixon-us-china-relations?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3275132/kamala-harris-could-be-next-richard-nixon-us-china-relations?utm_source=rss_feed Tue, 20 Aug 2024 06:30:09 +0000 Economists are struggling to reconcile their upbeat views on the US economy with the angst of average Americans. The key measures of economic performance – growth, unemployment and inflation – are almost perfect, putting the United States in an enviably strong position. But ahead of November’s presidential election, voters continue to cite the economy as a top issue. The main problem: inflation. How can this be? To the exasperation of most economists, all this hand-wringing seems terribly... https://www.scmp.com/opinion/world-opinion/article/3267931/defining-economic-issue-2024-us-election-cost-living?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3267931/defining-economic-issue-2024-us-election-cost-living?utm_source=rss_feed Tue, 25 Jun 2024 12:30:10 +0000 The United States does not have a coherent trade policy. It has a political strategy masquerading as trade policy that has taken aim at China, and China has responded in kind. With the two superpowers drawing on their allies for support, economic decoupling is the least of our problems. It is easy to blame US presidents Donald Trump and Joe Biden for this unfortunate turn of events – Trump for firing the first shot in the Sino-American trade war and Biden for doubling down on protectionism, yet... https://www.scmp.com/opinion/world-opinion/article/3264505/us-trade-policy-towards-china-dangerously-incoherent?utm_source=rss_feed https://www.scmp.com/opinion/world-opinion/article/3264505/us-trade-policy-towards-china-dangerously-incoherent?utm_source=rss_feed Wed, 29 May 2024 08:30:10 +0000 The current wave of anti-Chinese sentiment in the United States has been building for years. It started when US policymakers raised national security concerns about Huawei. China’s national technology champion, the market leader in developing new 5G telecommunications equipment, was accused of deploying digital back doors that could enable Chinese espionage and cyberattacks. But Huawei was just the start. The US has since spiralled into a full-blown outbreak of Sinophobia – a strong word that I... https://www.scmp.com/comment/opinion/article/3257028/sinophobia-us-rails-and-blocking-paths-progress?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3257028/sinophobia-us-rails-and-blocking-paths-progress?utm_source=rss_feed Thu, 28 Mar 2024 12:30:12 +0000 I love Hong Kong. Yet I now find myself in the uncomfortable position as a naysayer. My recent opinion piece in the Financial Times, “It pains me to say Hong Kong is over”, has stirred up considerable controversy in the city I used to call home. Unsurprisingly, Hong Kong politicians have been especially critical. But former colleagues, business associates and good friends have also raised concerns. A response is in order. While no nation, economy or city is ever definitively “over”, the title of... https://www.scmp.com/comment/opinion/world/article/3253200/why-i-am-making-good-trouble-hong-kong-city-i-love?utm_source=rss_feed https://www.scmp.com/comment/opinion/world/article/3253200/why-i-am-making-good-trouble-hong-kong-city-i-love?utm_source=rss_feed Tue, 27 Feb 2024 01:30:19 +0000 I have been in the forecasting business for more than 50 years. Over that period, I have heard the constant refrain that the world is in the midst of “unprecedented changes”. This popular trope frequently resulted in equally hyperbolic corollaries: breathless claims that we have never faced greater risks or such an uncertain future, and that forecasting has never been harder. Repeat it enough and it starts to become believable. Confession: my crystal ball has been cracked so many times by... https://www.scmp.com/comment/opinion/article/3245989/policymakers-must-stop-hiding-behind-myth-unprecedented-changes?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3245989/policymakers-must-stop-hiding-behind-myth-unprecedented-changes?utm_source=rss_feed Sat, 23 Dec 2023 08:30:23 +0000 “A Better Biden-Xi Summit?” was the title of my commentary last month, and the emphasis was on the question mark. With good reason: last year’s summit in Bali was a flop. Owing to poor preparation and an overemphasis on slogans (setting a “floor” for the troubled US-China relationship), any effort to ease tensions was quickly scuttled by the US downing of a Chinese surveillance balloon in February. There were no guarantees that the meeting in San Francisco would be any better. The good news is... https://www.scmp.com/comment/opinion/article/3242072/biden-xi-summit-clears-low-bar-set-us-china-relations?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3242072/biden-xi-summit-clears-low-bar-set-us-china-relations?utm_source=rss_feed Sun, 19 Nov 2023 14:30:08 +0000 All eyes are on the upcoming leaders’ meeting of the Asia-Pacific Economic Cooperation (Apec) forum, to be held in San Francisco from November 11-17. And with good reason: there is a distinct possibility that US President Joe Biden and Chinese President Xi Jinping will meet on the sidelines of this pan-regional gathering, a year after their last summit in Bali on the eve of the annual G20 summit. The Bali meeting accomplished little. While Biden and Xi agreed to set a “floor” for the... https://www.scmp.com/comment/opinion/article/3239383/us-china-relations-3-things-xi-biden-summit-should-aim-achieve?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3239383/us-china-relations-3-things-xi-biden-summit-should-aim-achieve?utm_source=rss_feed Fri, 27 Oct 2023 09:00:13 +0000 The debate over the difference between tactics and strategy is as rich as it is enduring. In his seminal 1996 article in the Harvard Business Review, Harvard’s Michael Porter tackled this issue head on. While his focus was business, his arguments can be applied much more broadly – including to today’s Sino-American rivalry. Porter differentiated between “operational effectiveness” and strategy, arguing that nimble companies had become well practised in the former, but had dropped the ball on the... https://www.scmp.com/comment/opinion/article/3236083/us-cant-win-china-tech-war-without-strategy-huawei-proof?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3236083/us-cant-win-china-tech-war-without-strategy-huawei-proof?utm_source=rss_feed Thu, 28 Sep 2023 06:30:14 +0000 Economist Min Zhu, speaking at a World Economic Forum (WEF) panel in China in late June, was among the first to hint at the nation’s underwhelming post-Covid policy stimulus. Zhu, a former deputy managing director of the International Monetary Fund (IMF) and a former deputy governor of the People’s Bank of China (PBOC), is no casual observer of the Chinese economy and its role in the world. He is also one of my oldest and wisest friends in China, and I have learned to take his views very... https://www.scmp.com/comment/opinion/article/3232265/how-chinas-property-and-debt-crises-limit-policymakers-ability-revive-economy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3232265/how-chinas-property-and-debt-crises-limit-policymakers-ability-revive-economy?utm_source=rss_feed Fri, 25 Aug 2023 17:00:16 +0000 American politicians have a long history of mangling economic policy debates. Some recognise reality, like when George H.W. Bush characterised so-called supply-side tax cuts as “voodoo economics”. But far too many distort economic statistics and analysis to score political points – think deficit scolds or the rise of modern monetary theory. The debate over US-China decoupling is a case in point. From President Joe Biden down, US policymakers have finally realised it makes no sense to argue for a... https://www.scmp.com/comment/opinion/article/3229041/how-us-politicians-are-mangling-economic-debate-over-decoupling-china?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3229041/how-us-politicians-are-mangling-economic-debate-over-decoupling-china?utm_source=rss_feed Thu, 27 Jul 2023 07:45:08 +0000 US Secretary of State Antony Blinken’s long-delayed trip to Beijing has come and gone. Despite the predictable optimistic spin on the visit – both sides agreed to strengthen people-to-people exchanges and promised to continue talks – it did little to defuse the increasingly fraught conflict between the United States and China. The failure to re-establish military-to-military communications is especially worrisome given the recent near-collisions between the two superpowers’ warships in the... https://www.scmp.com/comment/opinion/article/3225681/us-china-conflict-resolution-needs-more-latter-day-nixon-going-beijing?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3225681/us-china-conflict-resolution-needs-more-latter-day-nixon-going-beijing?utm_source=rss_feed Wed, 28 Jun 2023 19:00:13 +0000 In his now-classic 2018 book, AI Superpowers, Kai-fu Lee threw down the gauntlet in arguing that China poses a growing technological threat to the United States. When Lee gave a guest lecture to my “Next China” class at Yale in late 2019, my students were enthralled by his provocative case: America was about to lose its first-mover advantage in discovery (the expertise of AI’s algorithms) to China’s advantage in implementation (big-data-driven applications). Alas, Lee left out a key development:... https://www.scmp.com/comment/opinion/article/3221753/how-censorship-china-could-hold-back-its-quest-ai-supremacy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3221753/how-censorship-china-could-hold-back-its-quest-ai-supremacy?utm_source=rss_feed Thu, 25 May 2023 07:45:16 +0000 Five years into a once-unthinkable trade war with China, US Treasury Secretary Janet Yellen chose her words carefully on April 20. In a wide-ranging speech, she reversed the terms of US engagement with China, prioritising national security concerns over economic considerations. That ended a 40-year emphasis on economics and trade as the anchor to the world’s most important bilateral relationship. Yellen’s stance on security was almost confrontational: “We will not compromise on these concerns,... https://www.scmp.com/comment/opinion/article/3218248/us-economic-war-china-will-have-consequences-all-especially-americans?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3218248/us-economic-war-china-will-have-consequences-all-especially-americans?utm_source=rss_feed Tue, 25 Apr 2023 13:30:15 +0000 No two crises are alike. That is true of recent financial upheavals – the Asian financial crisis of the late 1990s, the dot-com crisis of 2000, and the global financial crisis of 2008-09. It is also the case with crises sparked by geostrategic shocks, such as wars, pestilence, famine, and pandemics. Today, we are witnessing a potentially lethal interplay between these two sources of upheaval: a financial crisis, reflected in the failure of Silicon Valley Bank, and a geostrategic crisis,... https://www.scmp.com/comment/opinion/article/3214888/china-quietly-revelling-us-latest-financial-crisis?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3214888/china-quietly-revelling-us-latest-financial-crisis?utm_source=rss_feed Sun, 26 Mar 2023 08:30:19 +0000 The Great War was triggered by the assassination of Austrian Archduke Franz Ferdinand in June 1914, which occurred against the backdrop of a long-simmering conflict between Europe’s major powers. This interplay between conflict escalation and a political spark has special resonance today. With war raging in Ukraine and a cold-war mentality gripping the United States and China, there can be no mistaking the historical parallels. The world is simmering with conflict and resentment. All that is... https://www.scmp.com/comment/opinion/article/3211798/us-china-and-russia-are-repeating-mistakes-major-powers-1914?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3211798/us-china-and-russia-are-repeating-mistakes-major-powers-1914?utm_source=rss_feed Tue, 28 Feb 2023 08:45:12 +0000 Technology is ground zero in the conflict between the United States and China. For the US, it is about the leading edge of geostrategic power and the means for sustained prosperity. For China, it holds the key to the indigenous innovation required of a rising power. The tech war now under way between the two superpowers could be the defining struggle of the 21st century. Huawei quickly became the lightning rod in the tech conflict between the two. Feared as a threat to US telecommunications... https://www.scmp.com/comment/opinion/article/3207933/us-china-tech-war-how-washingtons-approach-all-tactics-no-strategy-could-be-its-undoing?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3207933/us-china-tech-war-how-washingtons-approach-all-tactics-no-strategy-could-be-its-undoing?utm_source=rss_feed Wed, 25 Jan 2023 07:30:08 +0000 I have been a congenital China optimist for most of the past 25 years. I first came to that view in the depths of the Asian financial crisis in 1997-98. The so-called East Asian growth miracle was in tatters and China was widely portrayed as the final domino that would fall in what was then viewed as the first crisis of globalisation. Having shuttled back and forth to the region during that period as Morgan Stanley’s chief economist, I had quickly come to appreciate the power of China’s... https://www.scmp.com/comment/opinion/article/3204383/how-xi-jinpings-focus-security-and-control-punctures-decades-china-optimism?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3204383/how-xi-jinpings-focus-security-and-control-punctures-decades-china-optimism?utm_source=rss_feed Sat, 24 Dec 2022 00:15:18 +0000 Summits have long been portrayed as the crown jewels of diplomacy. Such was the hope with the Bali meeting between US President Joe Biden and his Chinese counterpart Xi Jinping. Notwithstanding the images of two beaming presidents grasping hands before their three-hour meeting, the summit accomplished little. Predictably, it was long on rhetoric. Biden ruled out any possibility of a new cold war, and Xi stressed the need to put the US-China relationship back on track. Post-summit readouts... https://www.scmp.com/comment/opinion/article/3201302/xi-and-biden-can-go-beyond-diplomatic-kabuki-us-china-secretariat?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3201302/xi-and-biden-can-go-beyond-diplomatic-kabuki-us-china-secretariat?utm_source=rss_feed Tue, 29 Nov 2022 06:15:12 +0000 China’s 20th party congress has come and gone. Despite all the fanfare and media hype, it was a hollow event. It revealed little we didn’t already know about China – an autocracy that maintains grandiose ambitions and ideological bluster to match but is woefully unprepared for an uncertain future filled with risks largely of its own making. That much is evident when the results of the congress are examined from three perspectives: leadership, strategy and conflict. The leadership reveal of the... https://www.scmp.com/comment/opinion/article/3197146/what-20th-party-congress-reveals-about-chinas-leadership-strategy-and-attitude-conflict?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3197146/what-20th-party-congress-reveals-about-chinas-leadership-strategy-and-attitude-conflict?utm_source=rss_feed Tue, 25 Oct 2022 20:00:15 +0000 It is tempting to give the US Federal Reserve credit for its about-face in tackling inflation. It is equally tempting to give President Xi Jinping credit for his stewardship of a rising China. Neither deserves it, and for a similar reason. That is certainly true of today’s Fed. The US central bank has raised the federal funds rate (FFR) by 75 basis points three times in a row. Politicians and pundits are howling in protest, but I disagree. It was past time for the Fed to start digging itself out... https://www.scmp.com/comment/opinion/article/3194073/both-us-and-china-focus-core-increases-susceptibility-major-policy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3194073/both-us-and-china-focus-core-increases-susceptibility-major-policy?utm_source=rss_feed Wed, 28 Sep 2022 16:30:10 +0000 Since the days of Deng Xiaoping, economic growth has mattered more than anything for China’s leaders. The 10 per cent annualised growth from 1980 to 2010 was seen as the antidote to the relative stasis of the Mao Zedong era, when the economy grew by only about 6 per cent. But under President Xi Jinping, the pendulum has swung back, with 6.6 per cent average growth from 2013 to 2021, closer to the trajectory under Mao than Deng. Some of the slowdown was inevitable as small economies are better... https://www.scmp.com/comment/opinion/article/3189971/how-china-sacrificed-economic-growth-altar-xi-jinping-thought?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3189971/how-china-sacrificed-economic-growth-altar-xi-jinping-thought?utm_source=rss_feed Wed, 24 Aug 2022 17:30:19 +0000 The widely acclaimed globalisation of the post-Cold-War era is now running in reverse. A protracted slowdown in global trade has been reinforced by persistent pandemic-related supply chain disruptions, ongoing pressures of the US-China trade war and efforts to align cross-border economic ties with geostrategic alliances, known as “friend-shoring”. These developments raise the pressure on China, arguably the country that has been the greatest beneficiary of modern globalisation. Of the many... https://www.scmp.com/comment/opinion/article/3186602/china-could-have-most-lose-crises-end-globalisation-era?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3186602/china-could-have-most-lose-crises-end-globalisation-era?utm_source=rss_feed Tue, 26 Jul 2022 19:30:14 +0000 The predictable downward revision cycle for the global economic outlook has officially begun. That is the message from the semi-annual World Economic Outlook just released by the International Monetary Fund, which reinforces earlier revisions from several prominent private forecasting teams. The revision, largely in response to the war in Ukraine, is a big one. It calls for a sharp reduction in world economic growth to 3.6 per cent for 2022, fully 1.3 percentage points below the IMF’s global... https://www.scmp.com/comment/opinion/article/3175519/three-reasons-expecting-soft-landing-global-economy-just-wishful?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3175519/three-reasons-expecting-soft-landing-global-economy-just-wishful?utm_source=rss_feed Tue, 26 Apr 2022 17:30:18 +0000 With war raging in Ukraine, China’s annual “Two Sessions” convey an image of a country in denial. As China’s National People’s Congress and its advisory body gather in Beijing this month, there has been little mention of a seismic disruption in the world order – an omission all the more glaring in view of China’s deep-rooted sense of its unique place in history. With its unabashed great power aspirations, modern China may well be at a decisive juncture. Two documents – the joint Sino-Russian... https://www.scmp.com/comment/opinion/article/3169645/ukraine-crisis-why-chinas-xi-jinping-will-do-unthinkable-and-defuse?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3169645/ukraine-crisis-why-chinas-xi-jinping-will-do-unthinkable-and-defuse?utm_source=rss_feed Tue, 08 Mar 2022 17:30:18 +0000 The US Federal Reserve has turned on a dime, an uncharacteristic about-face for an institution long noted for slow and deliberate shifts in monetary policy. It has recognised that it has a serious problem. That problem, of course, is inflation. Like the Fed I worked at in the early 1970s under Arthur Burns, today’s policymakers once again misdiagnosed the initial outbreak. The current upsurge in inflation is not transitory. It is widespread, persistent and reinforced by wage pressures stemming... https://www.scmp.com/comment/opinion/article/3164617/high-inflation-and-low-interest-rates-us-federal-reserve-playing?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3164617/high-inflation-and-low-interest-rates-us-federal-reserve-playing?utm_source=rss_feed Tue, 25 Jan 2022 06:45:18 +0000 The transitory inflation debate in the US is over. The upsurge in inflation has turned into something far worse than the Federal Reserve expected. It is presumed to have the wisdom and firepower to keep underlying inflation in check, but that remains to be seen. The Fed counsels patience. It is so convinced its forecast will turn out to be correct that it is content to wait. No surprise there – the Fed telegraphed such a response with its “average inflation targeting” framework last year. In... https://www.scmp.com/comment/opinion/article/3157025/us-federal-reserve-must-get-creative-and-act-fast-end-inflation?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3157025/us-federal-reserve-must-get-creative-and-act-fast-end-inflation?utm_source=rss_feed Tue, 23 Nov 2021 19:45:17 +0000 All eyes are fixed on the dark side of China. We have been here before. Starting with the Asian financial crisis of the late 1990s and continuing through the dotcom recession of the early 2000s and the 2008 global financial crisis, China was portrayed as the next to fall. Yet, the Chinese economy has defied gloomy predictions with a resilience that took many observers by surprise. Count me among the few who were not surprised that past alarms turned out to be false. But also count me in when it... https://www.scmp.com/comment/opinion/article/3150370/chinas-changing-growth-model-not-evergrande-top-threat-prosperity?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3150370/chinas-changing-growth-model-not-evergrande-top-threat-prosperity?utm_source=rss_feed Tue, 28 Sep 2021 17:30:20 +0000 When it comes to the Chinese economy, I have been a congenital optimist for over 25 years. But now I have serious doubts. The Chinese government has taken dead aim at its dynamic technology sector, the engine of China’s New Economy. Its recent actions are symptomatic of a deeper problem: the state’s efforts to control the energy of animal spirits. The Chinese dream, President Xi Jinping’s aspirational vision of a “great modern socialist country” by 2049, could now be at risk. At first, it seemed... https://www.scmp.com/comment/opinion/article/3142817/chinas-regulation-its-spirited-tech-sector-could-be-tipping-point?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3142817/chinas-regulation-its-spirited-tech-sector-could-be-tipping-point?utm_source=rss_feed Wed, 28 Jul 2021 19:30:09 +0000 I have long been haunted by the inflation of the 1970s. Fifty years ago, I was witness to the birth of the “Great Inflation” as a Fed insider. That left me with the recurring nightmares of a financial post-traumatic stress disorder. The bad dreams are back. They centre on the Fed’s legendary chairman at the time, Arthur F. Burns, who brought a unique perspective to the US central bank as an expert on the business cycle. Yet he lacked an analytical framework to assess the interplay between the... https://www.scmp.com/comment/opinion/article/3134870/how-us-feds-reassurances-inflation-fears-are-triggering-1970s?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3134870/how-us-feds-reassurances-inflation-fears-are-triggering-1970s?utm_source=rss_feed Wed, 26 May 2021 06:45:12 +0000 It wasn’t just the weather that was cold when senior US and Chinese officials convened recently in Anchorage, Alaska, to try to reset their countries’ relations after four years of mounting tension. Sadly, the meeting was more reminiscent of the Cold War era than of a fresh start. That needs to change quickly – before it is too late. Trapped in the politics of America’s bipartisan groundswell of anti-China sentiment, US President Joe Biden’s team appears to be staying the course set by the... https://www.scmp.com/comment/opinion/article/3126746/us-china-relations-why-biden-should-go-back-basics?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3126746/us-china-relations-why-biden-should-go-back-basics?utm_source=rss_feed Wed, 24 Mar 2021 17:30:09 +0000 As the second vaccine shot went into my arm, I could almost taste the instant gratification of deferred desires. Having done without for nearly a year, it was time to indulge. While I was lucky enough – actually, old enough – to be included in the first wave of inoculations, the rest of America is about to follow. The possibility that broader vaccine distribution will lead to “herd immunity” by the end of 2021 is no longer fanciful. And with the end of the Covid-19 nightmare, goes the argument... https://www.scmp.com/comment/opinion/article/3122735/covid-19-vaccinations-even-herd-immunity-may-not-revive-americas?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3122735/covid-19-vaccinations-even-herd-immunity-may-not-revive-americas?utm_source=rss_feed Tue, 23 Feb 2021 17:30:18 +0000 Plenty has been said, and rightfully so, about the violent insurrection at the US Capitol on January 6. Politicians are grappling with issues of legal and moral accountability. But the horrific events also touch on a critical contradiction of modern societies: the internet’s role as an instrument of democracy’s destruction. It was not supposed to be this way. The internet’s open architecture has long been extolled by cyber-libertarian futurists as a powerful new democratising force. Information... https://www.scmp.com/comment/opinion/article/3118627/us-capitol-riot-how-internet-exposes-weak-links-american-democracy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3118627/us-capitol-riot-how-internet-exposes-weak-links-american-democracy?utm_source=rss_feed Thu, 21 Jan 2021 11:45:07 +0000 The outlook for economic and financial markets hinges on the interplay between two cycles – the Covid-19 cycle and the business cycle. Notwithstanding the true miracles of modern science that we are now witnessing, the post-pandemic economy is in need of more than just a vaccine. Extraordinary damage was done by last spring’s lockdown. Now, a second and more horrific wave of the coronavirus is at hand – not dissimilar to the course of the 1918-20 influenza outbreak. In the United States, the... https://www.scmp.com/comment/opinion/article/3114895/pandemic-may-cast-longer-economic-shadow-us-policymakers-think?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3114895/pandemic-may-cast-longer-economic-shadow-us-policymakers-think?utm_source=rss_feed Tue, 22 Dec 2020 17:30:11 +0000 Suddenly, there is a credible case for a vaccine-led economic recovery. Modern science has delivered what must certainly be one of the greatest miracles of my long lifetime. Just as Covid-19 dragged the world economy into the sharpest and deepest recession on record, an equally powerful symmetry on the upside now seems possible. If only it were that easy. With Covid-19 still raging – and rates of infection, hospitalisation and death now spiralling out of control again – the near-term risks to... https://www.scmp.com/comment/opinion/article/3111296/despite-coronavirus-vaccine-hope-us-must-brace-itself-winter?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3111296/despite-coronavirus-vaccine-hope-us-must-brace-itself-winter?utm_source=rss_feed Wed, 25 Nov 2020 20:15:16 +0000 Just as China led the world in economic recovery in the aftermath of the global financial crisis of 2008, it is playing a similar role today. Its post-Covid rebound is gathering momentum amid a developed world that remains on shaky ground. Unfortunately, this is a bitter pill for many to swallow – especially in the United States, where demonisation of China has reached epic proportions. The two crises are, of course, different. Wall Street was ground zero for the 2008 crisis, while the Covid-19... https://www.scmp.com/comment/opinion/article/3107199/how-covid-first-china-trumping-america-first-economic-recovery?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3107199/how-covid-first-china-trumping-america-first-economic-recovery?utm_source=rss_feed Tue, 27 Oct 2020 08:50:08 +0000 The US dollar slide has entered the early stages of what looks to be a sharp descent, having already fallen by 4.3 per cent in the four months ending in August in terms of its real effective exchange rate – the index that matters the most for trade, competitiveness, inflation and monetary policy. This recent pullback comes after its nearly 7 per cent surge from February to April, when the dollar benefited from the flight to safety triggered by the Covid-19 economic shock. But even with the... https://www.scmp.com/comment/opinion/article/3103197/why-us-dollar-only-going-fall-faster-and-harder?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3103197/why-us-dollar-only-going-fall-faster-and-harder?utm_source=rss_feed Sun, 27 Sep 2020 09:00:16 +0000