https://www.scmp.com/rss/322146/feed Chen Zhao is founding partner and chief strategist of Alpine Macro. From 2015 to 2016, he was co-director of macro research at Brandywine Global Investment Management. Prior to that, Chen spent 23 years at BCA Research. He holds an MA in economics from the Central University of Finance and Economics, was a visiting scholar at University of Illinois at Urbana-Champaign and pursued post-graduate studies with a PhD candidacy at McGill University. en https://assets.i-scmp.com/static/img/icons/scmp-meta-1200x630.png https://www.scmp.com Chen Zhao Chen Zhao The notion that China is flooding the world with excess industrial capacity is usually based on its massive surplus in goods trade, now standing at nearly US$1.2 trillion. That number is real, but treating it as proof of systemic overcapacity is not entirely correct. Goods trade is only one slice of China’s external balance, and it is increasingly offset by large outflows such as import of services and investment income payments. Moreover, China’s total current account surplus is US$657 billion... https://www.scmp.com/opinion/china-opinion/article/3341555/fears-overcapacity-ignore-chinas-full-balance-payments-picture?utm_source=rss_feed https://www.scmp.com/opinion/china-opinion/article/3341555/fears-overcapacity-ignore-chinas-full-balance-payments-picture?utm_source=rss_feed Fri, 30 Jan 2026 01:30:08 +0000 There is an enormous amount of animosity in Western media towards Chinese President Xi Jinping’s purported power grab: Xi has been depicted as a Maoist ideologue who cares about nothing but absolute control of the party and economy. Some China observers predict that Xi will reinstate a centrally planned system, dismantling or rolling back the free market reforms of the last four decades. These perceptions will prove excessive and simplistic. First, although Xi will run the country with an iron... https://www.scmp.com/comment/opinion/article/3198866/taiwan-economy-west-being-overly-pessimistic-about-xis-china?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3198866/taiwan-economy-west-being-overly-pessimistic-about-xis-china?utm_source=rss_feed Thu, 10 Nov 2022 17:00:13 +0000 Since the Russian invasion of Ukraine, the West’s financial sanctions against Moscow have been among the most draconian in modern history. The Russian central bank’s assets are frozen, state-owned banks’ assets have been confiscated and the personal wealth of rich Russians has been seized without much due process. While this financial war will undoubtedly hurt the Russian economy badly, it will also produce many long-lasting consequences for the global financial system. The US dollar, the euro... https://www.scmp.com/comment/opinion/article/3171501/chinas-national-wealth-remains-vulnerable-western-financial?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3171501/chinas-national-wealth-remains-vulnerable-western-financial?utm_source=rss_feed Fri, 25 Mar 2022 19:30:21 +0000 There is wide recognition of the importance of demographic trends in economic growth. By and large, an ageing population is thought to reduce a country’s growth potential because growth is the sum of labour force growth plus productivity growth. For this reason, the steady decline in China’s population growth conjures up projections that the world’s second-largest economy may be heading for a permanent “middle income trap”. China does indeed face a unique demographic problem: the country is... https://www.scmp.com/comment/opinion/article/3142571/three-reasons-chinas-shrinking-population-wont-slow-economy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3142571/three-reasons-chinas-shrinking-population-wont-slow-economy?utm_source=rss_feed Tue, 27 Jul 2021 06:30:25 +0000 A widely circulated research report is predicting a “cataclysmic recession” in Hong Kong. The basic argument is that Hong Kong has an enormous private-sector debt problem, manifested by its high credit-to-GDP ratio, and that the Hong Kong private sector “may perpetually leverage itself” to a point that it eventually precipitates what would probably become a “cataclysmic recession”. This line of argument is based on misinformation, a highly questionable theory and a misunderstanding of how Hong... https://www.scmp.com/comment/opinion/article/3107139/why-hong-kongs-indebted-companies-wont-trigger-economic-collapse?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3107139/why-hong-kongs-indebted-companies-wont-trigger-economic-collapse?utm_source=rss_feed Wed, 28 Oct 2020 00:45:09 +0000 The Trump administration’s anti-China policy has reached a crescendo. After trying to cripple Huawei, it is cracking down on TikTok, WeChat – and who knows which other Chinese app or technology company. Secretary of State Mike Pompeo has declared Beijing the enemy of the free world and called on the United States’ allies to collectively contain China’s “designs on hegemony”. Like it or not, the Trump administration has launched a cold war against China.  The dramatic turn of Trump’s China policy... https://www.scmp.com/comment/opinion/article/3097251/trumps-anti-china-policy-doomed-fail-his-covid-19-strategy-did?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3097251/trumps-anti-china-policy-doomed-fail-his-covid-19-strategy-did?utm_source=rss_feed Fri, 14 Aug 2020 17:00:19 +0000 For President Donald Trump, aggressively attacking China could prove an effective way to deflect criticism in the United States over his handling of the Covid-19 outbreak. To match the toughening rhetoric, the Trump administration is reportedly weighing various options aimed at punishing Beijing’s alleged cover-up of the coronavirus outbreak in Wuhan. However, “punishing” China will not only prove easier said than done, but could also put the world at risk of financial chaos or even war. There... https://www.scmp.com/comment/opinion/article/3084041/why-trumps-threats-punish-china-over-covid-19-ring-hollow?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3084041/why-trumps-threats-punish-china-over-covid-19-ring-hollow?utm_source=rss_feed Wed, 13 May 2020 19:00:11 +0000 For some time, Chinese policymakers have been fearful of rising domestic indebtedness. Their concern is that an overleveraged economy will breed financial instability and lead to economic calamity. As such, Beijing’s monetary and credit policy has been preoccupied by deleveraging, causing the economy to slump from time to time. It is not an exaggeration to say that China’s deleveraging campaign has often become a key source of weakening global demand and commodity price declines since 2014. Is... https://www.scmp.com/comment/opinion/article/3047754/china-must-not-choke-private-sectors-access-credit-name?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3047754/china-must-not-choke-private-sectors-access-credit-name?utm_source=rss_feed Mon, 27 Jan 2020 13:00:10 +0000 China’s economic growth rate has been disappointing for those who had anticipated a strong upswing. However, many analysts and commentators have focused on China’s slowdown but ignored the enormous size of the economy and the various implications. Anyone who wants to understand the Chinese economy must first deconstruct their analysis into two distinctive components: structural and cyclical.  Structurally, China’s natural rate of economic growth has been falling for years, as the size of the... https://www.scmp.com/comment/opinion/article/3023614/why-theres-no-reason-be-bearish-about-chinas-slowing-economy-just?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3023614/why-theres-no-reason-be-bearish-about-chinas-slowing-economy-just?utm_source=rss_feed Wed, 21 Aug 2019 15:00:12 +0000 A possible Sino-US trade deal is widely regarded as a positive step for the world economy, as a tit-for-tat trade war between the two economic giants will only lead to shrinking incomes for both economies, cause supply chain disruptions and erode corporate profitability. Nevertheless, much less attention has been paid to how the world economy and financial markets would adjust to a possible Sino-US trade deal. In this regard, the financial and economic implications of a China-US trade deal can... https://www.scmp.com/comment/insight-opinion/article/3008102/us-china-trade-deal-wont-be-win-global-markets-if-beijing?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/article/3008102/us-china-trade-deal-wont-be-win-global-markets-if-beijing?utm_source=rss_feed Mon, 29 Apr 2019 17:00:16 +0000 The Chinese economy has been characterised by a stop-go pattern and policy flip-flops since 2010: a period of strengthening growth is always followed by a bout of monetary and fiscal tightening, which invariably leads to a growth slump and forces the government to reverse policy again. The root cause of this curious economic back-and-forth is that the Chinese government has fully embraced the popular view that the economy is overleveraged. Thus, whenever business activity is strengthening,... https://www.scmp.com/business/article/2175366/deleveraging-wrong-way-fix-chinas-economy-when-it-doesnt-even-have-debt?utm_source=rss_feed https://www.scmp.com/business/article/2175366/deleveraging-wrong-way-fix-chinas-economy-when-it-doesnt-even-have-debt?utm_source=rss_feed Wed, 28 Nov 2018 06:02:24 +0000 The Chinese stock market’s fall has finally unnerved policymakers. Securities Regulatory Commission chairman Liu Shiyu has assured investors that “spring is around the corner”, and governor Yi Gang promises that the People’s Bank of China’s toolbox is full and can deal with any risks facing the economy. None of these statements has made a major difference, with share prices falling to fresh lows for this year. Since 2010, an economic stop-go pattern and policy flip-flops have characterised the... https://www.scmp.com/comment/article/2168832/how-chinas-falling-stock-market-mirrors-its-failing-economic-policy?utm_source=rss_feed https://www.scmp.com/comment/article/2168832/how-chinas-falling-stock-market-mirrors-its-failing-economic-policy?utm_source=rss_feed Wed, 17 Oct 2018 04:00:45 +0000 The US and China are on a collision course. The bilateral trade imbalance was the key issue in the US-China trade dispute, but Washington is now after Beijing’s economic model. Trade hawks in the Trump administration want to punish China for its industrial policy, technology transfer requirements or simply, its “bad behaviour”. The Chinese government now regards the US trade threat as a blatant attempt to deny China’s right to a “peaceful rise”. Meanwhile, as China-bashing becomes politically... https://www.scmp.com/comment/insight-opinion/united-states/article/2160599/why-tit-tat-strategy-wont-work-china-trade-war?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/united-states/article/2160599/why-tit-tat-strategy-wont-work-china-trade-war?utm_source=rss_feed Tue, 21 Aug 2018 05:00:30 +0000 Chinese financial markets look precarious, with both stock prices and the yuan falling precipitously. Many blame the renewed yuan weakness on trade tensions with the United States. I am not so sure. China’s total exports to the US account for 3.5 per cent of gross domestic product. In the highly unlikely event that these exports are halved by higher tariffs, the net impact on the Chinese economy would still be very manageable. Therefore, the weakening financial markets in China must have been... https://www.scmp.com/comment/insight-opinion/united-states/article/2154763/trade-war-hits-chinas-focus-should-be?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/united-states/article/2154763/trade-war-hits-chinas-focus-should-be?utm_source=rss_feed Wed, 11 Jul 2018 08:00:45 +0000 China’s crawling currency peg is in a slow-motion crisis. Softening economic growth and the downward creep of the yuan have become a self-feeding prophecy, leading more and more households and businesses to convert their domestic savings into dollars. Currently, the People’s Bank of China (PBOC) still holds US$3.3 trillion in foreign exchange reserves, a formidable war chest to defend the currency. However, at the current rate of capital flight (about US$150 billion a month), China’s official... https://www.scmp.com/comment/insight-opinion/article/1912376/how-china-can-best-solve-its-currency-crisis?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/article/1912376/how-china-can-best-solve-its-currency-crisis?utm_source=rss_feed Sun, 14 Feb 2016 00:00:52 +0000