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The latest IMF report on China was released yesterday and provides a lot of good information and intelligent insight on the Chinese economy. The IMF’s measure of China’s adjusted fiscal deficit (including estimated off-budget

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China is aging so rapidly that it urgently needs to address the problem of a rapidly declining work force in a slowly declining population. To give an idea of relative population changes among the three most populous countries, today

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are 4.3 Chinese for every American and 4.7 Chinese of working age (ages 15-64), while there is just over 1 Chinese for every Indian and 1.1 Chinese of working age.

By the end of the century, however, there are expected to be 2.5 Chinese for every American and...

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just 2.4 Chinese of working age, while there will be 1.4 Indians for every Chinese and 1.5 Indians of working age. Over the rest of this century, in other words, while China’s population declines quite rapidly relative to that of the two other most populous countries, it...

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also switches from having a much better dependency ratio than either to having a worse one than either, with far more of its dependents being the elderly rather than children. In effect its working age population will drop by half relative to those of the other two.

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This is going to be a very tough problem to resolve, although to the extent China succeeds, it will be very useful as an example for other countries. I am not sure they are going about it the right way, however. Making seniors make better use of smart technology sounds...

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This is a really tough problem to resolve, especially if the massive increase in inflows from the trade and financial accounts are sustained, as I expect they will be well into 2021.

Clearly the PBoC would like to see the RMB gradually...

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strengthen. This would keep financial markets stable and promote rebalancing, but the RMB has already strengthened a lot, and this puts unwanted pressure on exporters and “international circulation”.

Although PBoC reserves have been flat, other state-controlled Chinese...

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banks have bought large amounts of dollars, but this is expensive. If these banks have half a trillion dollars of exposure, for example, they are losing at least $15-17 billion annually on negative carry, plus another $20-30 billion just this year from the rise of the RMB.

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Beijing seems also to be trying other measures to slow the rise. The regulators are relaxing capital controls on outflows. In mid October the PBoC cut to zero the reserve requirement ratio for banks doing FX forward trading. This requirement was created in 2018 to reduce...

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downward pressure on the RMB. In late October it suspended the counter-cyclical factor in RMB fixing, which was introduced in 2017 also to reduce downward currency pressure. But in both cases while the RMB dropped a few pips on the news, it quickly resumed its upward climb.

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It is a little frustrating to see the response many analysts had to the GDP growth data Chinese released today. These numbers aren’t especially good, and they certainly shouldn’t have been surprising. Back in April and May, when most

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were projecting negative or barely positive GDP growth for China in 2020 (the OECD, for example, expected China’s GDP to contract by 3.7%), I insisted that GDP growth for 2020 would be positive, and probably between 2% and 3%.

Today, it was reported as 2.3%. How did...

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I know? Because I knew that while most of the healthy sources of Chinese growth would contract (except for exports, which would expand given Beijing’s intense supply-side response to the impact of Covid-19), Beijing was going to respond to a significant...

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worsening of the healthy parts of its economy by unleashing enough of the unhealthy, non-productive growth it has long tried to constrain – basically real estate and infrastructure investment – in order to achieve as much economic activity as it...

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needed for domestic political ends.

And that’s exactly what happened. While GDP grew by 6.5% in the fourth quarter, even with substantial tailwinds its retail sales measure – a proxy for consumption – was only up 4.6%, and it was down 3.9% overall in 2020.

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While debt-to-GDP ratios already have a limited but very misunderstood use, it seems economists are finding bright new ways of misunderstanding them. Now we say that when nominal interest rates are lower than nominal growth rates, the

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downward pressure on the debt-to-GDP ratio makes rising government debt and larger government deficits more sustainable and more easily justified.

This is totally confused. When the nominal interest rate is lower than the nominal GDP growth rate, it only means that net...

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borrowers are getting a disproportionate share of growth relative to net lenders. This in and of itself changes the comparability of the debt-to-GDP ratio, so the fact that the ratio may decline tells us nothing about its sustainability which, I'm glad to say, isn't...

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a mistake Olivier Blanchard makes in this article.

At least three things matter. First, whether or not rising debt is sustainable depends almost wholly on underlying conditions in the real economy, and only trivially on the arithmetical relationship between...

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the interest rate and the growth rate. Second, this approach simply assumes away financial distress costs, in which case debt capacity is infinite anyway and the interest rate becomes irrelevant. And third, it assumes that the nominal debt level matters independently...

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Good article. But while growing international criticism and rising trade tensions may have had some impact, as the article suggests, I don’t think they really explain the great reversal in BRI lending of the past few years.

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As I have been writing since 2011, China’s development lending was always likely to follow the pattern of other countries when they first “went out” (e.g. the US in the 1920s, USSR in the 1950s, Japan in the late 1970s). Because of little historical...

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knowledge and no previous experience, an early rapid rise in development lending would be driven mainly by underestimating risk and an overestimation of their own business "success" in making loans, and would of course be further supported by geopolitical ambitions.

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This combination would inevitably lead to bad lending decisions, followed just as inevitably by debt restructuring, loan losses, and a contraction in development lending. In the 1920s, for example, the US set off quite explicitly and aggressively to displace England in...

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Latin America, and American businesses and banks assumed they “understood” Latin America much better than the English did, in spite of the vast English experience there, but their early displacement of British lending only resulted in the huge loan losses of the 1930s.

1 So, today we turn to early Islamic Beirut. what do we know of the earliest times of #Beirut under early Islamic rule, starting with the #conquest. How and when did Beirut enter the emerging Muslim empire? -rm

2 Let’s start with traditional sources for the early Islamic period. Of those, only al-Balādhurī (d. ca. 892), the Abbasid scholar, is informative. Other Muslim and non-Muslim sources including al-Ṭabarī's Tārīkh are silent on the matter.-rm

3 In his small tome, Futūḥ al-Buldān, al-Balādhurī tells his readers: “After the conquest of Damascus, Yazīd came to Sidon, ʿArqa, Byblos, and Beirut which lie on the sea coast with his brother Muʿāwiya leading the van of the army.”-rm

4 Hence, the men who conquered Beirut were Yazīd b. Abī Sufyān (d. 639) and his half-brother and future caliph Mu‘āwiya (r. 661-680). The date of the conquest of the coast falls between 636 and 639 at the latest, the date of the death of Yazīd in the plague of Emmaus. -rm

5 Yazīd and the Muslim army likely took the coastal road to Beirut, a path taken by numerous armies before. They would have either swung from Damascus to Baalbek through the Hims gap to ‘Arqa, then Byblos, crossed the Dog River, and arrived at the eastern side of Beirut.

THREAD

1)
#Iran's echo chamber at work

@JZarif describes Qassem Soleimani as a "national hero" who defeated ISIS

Iran apologists/lobbyists begin

There hv been concerted efforts by members of the Oyo APC to rewrite history. They repeat so often the lie that Ibadan was a peaceful place bfr Seyi Makinde took over office on May 29, 2019. It has become a case of, repeat a lie often enough, & it begins to sound like the truth.

Immediately after he took over the government in May 2011, a violent clash erupted. The bloody clash described as "a recurring decimal" in the state saw one dead and about 10 injured.

By June 2012, there was another clash. This time between the NURTW and the PDP. The story was that the NURTW were angry that PDP members were singing Arikesola's praises. You can read the report for yourself.

May 2013 - Violence erupted on Thursday in Ibadan, the Oyo State capital, when known members of the ACN and the NURTW made to disrupt a political gathering put together by the leader of Accord Party, Senator Rashidi Ladoja.

August 2013- No fewer than eleven herdsmen have been killed in the last six weeks in some parts of Oke Ogun area; Otu, Ikomu, Igbo-Ora, Iwere-Ile, Iganna, Ilaju and Ado-Awaye.