Posts tagged ‘Monetary policy’

23/09/2016

Shacking up | The Economist

WHEN Da Lin moved in with his girlfriend two years ago, his mother tried to stop them: she feared that their living together unmarried would sully his girlfriend’s reputation and, by association, his too. She will be happy only after they finally marry next year (his family is buying the apartment, hers the car).

That generational clash is replicated in thousands of families across China: cohabitation without marriage was long anathema and officially illegal until 2001. Today it is commonplace.China’s social mores are changing astonishingly quickly. Before 1980 around 1% of couples lived together outside wedlock, but of those who wed between 2010 and 2012, more than 40% had done so, according to data from the 2010 and 2012 China Family Panel Studies, a vast household survey (see chart). Some reckon even that is an underestimate. A recent study by the China Association of Marriage and Family, an official body, found that nearly 60% of those born after 1985 moved in with their partner before tying the knot, which would put the cohabitation rate for young people on a par with that of America.

The number of unmarried couples living together is growing for many of the same reasons it has elsewhere: rising individualism, greater empowerment of women, the deferral of marriage and a decline in traditional taboos on pre-marital sex. Greater wealth helps—more couples can afford to live apart from their parents. Yet Chinese cohabitation has distinctive characteristics. In rich countries, living together is most common among poorer couples, but in China youngsters are more likely to move in together if they are highly educated and live in wealthy cities such as Beijing and Shanghai. Shacking up is seen as a sign of “innovative behaviour”, say Yu Xie of Princeton University and Yu Jia of the Chinese Academy of Social Sciences.

Elsewhere rising cohabitation represents the fraying of marriage: many couples never bother to wed. In China, however, cohabitation is almost always a prelude to marriage—as for Da Lin and his girlfriend—rather than an alternative to it. Marriage is still near-universal, although the skewed sex ratio resulting from China’s one-child policy and a cultural preference for boys has resulted in a surplus of poor rural men who will remain unhappily single. Some highly educated women in cities forgo marriage too.In some Western countries those who live together for an extended period enjoy some of the same legal rights and obligations as married couples. In China cohabitation carries no legal weight. And it is very hard for a child born out of wedlock to acquire a hukou, or residency permit, which provides access to health care, education or other public services.In the 1980s virginity was considered a woman’s chief asset and few couples dared to date openly, let alone live together. Now China is in the midst of a sexual revolution—some 70% of people have sex before marriage, according to a study conducted in 2012. Many young Chinese, however, still have conservative ideas about how their elders should behave: although cohabitation is also on the rise among the elderly, many of them avoid remarrying because their adult children oppose it.

Source: Shacking up | The Economist

06/06/2016

Indian Firms Continue to Flounder in the Face of Fantastic Fundamentals – India Real Time – WSJ

India has the highest gross domestic product growth of any large economy; its chronic inflation problem seems under control and it has a relatively business-friendly prime minister. But its companies’ profits remain utterly unimpressive.

The latest round of quarterly results showed once again that whatever is happening with top-line GDP expansion isn’t trickling down to the bottom line.

The profit after tax at the 30 companies that make up the benchmark Sensex rose only 2.7% from a year earlier. That is better than the 9% decline a year ago but a slowdown compared  to the previous quarter.

For the full fiscal year ended March, Sensex company profit fell 1.6%–their worst performance in seven years. Official data showed last week that the economy grew 7.6% in the same period.

Profits were pummeled as Indian government-owned banks reported losses as they set aside huge amounts of money for bad loans.

Source: Indian Firms Continue to Flounder in the Face of Fantastic Fundamentals – India Real Time – WSJ

01/11/2015

China Pessimism Is Overblown, IMF Says, Citing Booming Services Sector – China Real Time Report – WSJ

Recent Chinese economic data is stoking fear the world’s second largest economy is decelerating at pace that could pull the global economy into a recession. But the International Monetary Fund’s top Asia economist, Changyong Rhee, says such pessimism may be unwarranted.

A booming services sector—such as shipping and retail—is offsetting the collapse in manufacturing, he argues. Advertisement “We don’t think there’s enough evidence based on the manufacturing sector that there will be a hard landing,” Mr. Rhee said in an interview. “They definitely have a manufacturing slowdown, an overcapacity problem. But other parts of China are actually growing faster.” If Beijing relies too much on monetary policy to stimulate growth, it could fuel China’s economic problems rather than fix them, the IMF official cautioned. His warning came as the People’s Bank of China on Friday cut interest rates again in a bid to revive growth.

Old ways of measuring China’s economy—such as looking at electricity consumption—are outdated because they don’t accurately reflect the changing nature of growth, Mr. Rhee said. Services now account for more than 50% of the country’s economy and there is a good chance their contributions are being underestimated, he said. On first glance, China’s trade data appears to support worries about the economy. But digging a little deeper into the numbers may actually show the country’s move towards a growth model more reliant on consumer demand is already bearing fruit.

Although the value of imports has fallen, volumes tell a different story. By adjusting for the fall in commodity prices and the appreciation in the yuan, the IMF calculates imports actually grew in July by 2%. And while the amount of goods imported has declined, imports of services are in double digits.

China’s real-estate sector has also fomented concerns. But Mr. Rhee said there are signs property prices are stabilizing. That is not to say the IMF believes there is no cause for apprehension. Beijing fueled its stellar growth rate over the last two decades through cheap credit. Souring global growth prospects revealed a country vastly overinvested in manufacturing capacity, particularly by state-owned enterprises. The IMF estimates overinvestment totals nearly 25% of the country’s growth domestic product. That means government-owned firms will struggle to pay their loans on mountains of credit. “If they mismanage the financial market, then they could have a hard landing,” Mr. Rhee said.

Beijing is facing a daunting task. Winding down the amount of credit in the system too quickly could stall growth. But failure to cut corporate debt levels and deal with bad loans quickly could create a bigger credit crisis over the next couple of years. “One question is whether China can manage this transition with the current governance system,” the senior IMF official said. “That is a critical issue.” Beijing will need to ensure government agencies take greater responsibility for their respective areas of oversight and state-owned companies will need to have stronger budget constraints, he said. China’s recent market turmoil revealed a weak regulatory structure. And overhauling a political system that relied on state-owned firms to boost growth and enrich regions is also expected to be a challenge.

That’s why, even though the IMF is backing more stimulus by Beijing to prevent too much deceleration in the economy, fund officials are concerned the government may depend too much on the old system of juicing the economy through credit. Counting on monetary policy, rather than using the budget to stimulate the economy, could exacerbate the problem of overcapacity.

“If they rely on monetary policy too much, then they would continue the classic credit expansion,” Mr. Rhee said. Besides fueling bad investments by state-owned enterprises, it could also “drag on necessary structural and governance reforms.”

Source: China Pessimism Is Overblown, IMF Says, Citing Booming Services Sector – China Real Time Report – WSJ

05/08/2014

India central bank cautiously optimistic on growth – Businessweek

RBI head office, Delhi

RBI head office, Delhi (Photo credit: Wikipedia)

India’s central bank said Tuesday it sees signs of recovery in Asia’s third-largest economy even though the monsoon season, which is crucial for agriculture, had a weak start.

The Reserve Bank of India left its key interest rate unchanged at 8 percent Tuesday, maintaining a tough stance against stubbornly high inflation. It has faced calls to cut interest rates to help revive flagging growth.

“Domestic economic activity appears to be reviving, with incoming data suggesting a firming up of industrial growth and exports,” RBI Gov. Raghuram Rajan said in a statement.

The central bank remains on guard against inflation partly because of the slow start to the monsoon, which could drive up food costs, hurting the hundreds of millions of poor Indians who live on less than $2 per day.

Wholesale inflation eased to 5.4 percent in June.

“We are not against growth,” Rajan told reporters in a press briefing. But he said growth should be beneficial, not a short-lived mini-boom engineered by easy monetary policy.

via India central bank cautiously optimistic on growth – Businessweek.

14/12/2013

Six major economic tasks set for next year – Chinadaily.com.cn

Chinese leaders have wrapped up a four-day Economic Work Conference, promising to maintain stable economic policies to achieve reasonable economic growth in the coming year and pointing out six major tasks.

Six major economic tasks set for next year

The four-day economic conference, chaired by China’s President Xi Jinping, decided to maintain the proactive fiscal policy and prudent monetary policy stance in 2014.

In a statement after the conclusion of the close-door-meeting, officials said the country would expand its reforms into different sectors. Especially, focus should be placed on keeping reasonable credit growth and social financing next year. Pushing forward interest rate liberalisation and the internationalisation of the yuan currency also figure on the hit list. The six top tasks for 2014 are

1. Securing food supply, and at the same time, food safety;

2. Changing the industrial structure, resolve the over-capacity issue and promote sustainable economic growth driven by consumption, services and innovation.

3. The government will also try to better manage the debt of local governments.

4. Coordinating the development between different regions.

5. Improve people’s livelihood and boost employment.

6. Last but not least, China will also spur international financial cooperation, mainly in the areas of Free trade agreements and investment deals.It’s widely expected that China’s economy will grow at annual 7.6-7.7 percent this year, above the government target of 7.5 percent.

via Six major economic tasks set for next year – Chinadaily.com.cn.

See also: https://chindia-alert.org/economic-factors/china-needs-to-rebalance-her-economy/

04/09/2013

Manmohan seeks break with developed world’s policies

The Hindu: “Prime Minister refers to an orderly exit from unconventional monetary policies in the backdrop of splits between emerging markets and the U.S. and the slowing growth of India.

Prime Minister Manmohan Singh has called for an “orderly exit” from unconventional monetary policies being pursued by the developed world to avoid damaging growth prospects of the developing world. File photo

Amid imminent phasing out of the fiscal stimulus by U.S. Federal Reserve, Prime Minister Manmohan Singh on Wednesday called for an “orderly exit” from unconventional monetary policies being pursued by the developed world for the last few years to avoid damaging growth prospects of the developing world.

In a statement before leaving for the 8th G20 Summit in the Russian city of St. Petersburg, he also underscored the importance of the grouping of industrialised and major developing economies to promotes policy coordination among major economies in a manner that provides for a broad based and sustained global economic recovery and growth.

The Prime Minister made a reference to an orderly exit from unconventional monetary policies in the backdrop of splits between emerging markets and the U.S. over its winding down of stimulus and the slowing growth of India and other four BRICS countries.

Dr. Singh said though there are encouraging signs of growth in industrialised countries, there is also a slowdown in emerging economies which are facing the adverse impact of significant capital outflow.

“I will emphasise in St. Petersburg the need for an orderly exit from the unconventional monetary policies being pursued by the developed world for the last few years so as to avoid damaging the growth prospects of the developing world,” he said.

Brazil, India, Russia, China and South Africa — grouped in the BRICS bloc seen as an alternative economic powerhouse — all go into the meeting experiencing slowing growth, embattled currencies and huge capital outflows.

The Indian rupee has lost one-fifth of its value against the US dollar this year following major capital outflows triggered mainly due to the moves by the Fed Reserve.

India is also suffering a decade-low growth and GDP rose just 4.4 per cent in the first quarter this fiscal, the weakest performance since 2009.

Dr. Singh said he will once again emphasise at the Summit that the G20 should ensure primacy of the development dimension in his deliberation, focus on job creation, promote investment in infrastructure as the means of stimulating global growth and create potential in developing countries to sustain higher growth in the medium term.”

via Manmohan seeks break with developed world’s policies – The Hindu.

30/01/2013

* Indian Rupee at Over 3-Month High

Indian rupee collection

Indian rupee collection (Photo credit: Wikipedia)

WSJ: “The Indian rupee rose to its highest level in more than three months against the U.S. dollar Wednesday, tracking strong gains in the euro.

At 1005 GMT, the dollar was trading at 53.37 rupees, after falling to 53.35 rupees–a level not seen since Oct. 23. The dollar was at 53.76 in late Asian trade Tuesday.

The euro touched a fresh 13-month high of $1.35367 Wednesday.

The rupee benefited also from hopes of more monetary-policy easing by the central bank in 2013 to help boost economic growth which has slowed to its weakest in nearly a decade.

Tuesday, the Reserve Bank of India trimmed its key lending rate by a quarter-percentage point to 7.75%–the first rate cut in nine months–and said “it is critical now to arrest the loss of growth momentum.”

The RBI said its policy stance intends to “provide an appropriate interest rate environment to support growth as inflation risks moderate.””

via Indian Rupee at Over 3-Month High – WSJ.com.

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