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Sorry，刚下班，今天发的稍微晚了一点。越障有点长，大家坚持住哈。
【速度】
ECONOMY & POLICY
China’s Economic Slowdown: Why Stimulus Is a Bad Idea
What Beijing needs to spur growth is not greater spending or easy money, but fundamental reform
【计时1】
Anyone who thought China was impervious to either the perilous state of the global recovery or the laws of basic economics should take a look at the data streaming out of the country in recent months. GDP growth in the second quarter slipped to 7.6%, the slowest clip in three years. Manufacturing output and exports have been weak and the property sector has stalled. The IMF recently lowered its forecast for China’s growth in 2012 to 8% — which would be the economy’s worst performance since 1999. And with the sagging data have come louder and louder cries for greater government stimulus to pump up growth, as Beijing’s policymakers did successfully after the 2008 financial crisis. “There’s lots more the government can do to ratchet things up,” HSBC said in a recent report.
That’s exactly what China doesn’t need, however. Government policies to greatly boost growth will only exacerbate the percolating dangers within the Chinese economy — dangers that could even result in an economic crisis. Instead, the current slowdown shows how badly China needs a new growth model, and the reform necessary to build one.
For several years now, economists have been warning that China’s growth is unbalanced and, therefore, unsustainable. The economy is too dependent on investment and exports to drive growth, they argue, and to fix that problem, Beijing has to do more to encourage domestic consumption as another pillar of development. Not much has really been done to “rebalance” the economy, however, and sometimes it seemed that didn’t much matter. As the economists babbled, the economy continued to grow.
【261 words】
【计时2】
As the global recovery stumbles and Europe remains embroiled in a debt crisis, Chinese exports have taken a hit. At home, meanwhile, Beijing’s efforts to control rapidly rising property prices dampened investment in real estate. Property-investment growth in the first half of 2012 was half the rate posted in the same period of 2011. China, though, has nothing else to keep growth going. Its own consumers can’t fill in the gap. Private consumption in China relative to GDP is among the lowest of any major economy and remains constrained by government policies that punish consumers to subsidize investment. Thus the need to rebalance. If China’s consumers played a bigger role in overall national growth, the country would have another leg to stand on when the others weaken.
Why hasn’t China done more to rebalance? The scale of the adjustment necessary to switch from an investment-led to consumption-led growth machine is so monstrous that the country would likely experience a lower rate of growth while it is taking place — something policymakers so far have been reluctant to accept. Rebalancing will also require major reforms within the economy — such as liberalizing regulated interest rates and curtailing the influence of the state sector — which would pinch powerful interest groups. Policymakers have thus chosen to talk about rebalancing while perpetuating the policies that prevent it from happening.
【223 words】
【计时3】
Beijing has trotted out many of the same stimulus policies used after the 2008 Lehman Brothers collapse to stimulate growth. China’s central bank cut its benchmark interest rate twice in less than a month recently, and the amount of cash that banks must hold in reserve has been reduced to encourage lending. The government is also fast-tracking approvals of new infrastructure projects. Some economists expect more such action to be taken in the second half of the year.
In doing so, however, Beijing will only exacerbate the frightening distortions within the economy. Easier money will fuel even high levels of debt, which have already spiked in recent years. That will come to haunt the financial sector in the form of increased numbers of bad loans. Much of any new lending would end up in the hands of state companies, which are terribly inefficient and wasteful. In other words, large-scale stimulus measures will perpetuate the economy’s reliance on investment, leaving it continually vulnerable rather than building new sources of growth. Rating agency Fitch warned earlier this month of the dangers of pursuing this strategy:
Renewed reliance on investment to support activity threatens to prolong the Chinese economy’s structural imbalances … Statements by senior officials including Premier Wen Jiabao have pointed to renewed emphasis on investment to support growth in the remainder of the year. An investment-led strategy backed by monetary easing is likely to avoid a “hard landing” in the short term … However, this investment-led strategy is likely to be at the cost of postponing resolution of the economy’s structural imbalance towards investment. Moreover, the rise in investment as a share of GDP since 2008, which is inherently unsustainable, has coincided with deteriorating efficiency as measured by the ratio of incremental output per unit of investment.
【296 words】
【计时4】
Yet at the same time, there are indications that China’s policymakers understand the risks inherent in massive stimulus. The current efforts to propel growth are far smaller in scale than what the government employed in 2008–09. Key restrictions on the property sector, like measures to limit speculative purchases of apartments, have remained firmly in place even as the sector has faltered. And as Michael Pettis, a finance professor at Peking University, pointed out in the Financial Times the other day, China has allowed real interest rates to rise substantially — a measure that would curtail investment while boosting the income of savers and thus consumption. Such a policy direction would inevitably lead to slower but ultimately healthier growth — a course, Pettis convincingly argues, the rest of the world should encourage:
As China rebalances we would expect slowing growth and rapidly rising real interest rates, which is exactly what we are seeing. Rather than panicking and demanding that Beijing reverse the process, we should be relieved that China is finally solving its problems.
The intentions of China’s policy mandarins will become clear over the next few months. Taking the proper reform measures will require the government to accept a lower growth rate while the economy adjusts. Will they take more drastic steps to pump up the country’s existing but strained growth model or earnestly start the process of creating a new growth model? The future of China’s economic miracle may well depend on the answer.
【244 words】
Where Are College Costs Going Up? 14 Public Universities with the Fastest-Growing Tuition
Steep Hikes for Many Students
By Kayla Webley | @kaylawebley | June 13, 2012 | 18
【计时5】
All tuition increases are not created equal. Updated information, released June 12 by the Department of Education on their College Affordability and Transparency Center site, shows that while tuition at public, four-year universities nationwide went up at an average of 15% from 2008 to 2010, some colleges upped tuition by as much as 40 to 60%. In the most egregious case of tuition hiking, the University of the District of Columbia raised their tuition by 123%.
“Unfortunately, we are seeing some alarming trends,” Education Secretary Arne Duncan said in a press call with reporters.
What’s even more alarming is that if you look at just those universities within the 50 states (excluding universities in Puerto Rico, which had large increases in tuition), the vast majority of schools on the list are from Arizona, Georgia and California. The University of California system alone has six schools on the list.
But while the steep hikes in tuition are alarming, the colleges on this list are still cheaper than those universities that top the list of schools with the highest tuition. While the national average for in-state tuition and fees for four-year, public universities in 2010 was $6,669, tuition at Pennsylvania State University, which totaled $15,250, is more than double the national average. Other schools on the list include the University of Pittsburgh ($14,936), University of Vermont ($14,066), University of New Hampshire ($13,672) and St. Mary’s College of Maryland ($13,630).
Tuition at private, not-for-profit colleges averaged $21,949. The most expensive private schools include Connecticut College ($43,990), Sarah Lawrence College ($43,564), Columbia University ($43,304), Vassar College ($43,190) and George Washington University ($42,905).
To get a better idea of where college costs are going up and by how much, TIME put together this list of schools with the fastest-growing tuition. The 14 colleges on the list are all within the 50 states and have undergraduate populations greater than 10,000.
【314 words】
【越障】
Emerging markets
Dream on?
The emerging economies cannot blame all their woes on the rest of the world
Jul 21st 2012 | HONG KONG | from the print edition
[attachimg=595,335]103852[/attachimg]
FIFTEEN years ago this month, Thailand at last allowed its currency, the baht, to fall against the dollar, abandoning a long, losing battle with market forces. “I haven’t slept for two months,” said the governor of the central bank on the day of the devaluation. “I think that tonight I’ll be able to sleep at last.” What followed was a five-year nightmare for emerging markets, as the financial crisis spread to Thailand’s neighbours, then to Russia and Brazil, before eventually claiming Argentina and Uruguay in July 2002.
After the tossing and turning of 1997-2002, the next decade went like a dream. In 2003 China resumed double-digit growth; India’s economy expanded by 8%, a feat it would surpass in four of the next six years; Brazil’s new president, Luiz Inácio Lula da Silva, appeased the IMF and the bond markets by cutting public debt and achieving the first of five annual current-account surpluses. Goldman Sachs released the first of its 2050 projections (“Dreaming with the BRICs”, its catchy acronym for Brazil, Russia, India and China), suggesting that the big emerging economies would eventually inherit the Earth.
The crisis-hit countries emerged from devaluation, default and distress with low expectations, cheap and flexible currencies, scope to borrow and room to grow. Global capital markets welcomed them back, buying their equities and their bonds, even when denominated in their own currencies. The popular emerging-markets stockmarket index compiled by MSCI rose by over 350% from the end of 2002 to its peak in October 2007.
Rather than spend these capital inflows, emerging economies recycled them. They amassed foreign-exchange reserves as a guarantee against ever again succumbing to a currency crisis or the ministrations of the IMF. Some have even begun to help fund the fight against crises elsewhere. On July 10th Indonesia’s central bank confirmed it would buy $1 billion of the IMF’s notes, a poignant reversal of roles.
But after a dream decade, something is amiss. China is now struggling to grow as fast as 8% (its GDP expanded by 7.6% in the year to the second quarter). India, a country that once aspired to double-digit growth, can now only dream of ridding itself of double-digit inflation. None of the biggest emerging economies stands on the edge of a dramatic financial precipice, like their counterparts in the euro area, or a fiscal cliff, like America’s. But their economic prospects have nonetheless started to head downhill.
The MSCI emerging-market index is flat for the year and still 30% below its 2007 peak. Only 15 months ago, the IMF’s forecasters expected Brazil’s economy to grow by over 4% this year. This week their 2012 forecast was just 2.5% (see chart 1). Over the same period, South Africa’s 2012 growth forecast was cut from 3.8% to 2.6%.
[attachimg=290,281]103853[/attachimg]
Some of this slowdown can be blamed on events elsewhere. Europe’s pain, for example, has spread far beyond its immediate neighbours. The European Union remains the biggest foreign market for many emerging economies, buying about 19% of China’s exports and 22% of South Africa’s. Euro-area banks have also begun to sell assets and withdraw lending. They account for about 45% of credit to emerging Europe and a substantial share of trade credit in Asia.
Some of the slowdown was also orchestrated by governments nervous about price pressures or property bubbles. Poland’s central bank raised rates as recently as May to quell inflation, which persists above its 2.5% target. China’s premier, Wen Jiabao, fell into a game of chicken with the country’s 50,000 property developers, waiting for them to cut prices, even as they waited for him to lift restrictions on multiple home purchases. As growth slows, policymakers will ease in response.
But there is more to this story. The slowdown is not simply a demand-side phenomenon, the result of weak exports and past tightening dragging growth below its long-run potential. The underlying rate of sustainable growth may also be less impressive than previously thought. As the IMF pointed out this week, the last decade or so may have “generated overly optimistic expectations about potential growth”.
High commodity prices boosted some emerging economies, such as Brazil, Russia and South Africa. They also flattered emerging-market share prices. As Bank of America Merrill Lynch observes, natural-resource industries account for more than a third of the market capitalisation of the BRICs and over a quarter of the market cap of MSCI’s benchmark index.
The dream decade was also sweetened by rapid credit growth, according to the fund. The ratio of bank credit to GDP has risen steeply in many emerging economies (see chart 2) over the past ten years. From trough to peak, it rose by over 20 percentage points in Brazil, China, the Czech Republic, Hungary, Malaysia, Poland, South Korea, Taiwan and Turkey. It rose almost as far in India and Russia.
[attachimg=290,317]103854[/attachimg]
In some emerging economies, the upswing began late in the decade. In China, the credit ratio has risen by over 27 points since 2008 alone. In others, it has already ended: in South Africa, Hungary and South Korea, the credit ratio has fallen substantially since the financial crisis.
A rising credit ratio may represent healthy “financial deepening” as the banking system does a better job of capturing household saving and reallocating it to its best use. But it may also reflect a potentially destabilising “financial cycle”, an upswing in credit and other financial variables, which overlays and often outlasts the swings in GDP and inflation that mark conventional business cycles.
The upturn in the financial cycle may flatter growth, as easy credit encourages spending and speculation, boosting the value of collateral and thus easing credit further. This may have lulled emerging economies into thinking they could grow faster than they really can, just as permissive finance helped persuade the rich world that its growth was more stable than was actually the case.
Ninety-nine cred balloons
When credit booms show up in inflation, central banks are typically quick to react. But consumer prices often remain tame, because rising exchange rates and imports fill the gap between expanding domestic demand and supply. That allows the booms to grow dangerously large. Selim Elekdag and Yiqun Wu of the IMF have identified 99 “credit balloons”, episodes of fast credit growth over the past 50 years in rich and emerging economies alike. Of these balloons, 44 popped badly (resulting in a banking crisis, currency crisis or both) and another 13 very badly, with a 9% contraction of GDP on average.
In Asia’s emerging economies, credit ratios have risen further and faster than they did before the Thai crisis, says Frederic Neumann of HSBC. Even so, the region’s central bankers need not lose too much sleep. Now, unlike then, bank loans have not outstripped deposits. And in most countries, domestic investment has not outstripped domestic saving. If foreign capital were to withdraw abruptly as it did 15 years ago, the effects would not be as ruinous. Most foreign-capital inflows come in the form not of debt but equity, which shrinks to fit an economy’s ability to pay. The debt of Asian economies is also now partly in their own currency, which would fall in a crisis, taking some of the strain. If foreign capital retreats, Asia’s surplus countries should have enough resources to replace it, although the switch may not be entirely smooth.
The picture is different in Europe. In Poland, for example, credit to the private sector grew by an extraordinary 36.6% in 2008, contributing to a current-account deficit of almost 9% of GDP. The crisis interrupted these excesses but did not reverse them: the country’s external deficit remains over 5% of GDP. In recent months, the FDI and portfolio capital Poland requires to fill this gap has flowed in the wrong direction. That leaves the country uncomfortably “susceptible” to the euro crisis, says Raffaella Tenconi of Bank of America Merrill Lynch, if it prompts a further withdrawal of cross-border lending.
If the credit cycle has got out of hand, who is to blame? Policymakers in emerging economies sometimes present themselves as powerless victims of vague global forces, such as the “tide of liquidity” supposedly sweeping across the globe, thanks to near-zero interest rates in America, Japan and the euro area. But research by Mr Elekdag and Fei Han, also of the IMF, suggests that such external factors explain only a small portion (16%) of the variation in credit growth in emerging Asia. By imposing curbs on domestic credit and allowing greater flexibility in their currencies, economies can regain greater control.
[attachimg=595,335]103855[/attachimg]
As the financial cycle ebbs and emerging economies slow, must they forget the “dream” of an “emerging century”, as Jonathan Anderson, formerly of UBS, has put it? Not yet. By 2010, the combined dollar GDP of the BRICs was already about 75% bigger than Goldman Sachs foresaw when it made its original projections seven years earlier. There is therefore a substantial margin for error.
The big emerging economies may never again grow as fast as they did after 2003. But the BRICs scenarios did not assume they all would. In its latest projections, released last year, Goldman Sachs envisioned average growth for the rest of this decade of 5.2% in Brazil, 5.4% in Russia, 6.3% in India and 6.9% in China. It now looks as if Brazil and Russia may fall short of this projection. But China and India can still dream of fulfilling it.
【1,560 words】
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发表于 2012-7-26 23:16:55
