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Discussion Paper
Why Are China’s Households in the Doldrums?
A perennial challenge with China’s growth model has been overly high investment spending relative to GDP and unusually low consumer spending, something which China has long struggled to rebalance. As China attempts to move away from credit-intensive, investment-focused growth, the economy’s growth will have to rely on higher consumer spending. However, a prolonged household borrowing binge, COVID scarring and a deep slump in the property market in China have damaged household balance sheets and eroded consumer sentiment. In this post, we examine the impact of recent shocks on Chinese ...
Discussion Paper
A Closer Look at Chinese Overseas Lending
While considerable attention has focused on China’s credit boom and the rise of China’s domestic debt levels, another important development in international finance has been growth in China’s lending abroad. In this post, we summarize what is known about the size and scope of China’s external lending, discuss the incentives that drove this lending, and consider some of the challenges these exposures pose for Chinese lenders and foreign borrowers.
Threat of global housing slide looms amid rising rates
While house-price growth has recently begun to moderate—or, in some countries, to decline—the risk of a deep global housing slide persists.
Mexico seeks to solidify rank as top U.S. trade partner, push further past China
Mexico's emergence followed fractious U.S. relations with China, which had moved past Canada to claim the top trading spot in 2014. The dynamic changed in 2018 when the U.S. imposed tariffs on China’s goods and with subsequent pandemic-era supply-chain disruptions that altered international trade and investment flows worldwide.
U.S. 30-Year mortgage predominance doesn’t seem to delay impact of Fed rate hikes
After comparing economic data of the U.S. and other major advanced economies, we find tentative evidence that the slow adjustment of the outstanding mortgage rate in the U.S. has not played an important role in delaying the intended effects of the monetary tightening.
Arbitrage limits heighten dollar shortages abroad during volatile times
U.S. dollars are hard to find in foreign markets during times of heightened risk, as evidenced by two interesting and related features in the post-2007 international financial landscape.
Journal Article
Mexico awaits ‘nearshoring’ shift as China boosts its direct investment
When it comes to trading goods with the United States, Mexico would appear a logical sourcing alternative to China. Before the pandemic, increasing friction between the U.S. and China—the top supplier of goods imports to the U.S. in 2019—contributed to an anticipated “nearshoring” shift among companies dependent on Asia.
Decentralized finance proposed as alternative to traditional financial services
DeFi applications allow users to directly interact with each other to borrow, lend, insure and exchange digital assets without centralized intermediaries, such as banks and custodial exchanges.
Fed’s 1994 Rate Aggressiveness Led to Emerging-Market Turmoil; Is This Time Different?
As the Federal Reserve embarks on a monetary tightening cycle, only a few spots of vulnerability have appeared among emerging markets.
Mexican peso strength noteworthy among emerging markets during Fed tightening
Many emerging-market currencies have depreciated modestly during the Federal Reserve’s tightening cycle that began in March 2022. The Mexican peso, however, outperformed the group during the period.