Fleeing China II: Foreign Divestment Edition
International Political Economy Zone
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5M ago
Bing prompt: "Draw a businessman leaving China". Hot on the heels of the previous post about how Chinese are showing at the United States' southern border seeking asylum from increasingly dire economic conditions in the PRC, we get more news of this sort. Just as people are leaving China, so is capital: For the first time its records, the PRC has seen a net outflow of Foreign Direct Investment (FDI). On balance, more FDI is leaving than entering China, once the world's most notable destination for investment. From the Nikkei Asia Review:  Outflows of foreign direct investme ..read more
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Chinese Migrants at US Border: PRC's Dire Straits
International Political Economy Zone
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5M ago
The blog's first AI image c/o Bing: "Draw a Chinese person walking through a Panamanian jungle."   A usually good indicator of an underwhelming economy is of a country's citizens departing it for greener pastures. The year is 2023, not 1882 when the US passed the Chinese Exclusion Act to stop a massive influx of Chinese immigrants. Moreover, isn't the 21st century supposed to have been the Asian Century according to some prognosticators? My belief is that policy missteps by Xi Jinping have greatly dented the forward momentum of China in recent decades, recently exacerbated by en ..read more
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Germans Brand Thee, USA, an ESG Disaster
International Political Economy Zone
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10M ago
Just one flagrant American ESG violation among countless others. This news story from Bloomberg had me laffing so hard it hurt: Despite the action being rather novel--banning investment in US Treasuries over environmental, social and governance [ESG] grounds--it is undoubtedly true that America is an ESG disaster. Offhand, we can cite endless ESG offenses that the US has perpetuated on its citizens and the rest of the world. Among others: Environmental: Being the world's second-largest carbon emitter and, historically speaking, by far the world's largest; Social: Maintaining a persis ..read more
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A Problem of Unstressful US Bank Stress Tests
International Political Economy Zone
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11M ago
 Each day brings news of a distressed US bank about to take leave for the Great Central Bank In the Sky. Aren't US banks supposed to be safer now with the advent of greater macroprudential regulation? A common way to gauge the soundness of banks is through the use of stress tests that simulate how these financial institutions would fare in the wake of financial, well, stress. While Americans bicker about whether the 2019 loophole exempting midsize banks holding between $100 to $250 billion in assets from stress testing led to their currently precarious situation, even that may not have s ..read more
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The Trials and Tribulations of Friendshoring
International Political Economy Zone
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11M ago
At least Chinese state media's take on the topic is obvious. Puns on the term "offshoring"--moving one's production facilities abroad, or having foreign-based concerns manufacture components for you--have proliferated. Some time thereafter came the term "reshoring" to denote moving back production to where something was once manufactured. (A US firm moving its plant back to America from China would be the most obvious example.)  Now we have the slightly more convoluted term "friendshoring" care of Treasury Secretary Janet Yellen. Like reshoring, friendshoring concerns moving pr ..read more
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ARM Holdings IPO: Ditch UK, Flee to US
International Political Economy Zone
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11M ago
SoftBank-ARM was a fine idea at the time; now it's a brilliant mistake. Hard as it may be to believe given how downtrodden it is now, Japan's SoftBank was once regarded as a formidable presence on the global technology stage. Sure, it always carried a fairly high level of debt, but its principal Masayoshi Son was regarded as an Asian tech visionary in the mold of a Bill Gates or Steve Jobs. Just as Japan, Inc. gorged on buying US properties in the 1980s, SoftBank gobbled global tech shares in the 2000s, culminating in the creation of Vision Fund for venture capital. Launched in 2017 ..read more
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The IMF, Team Transitory & You
International Political Economy Zone
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1y ago
I have a confession to make in being on board "team transitory", or the belief that the recent (global) increase in inflation is due to largely temporary factors. As these factors fade, we are set to resume the previous economic environment of relatively benign inflation. On the demand side, these temporary factors include increased demand for consumer goods as people stayed more at home due to the pandemic. Economic stimulus provided by rich countries to their citizens further fueled this demand. On the supply side, disruptions in goods production, transportation and retail also arose due to ..read more
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Geo/Econ Challenged: UK in CPTPP?
International Political Economy Zone
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1y ago
The UK will soon join this group, but does it really matter? It has somehow come to pass that the UK has now joined an Asia-Pacific trade agreement. OK, so the free trade agreement in question is not the US-led Trans Pacific Partnership, but rather the US-absent Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Moreover, the Pacific is vast: the world's largest ocean is said to contain over half the world's waters. Still, an undeniable fact is that the UK is not in the Pacific. (The last time I checked, it also belonged to this group called the "North Atla ..read more
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Joe Biden, Oil Trader of the Year 2022?
International Political Economy Zone
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1y ago
Of all people, Joe's got the magic touch with petroleum? The endless number of foiled speculators attests to the difficulty of realizing the old adage about how to make money--buy low, sell high. Let's face it: ever-changing markets often result in us doing quite the opposite, and not making money in the process. Now, whenever we are asked to think about who are the least savvy market participants, we often identify governments--or more specifically, government officials. Not being keen market watchers with limited skin in the game--it's taxpayer money they are officially dealing with ..read more
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Apple iPad, Soon Made in Vietnam
International Political Economy Zone
by
1y ago
 China's epic recurring COVID-19 shutdowns have frustrated multinational corporations aiming for predictability in their supply chains. Sure, China still benefits from having globally-renowned tech clusters. However, having your production capabilities curtailed again and again due to a handful of (relatively mild) COVID-19 cases doesn't encourage foreign firms, as you would expect. Not so long ago, I covered Vietnam's emergence as a major assembly hub for South Korea's Samsung [1, 2]. In the years since, it's developed a reputation as a reliable production center for MNCs. It was perhap ..read more
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