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Category Archives: China

Chinese manufacturing continues to contract

It is now 11 months in a row that China has seen a contraction in this major sector. The Flash China manufacturing purchasing managers’ index (PMI) produced by the bank HSBC, and eagerly awaited in economic circles, shows that the nine-month low of 47.6 in August, reached 47.8 mid way through September. The cause for concern is that any figure … Continue reading

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China’s April trade surplus will cause problems with the US

China recorded a trade surplus of $11.4bn or £7bn in April. This was from a surplus of only $140m in March but was about four times greater than analysts had been expecting. Why does this pose a problem for the US? It is because many Americans believe that the Chinese currency, the yuan, is undervalued. An undervalued currency means that … Continue reading

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Could the UK be consigned to the “slow lane of history” for the next 40 years?

The global financial crisis has accelerated the shift in economic power to the emerging economies, according to a report published by consultants PricewaterhouseCoopers (PwC) today. This is one of the conclusions from their “The World in 2050” report. This suggests that the so-called E7 group of emerging economies (China, India, Brazil, Russia, often referred to as the BRICs, with Mexico, … Continue reading

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China raises interest rates, MPC divided.

China has announced its first rise in interest rates for three years. According to the People’s Bank of China, its one-year lending rate goes up from 5.31% to 5.6% and its one-year deposit rate also rises from 2.25% to 2.5%. Why has China done this? In recent years double-digit rates of economic growth have become familiar in the country. In … Continue reading

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The truth about global exports

When we try to explain Ricardo’s theory of comparative advantage we invariably use a two country, two product example. Two hundred years ago, when Ricardo first put forward his theory of international specialisation and trade, it was really that simple. We produced something wholly within our country and sold it to their country. They produced something different, completely within their … Continue reading

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International Monetary Fund powerless to act

The word ‘war’ has been on the lips of international negotiators in recent months. This is nothing to do with Afghanistan or Iraq, but is just as significant. This is about the possibility of a global currency war. There are imbalances in the global economy which were at the heart of the recent collapse of the world economy. What are … Continue reading

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Upside down Economics

Yesterday, the Reserve Bank of Australia raised interest rates from 3.75% to 4.0%, which is the fourth increase in rates since last October. Yes, I did say ‘raised’ interest rates. While the rest of the world has been digging itself out of recession the Australian economy grew at 2.7% during 2009. This is at a time when other major economies … Continue reading

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China back to double-digit growth

The Chinese economy grew by 10.7% year-on-year in the final quarter of 2009. This was the fastest growth for two years and meant that there was a growth in output for 2009 as a whole of 8.7%. The official growth target had been 8.0%.   Gross Domestic Product totalled £3,020 billion in 2009 which put China’s output just below the … Continue reading

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Asia to lead the world economy back into growth

Developing Asia, which excludes Japan, Australia and New Zealand, is set to expand growth by 3.9% in 2009 and 6.4% in 2010, according to the Asian Development Bank (ADB). These growth figures have been raised from the forecast last March of 3.4% and 6.0% respectively.   “Despite worsening conditions in the global economic environment, developing Asia is poised to lead … Continue reading

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UK lagging in terms of economic recovery

The good news according to the Organisation for Economic Co-operation and Development (OECD) is that the global economy is now expected to recover earlier than previously forecast. The bad news is that the UK is not going to be part of it.   In fact the OECD now believes that the UK economy will shrink by 4.7% in 2009, which … Continue reading

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