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China's import surge: standard economic theory prevails

Submitted by Louis Kuijs on Wed, 2009-08-05 17:07

When China’s government started to work on and implement its massive stimulus program in November last year in light of a rapid deterioration of the world economy, economists working on China had to work out what it all meant for China’s growth, the composition of growth, and the rest of the world.

Many foreign observers doubted that the stimulus would be effective enough to boost domestic demand in the first place. But even among those with higher expectations in this regard—like we at the World Bank—many wondered what the stimulus would mean for the rest of the world.

Usually, when one country grows much faster than other countries, we expect imports into that country to rise much faster than exports (or, fall much less). However, in the case of China, exports had for quite some time been outgrowing imports by a large margin and many were skeptical that this would change even as economic conditions were changing in a pronounced way.

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Regional roundup: Finance in East Asia - Jul. 10

Submitted by James Seward on Thu, 2009-07-09 23:16

This is the latest installment of the regional round-up and it has been a while. However, there has not been much groundbreaking news related to the financial crisis to report, with a few exceptions (more to come later).

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What are the implications of the crisis for the financial systems in East Asia?

Submitted by James Seward on Sun, 2009-06-14 23:22

I apologize for the lack of recent posts, but I have been traveling in the region and then getting over a cold, so I’m finally back in action. One of the stops during the trip last month was to Jakarta to participate in our internal Economist’s Forum. This forum was very interesting and included sessions with the Indonesian Minister of Finance, as well as the Minister of Trade. The session that I participated in was focused on the implications of the current global economic crisis and the impacts on East Asian financial sectors. This was a good opportunity to consolidate our own thoughts on the subject and to lay out the basic issues as we see them today (I’ve attached the presentation, which comes with the required caveat that these are not official World Bank views, but instead my personal views).

This presentation starts by running through what we know, what we can expect to know and how we know what we know, and why it is so hard to know anything in the area of corporate and financial sectors. We then move into how we see the crisis coming to Asia, the impact on corporations, the spillover to the financial sector, the policy responses to the crisis to date, and finally what the World Bank is doing. We begin by admitting that it is difficult to do accurate corporate and financial sector analysis for a wide range of reasons, ranging from problems with reporting and disclosure to weaknesses in regulatory standards and financial supervision practices. Despite this constraint, we can see some general regional trends...

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Regional Finance Roundup – A look at Thailand after the ASEAN summit cancellation; updates on China, Singapore and Mongolia

Submitted by James Seward on Thu, 2009-04-16 11:32

In terms of big newsworthy events in Asia, one of the biggest has to be the anti-government protests in Thailand. A relatively small number of protesters dramatically caused the cancellation of an ASEAN+3 meeting held in Pattaya this past weekend where 10 regional heads of state were evacuated. The World Bank President, as well as the head of the IMF and UN, were turned around at the airport in Bangkok. Although the protests around the country have effectively ended after martial law was declared and two protesters died, the damage of this may be longer-lasting. Although a discussion of the politics would be interesting, let's concentrate on the finance-related issues.