India and China the world’s emerging economic giants will determine the world’s environmental future – there is also the threat of resource-driven conflicts between the two. This Science Magazine report sets out the issues. The report has to be purchased - I’ll summarise the main issues.

Both countries are using many natural resources – iron ore, coal and gas imports are not even mentioned – but there is a concentration of imports too from S.E. Asia. By 2020, Chinaand India may be importing 64% of all currently produced roundwoodin Asia contributing to deforestation-drivenGGEs and biodiversity loss. Both countries import 9 milliontons of crude palm oil annually—one-quarter ofglobal production—mostly from Malaysia and Indonesia.

The degree to which China and India consume natural resourceswithin their boundaries, and beyond, will determinefuture global environmental, social, and economic outcomes.. Read more »

Author: Ronald I. McKinnon, Stanford University

In the debate on whether China should appreciate its currency or keep it stable as I argue, it’s worth going back to some basics to clear things up.

For a ‘home’ country, consider the identity from the national income accounts:

X – M = S – I = Trade (Saving) Surplus

where X is exports and M is imports (both broadly defined), and S is gross national saving and I is gross domestic investment. Read more »

A fascinating and entertaining overview of Chinese history and where things will go from here – this is a podcast byRoss Garnaut.  He is good at painting the broad picture.

Ross Garnaut only talked a little about climate change issues in China. This article suggests an approach to the issue close to my own heart – an internationally-oriented ETS. Read more »

Over the horizon, a storm in US-China relations is gathering around the question of whether China is deliberately undervaluing its currency, the renminbi, against the US dollar, giving it an unfair competitive edge in US markets and causing high levels of American unemployment and current account surpluses. Most economists would accept that there was some measure of undervaluation of the Chinese currency (how much is a more difficult question on which to get agreement). But few would argue that appreciation of the Chinese currency would solve the American woes of which it is supposed to be the cause.

Read more »

Spring has arrived in Beijing though the lakes are covered with a thin layer of grey ice and it is cold (2-4^oC) with icy winds when you wander anywhere that has some open space. Pollution-smudged snow drifts are everywhere. Black-tailed magpies (so-called ‘happy birds’) are raucously setting up to breed in massive nests in the spartan winter-frozen trees anticipating warmer weather. The massive building/construction program that dominated the Beijing skyline before the GFC continues unabated after it although- at nominal interest rates that are lower than the current inflation rate – this last happened in 2008 when things seemed really grim.

There is a fear about this. The property boom that continues to spiral is driven by increasing-prosperity fundamentals but is currently dominated by speculation at low (indeed negative) interest rates. What will happen? Let me offer a useless, though accurate, conditional forecast. Read more »