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Prevailing Winds Blog

Prevailing Winds is a China-focused blog written by Nicholas Borst, Director of China Research at Seafarer. The blog tracks the economic and financial developments shaping the world’s largest emerging market. @NBorstSF

Are China’s Economic Challenges Cyclical or Structural?

China’s economy is weighed down on four fronts – real estate, consumption, fiscal issues, and the private sector – and political obstacles are standing in the way of addressing these problems.

Are China’s Economic Challenges Cyclical or Structural?

The Balance Sheets at Risk from China’s Property Slowdown

The fallout from the end of China’s property boom will continue for many years as its effects ripple through the balance sheets of property developers, banks, and local governments.

The Balance Sheets at Risk from China’s Property Slowdown

Can Consumption Save the Chinese Economy?

To avoid a long-term slowdown in economic growth, Chinese policymakers need to change tactics and boost household consumption.

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Testimony – China’s Economy: Implications for Investors

In testimony to the U.S.-China Economic and Security Review Commission, Nicholas Borst discusses the causes of China’s economic slowdown and the risks of local government debt.

Testimony – China’s Current Economy

China’s Reopening and Corporate Expansion Overseas

After a recent trip to China, Nicholas Borst reports on China’s reopening, the operating environment for the country’s private sector, and Chinese companies’ efforts to expand internationally.

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Of Profits and Peril: Corporate China’s Push Abroad

Chinese companies are making an unprecedented effort to expand internationally, yet they face growing restrictions in the U.S. and other global markets.

Of Profits and Peril: Corporate China’s Push Abroad

China’s Balance Sheet Challenge

In an article for China Leadership Monitor, Nicholas Borst examines the scale of China’s debt problem and how policymakers can put the country’s balance sheet on firmer footing.

China’s Balance Sheet Challenge

China 2023 Outlook

Despite significant challenges facing Chinese companies, there are reasons to be optimistic that China will continue to provide attractive investment opportunities.

China 2023 Outlook

Security Over Growth: China’s New Economic Approach

Shenzhen, China

A growing sense of internal and external vulnerability has led Xi Jinping to emphasize security and political concerns in China’s economic policy.

Security Over Growth: China’s New Economic Approach

The Balance Sheet Constraints on China’s Economic Stimulus

Shanghai, China

As China faces major economic headwinds, Beijing’s attempts to stimulate growth are constrained by large contingent liabilities and a struggle for fiscal control with local governments.

The Balance Sheet Constraints on China’s Economic Stimulus

Fixing China’s Broken Balance Sheets

Beijing, China

China’s approach to repairing weak balance sheets and preventing financial instability reflects lessons learned from past crises and the current priorities of Xi Jinping.

Fixing China’s Broken Balance Sheets

How Strong is China’s Household Balance Sheet?

Shanghai, China

China’s household balance sheet is stronger than commonly thought, but it is still vulnerable to shifts in the real estate market.

How Strong is China’s Household Balance Sheet?

China’s National Balance Sheet – A Framework for Analysis

The risks of China’s economy and debt levels should be evaluated in the context of its national balance sheet – taking into account the interconnected assets and liabilities between households, corporations, financial institutions, and the government.

China’s National Balance Sheet – A Framework for Analysis

Risks and Opportunities: The U.S.-China Financial Relationship

In an Asia Society Conference panel, Nicholas Borst explains why the U.S. and China share responsibility for the current state of the deteriorating bilateral investment relationship.

Risks and Opportunities: The U.S.-China Financial Relationship

China’s Complicated Relationship with the Private Sector

In response to a large and freewheeling private economy, the Chinese government under Xi Jinping is engaging in a widespread campaign to assert greater control over the private sector.

China’s Complicated Relationship with the Private Sector

Rebalancing the U.S.-China Economic Relationship

In an Asia Society Conference panel, Nicholas Borst explains how the increase in holdings of Chinese securities by U.S. investors has emerged as a major source of conflict in the U.S.-China economic relationship.

Rebalancing the U.S.-China Economic Relationship

How Exposed Are U.S. Investors to China?

U.S. investors have invested more in China than the official statistics indicate, but remain less important as a financing source for Chinese companies than policymakers and the media may imagine.

How Exposed Are U.S. Investors to China?

Tracking China’s Foreign Debt

China leads the emerging markets in foreign debt, but a closer analysis reveals that China’s foreign borrowing is less risky than it appears, and is manageable relative to the size of the economy.

Tracking China’s Foreign Debt

Have Foreign-listed Chinese Stocks Been a Bad Deal for Investors?

Contrary to the assertions of many critics, foreign-listed Chinese firms – particularly those listed in the U.S. – have provided attractive returns for investors over the past decade.

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The China Investment Dilemma – Part IV

How to Navigate a Tumultuous U.S.-China Relationship

The fourth and final installment of The China Investment Dilemma: Risks for U.S. Investors During a Turbulent Time offers a disciplined approach to navigating the challenges posed by the volatile U.S.-China relationship.

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Divest and Delist? The Case Against Exiting China

Efforts to limit foreign investment in Chinese companies will be a significant setback for corporate reforms in China.

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The China Investment Dilemma – Part III

Risks for U.S. Investors in China

The third installment of The China Investment Dilemma: Risks for U.S. Investors During a Turbulent Time examines why the challenged U.S.-China relationship is creating a new set of risks for U.S. investors in China.

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The China Investment Dilemma – Part II

The Rocky State of the U.S.-China Relationship

The second installment of The China Investment Dilemma: Risks for U.S. Investors During a Turbulent Time reviews major trends behind the deteriorating trajectory of U.S.-China bilateral relations.

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Has Covid-19 Led to Financial Instability in China?

While China’s financial system weathered the initial stages of the Covid-19 crisis well, heightened risks warrant vigilance.

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The China Investment Dilemma – Part I

China’s Financial Rise

The first installment of The China Investment Dilemma: Risks for U.S. Investors During a Turbulent Time explains how China’s emergence as a major investment destination is driven by the size, depth, and increasing openness of its capital markets.

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State-owned Enterprises and Investing in China

State influence over companies in China defies easy categorization and depends on both ownership levels and government policy priorities.

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Visualizing China’s A-Share Market Selloffs

China’s stock market corrections in 2015 and 2018 illustrate the volatility and peculiar tendencies of the A-share market.

A Tale of Two Corrections

China’s Hidden Government Debt

Local government off-balance sheet borrowing – both a channel of economic stimulus and a source of acute financial risks – complicates measurements of overall government debt in China.

China’s Hidden Government Debt

Testimony – What Keeps Xi Up at Night

In testimony to the U.S.-China Economic and Security Review Commission, Nicholas Borst describes the array of challenges facing the Chinese economy and the structural reforms that would help China achieve sustainable economic growth.

Looking Back on China’s 2018

Looking Back on China’s 2018

China experienced a tumultuous 2018 full of headwinds that drove down equity markets and economic sentiment, but trade growth and private sector resilience remain positive long-term trends.

Looking Back on China’s 2018

China’s Private Sector is Feeling the Pinch

While new government policies in China may ease the financing challenges faced by the private sector, truly leveling the playing field between private and state-owned enterprises will require structural reforms and take years to implement.

China’s Private Sector is Feeling the Pinch

How Artificial Intelligence is Shaping Industries Across China

China has rapidly emerged as a world-class innovator in the field of artificial intelligence and is at the forefront of applying AI to solve real world business problems.

How Artificial Intelligence is Shaping Industries Across China

China’s Tech Rush

China’s campaign to advance its technological capabilities has the potential to transform many emerging high-tech industries through an unprecedented level of government support and cooperation with the private sector.

China’s Tech Rush

How Open Are China’s Capital Markets to Foreign Investment?

The current stock market correction in China is serving as a useful test of the commitment of policymakers to maintaining recent financial reforms in the face of financial volatility.

How Open Are China’s Capital Markets to Foreign Investment?

China’s Crackdown on Financial Risks

Following financial shocks in China in 2015 and 2016, Chinese authorities have taken steps to reduce risks across the financial system and slow the growth rate of credit, particularly in the shadow banking system.

China’s Crackdown on Financial Risks

Fixing China’s Municipal Bond Market

A viable municipal bond market has developed in China, in response to the growing fiscal needs of local governments – but challenges remain, including high levels of borrowing and the availability of long-term financing.

Fixing China’s Municipal Bond Market

China’s Investment Numbers Don’t Add Up

While each release of China’s fixed asset investment numbers generates news headlines, the data should be treated with a healthy dose of skepticism until China completes reforms to its statistical methodology.

China’s Investment Numbers Don’t Add Up

Forty Years Later: China in a New Era

The recent China Development Forum celebrated China’s economic achievements, but it also highlighted a large shift occurring across China: the Communist Party’s reassertion of control over the government.

Forty Years Later: China in a New Era

Welcome to Prevailing Winds

For emerging markets investors, no country is more important to get right than China. Prevailing Winds will track the complex and contradictory forces that are shaping the Chinese economy.

Welcome