Shaun Rein

Everyone Is Working Hard to Increase Global Trade Imbalances

Another excellent piece Michael. While I do not always agree with your conclusions, your opinions are well-received here. Keep the torrid publishing pace up.

I chime in here because you highlight a good point that many analysts have noticed -- I am dubious of whether interest rate cuts will have any affect on boosting consumer consumption or at least not anytime soon. The interest rate cuts have been spurring more lending to SOEs which slowly if at all trickles down to the middle class Chinese who are the segment that we should be looking at to drive consumption.

I am working on a piece about this in part.

To boost consumption in China, one thing China should do is reduce import duties which causes everyone to shop abroad. Did you know that Chinese consumers buy about $6.5 bil USD worth of luxury products every year but that only 1/3 of that is actually bought in China because tariffs cause products to be 20-30% higher in China and because there is more cachet for shopping in Hong Kong or Europe?