China’s financial integration into the world economy: Scrutinising China’s international investment position

Agriculture is both a major emitter of greenhouse gases and a potential key contributor to the mitigation of climate change. Besides lowering emissions, climate-friendly agricultural practices can play a significant role in sequestering carbon. So why is the current debate on mitigating climate change largely ignoring the potential of agriculture and land use? In this paper, we analyse various approaches to realising this potential and discuss some of the challenges involved. We also indicate actions required for transitioning towards a low-carbon agriculture. We show how governments, agricultural producers, the food industry, consumers and the financial sector are all key players in shifting policy and investment priorities. [more]

CCS is only one pillar in international climate protection policy, but certainly an important one. However, it currently does not seem likely that this pillar will be able to bear its load as planned for the coming two decades. Without CCS, though, the 2°C target would be in even greater jeopardy than it already is. Politicians’ general commitment to CCS and the realisation that the technology can make a valuable contribution to climate protection must therefore be followed by action: first and foremost, further research must be carried out and, second, price signals for CO2 would be required for its implementation. [more]

Our China-India Chartbook presents a graphical overview of economic and social indicators in both China and India and highlights the changes that have taken place over the past decade. Both countries have experienced strong growth, which has led to improvements in health, education, and poverty reduction. While they emerged unscathed from the global financial crisis, they still face macroeconomic challenges such as containing inflation pressures and reducing external imbalances. Progress has been made on improving infrastructure and strengthening banking sectors. The next decade will likely see both economies continuing to grow strongly, with the sources of growth more evenly balanced between domestic and external demand. [more]

Food prices are reaching record highs, which raises concerns about spending capacity, hunger, political turmoil and global growth. The current surge in food prices is due to the combination of short-term supply shocks and longer-term structural factors leading to a tight demand-supply balance. In this paper we review the main considerations regarding food price movements and include a discussion on the impact of speculation. [more]

Although gender balance in leadership is beneficial for companies, it is still far from reality. Given that women account for more than half of the talent available to business today, in a context of skills shortages, such an imbalance is not sustainable. In order to create workplaces maximising the potential of both genders, companies need to alter outmoded corporate attitudes and processes. This includes looking at gender in leadership as a business issue, acknowledging that women are different and incorporating the differences. [more]

BRIC FX reserve accumulation continues (apace). As far as the BRICs are concerned, FX reserve accumulation is increasingly difficult to justify in terms of “risk insurance“: all four BRIC governments are net foreign (currency) creditors. Even if private-sector debt is included, national balance sheets look strong as far as solvency and liquidity are concerned. The performance of the BRICs throughout the crisis has also demonstrated their resilience, if not in terms of growth, at least in terms of financial stability. [more]

The goal of this study is to shed light on Chinese consumers’ evolution and behaviour as well as on the composition of this heterogeneous group. China’s urban consumers are growing in number and in spending power, and their outlook is promising. On the other hand, the potential of rural consumers must still be developed, and their income gap with the urban counterparts narrowed. Policies to support income growth, increase disposable income, and help households grow their wealth are starting to be implemented. These policies, coupled with China’s attractive long-term growth prospects, bode well for China’s consumers, who in a few decades could turn out to be the world economy’s key growth driver. [more]

Following the creation of EMU, some observers predicted that the euro would emerge as the world’s major reserve currency. More recently, eurozone travails and rapidly rising US indebtedness have re-ignited the debate about alternative reserve currencies (incl. SDRs). Among the possible medium-term contenders for “top currency” status are the yuan and the euro. Neither the UK nor Switzerland, nor Japan, have or will have the necessary economic and financial size for their currencies to become the world’s dominant reserve currency. ... [more]

In real life people do not always decide rationally on the basis of established preferences and complete information. Much of their behaviour is caused through their trying to cope with the complexity of the world around them by approximating. As a rule these approximation methods deliver serviceable results, but they often also lead to distorted perceptions and systematic errors. To avoid making flawed decisions, investors and investment consultants should be aware of these effects when assessing financial products, when estimating factors of relevance to investment performance and their own appetite for risk, and when considering their personal investment behaviour. [more]

The world’s water markets are confronted with major challenges. The increase in the world's population and higher incomes in developing countries and emerging markets are going hand in hand with a rise in demand for food, energy and other goods. This is resulting in increased demand for water. Climate change will amplify many water-related problems and create new ones. We put the annual investment required in the global water sector at about EUR 400-500 bn. Governments will not be able to raise the funding needed on their own. For this reason, we believe it makes sense for governments and the private sector to cooperate more closely. Makers of “water technologies” will have huge sales potential awaiting them in the coming decades. We have used a scoring model to rank the attractiveness of various countries for investments in the water industry. Among the economies that ranked best are many countries from the Middle East, but also the heavily populated countries of China and India as well as the US and Germany. In principle, though, all countries require a substantial amount of investment in the water sector. [more]

According to a recent Pew poll, 41% of people believe that China is the world’s leading economic power, tied in first place with the United States. More revealingly, a recent Gallup poll showed that 44% of Americans believe that China is the world’s greatest economic power (only 27% named the US). The fact that the US was at the epicentre of the very global crisis that China appears to have weathered largely unscathed is bound to have contributed to this perception. [more]

Final direct cost of the crisis for taxpayers may remain below 1% of GDP in most developed countries. This is only a small fraction of original commitments and also much lower than initial gross expenditures. Direct fiscal costs are in the end unlikely to exceed 2% in the US and 1% in Germany, while banking-sector rescue programmes in France and the UK might possibly even return a net gain. [more]