发帖
雷达卡
Over the last decade, America’s expansionary monetarypolicy and China’s rapid growth have been the two key drivers of globalfinancial flows. Now, both dynamics are being reversed, generating new risksfor the global economy – particularly for emerging countries. Whether they cancope with these changes will depend on whether they have taken out enough insurance against theright risks.
Following the Asian financialcrisis of the late 1990’s, emerging economies began to accumulate massiveforeign-exchange reserves to protect themselves against the risks of externalover-indebtedness. In fact, they amassed far more than they needed – $6.5trillion, at last count – effectively becoming over-insured against external balance-of-payments shocks.
But they remained underinsured against domesticcredit risks – the leading threat to emerging economies today.After the global financial crisis erupted in 2008, interest rates plummeted,fueling private-sector credit booms in many of the largest emerging markets,including Brazil, India, Indonesia, and Turkey.
Although these boomswere initially financed by domestic capital, they soon became dependent onforeign capital, which flowed into their economies as advanced-country centralbanks pumped huge amounts of liquidity into financial markets. Now, just as theUS Federal Reserve contemplates an exit from its unconventional monetarypolicies, emerging economies’ current-account positions are weakening, makingtheir reliance on capital inflows increasingly apparent – and increasinglydangerous.
Ironically, today’spain stems from one of the great successes that emerging economies haveachieved: the reduction of foreign-currency funding in favor of local-currencydebt. As emerging-market central banks leaned against heavy capital inflows inorder to mitigate exchange-rate appreciation, their currencies became lessvolatile. The resulting perception that currency risk was declining bolsteredcapital inflows further.
This virtuousfeedback loop has now turned vicious, with capital inflows amounting to only afraction of outflows. Given this, the likely upshot of monetary tightening in the advancedeconomies will be a long depreciation of emerging-market currencies and, inturn, a significant interest-rate hike – a trend that puts emerging economiesat risk for the kinds of credit crises that have bedeviled developed economies over the last sixyears.
The higher interestrates rise to stabilize emerging markets’ currencies, the more severe theircrises will be. Ultimately, even if emerging economies manage to diversify theirfunding away from foreign currencies, they will remain hostages to USmonetary-policy cycles.
Had emergingeconomies resisted the temptation of excessive private-sector credit growth,raising interest rates in order to stabilize currencies would not pose a severethreat to economic performance. But, unsurprisingly, they did not; rather, theysuccumbed to the notion that unprecedentedly high rates of GDP growth were thenew normal.
Nowhere was this moreapparent than in China, where double-digit annual output gains long obscuredthe flaws in a state-led, credit-fueled growth model that favors state-ownedenterprises (SOEs) and selected industries, like the real-estate sector, to thedetriment of private savers.
Since 2008,banking-sector credit growth in China has been among the fastest in the world,far outpacing GDP growth, and China’s total debt has risen from 130% of GDP to220% of GDP. As of this year, ¥1 of GDP growth is consistent with more than¥3.5 of credit growth. China’s financial sector is now increasingly feeling thestrain of this rapid credit growth, which has led to overcapacity in favored sectors and mounting debtproblems for local governments, SOEs, and banks.
Meanwhile, China’s shadow-banking system hasexpanded at an unprecedented rate. But here, too, mounting risks have beenlargely ignored, owing partly to the collateralization of real property, whichis believed to retain its value permanently, and partly to the system of implicitgovernment guarantees that backs loans to local governments and SOEs.
At the very least,the combination of higher interest rates in the shadow-banking sector andweaker nominal GDP growth undermines borrowers’ debt-repayment capacity. In aworst-case scenario, falling property prices or diminishing faith in implicitgovernment guarantees would compound the risks generated by the shadow-bankingsystem, severely undermining China’s financial stability.
In that sense,although China, with its $3.5 trillion stock of foreign-exchange reserves, mayseem to exemplify emerging economies’ tendency to be over-insured againstexternal risks, it actually faces the same credit risks as its counterparts.The difference is that China has implemented structural – and thuslonger-lasting – credit-based policies, while other emerging economies havebeen drawn into a cyclical lending binge.
Indeed, China’sslowness to implement an alternative to the investment-led, debt-financedgrowth model that has prevailed for the last two decades means that itsdomestic credit risks are the most significant threat to the global economytoday. While China may have the financial resources to cover its debt overhang,it risks being left with a low-to-middle-income economy, high debt levels, andnominal growth rates roughly two-thirds lower than the 17% average annual rateachieved in 2004-2011. This is bad news for other emerging economies, whichhave depended heavily on China’s growth for their own.
Unlessemerging-market governments take advantage of the limited space provided bytheir foreign-exchange reserves and floating currencies to enact vitalstructural reforms, the onus of adjustment will fall on interest rates,compounding the effects of slowing growth and the risks associated with baddebt. Whether this becomes a systemic issue affecting the entire global economywill hinge on China.
京公网安备 11010802022788号
