The dual objective of China’s competition quest: mitigating structural deceleration and great power rivalry

The Chinese economy has been decelerating for over a decade and will likely continue to do so, given the structural forces pushing it in this direction, such as an increasingly low return on assets but also aging. China’s single ‘silver bullet’ to mitigate such structural deceleration is innovation. To counter the downward pressures to development, and to increase domestic productivity, the central government is doubling down on its quest for industrial upgrade and technological innovation. Progress is visible. China has risen to the top in terms of number of scientific publications and patent...

Fed: lack of progress on inflation but rate hikes remain improbable

FOMC Recap: Cuts delayed, not cuts denied

In its May meeting, the F OMC confirmed that inflation is not falling as quickly or as reliably as it had hoped, but the process has stalled, not stopped or reversed. As expected, the policy rate stayed on hold and there were no dissents, but both the policy statement and (especially) Chair Powell’s press conference indicated that cuts are far more likely than hikes despite the Q1 inflation setback. Meanwhile, the Fed is to slow the pace of its balance sheet runoff, reducing the number of T reasuries it lets roll off every month more than expected .