China’s Corporate Squeeze: What Falling Markup Reveals About Economic Involution

This paper investigates the phenomenon of "involution" in the Chinese economy, which has been manifesting in recent years, squeezing corporate profits and hampering economic growth.We use the economic concept of markup as a primary analytical tool to measure the pricing power and profitability of Chinese firms. Our central finding is a sustained decline in corporate markup rates over the past decade, a trend that has accelerated sharply since 2019.This analysis demonstrates that there is no apparently collapsing demand, but rather a widespread "lower-price-for-volume" strategy driven by excess...

Pékin ne parvient pas à résoudre son problème d'involution

FOMC Preview: Let’s get on with it

The Federal Open Market Committee (FOMC) will likely decrease its main policy rate by 25bps to an upper bound of 4.25% in its September meeting . We think the communication from Chair Powell and the official statement will acknowledge the softness in the labor as well as the uncertainty about the effects of tariffs on inflation but assert that the upward pressure on prices should be viewed as transitory. Still, we think the path towards neutral may not be a direct one. With inflation still above target and trending in the wrong direction, Fed communication will want to be restrained about ho...