Economist, Centennial Asia Advisors

Nigel Chiang

Centennial Asia Advisors deliver timely and accurate economic and political analysis to investors, focused on anticipating key turning points that affect the client’s interests in the Asia-Pacific region. Clients include public agencies and central banks, as well as fund managers and investment banks. The company draws strength from its flexibility to tailor products to fit client’s specific interests. It provides detailed macro-economic forecasts, scenario analysis and timely assessments of how specific major economic and political developments may affect a client’s areas of interest. At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way.

Economist

Prosperity/ Afghanistan/ US-China/ Pensions/ Arctic

The World Economy Is Sinking … Will China Bail It Out Again?

The Afghanistan Hostage Disaster - The Next Black Swan Event?

China: Growth Is Not the Problem, Worry About the Savings Conundrum

China: Regulatory Blitz on Tech a Negative for the Private Sector

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

Macroeconomics

Despite the downside surprise to activity and credit growth in July, we do not think that interest rate cuts are forthcoming. The policymakers’ preference for a targeted and calibrated approach to macro-economic management means that further reserve requirement ratio (RRR) cuts to spur bank lending and fiscal measures e.g. infrastructure spending are more likely.<ul>
<li>It is worth pointing out that the weaker macro environment of late is indicative of the pathologies of the Chinese economy: consumer spending is held back by a combination of structural and cyclical headwinds, while much of fixed investment is inefficient.</li>
<li>Taken together, this means that a) any meaningful credit stimulus quickly raises the risk of financial instability, and b) growth disappoints whenever the policy put is pulled out from under the rug. The key to long-term, sustainable growth continues to be reforms that raise the potential for quality sources of growth e.g. consumption, SMEs to drive the Chinese economy.</li>
</ul>The other key question in China macro right now is the outlook for regulatory action going forward, following a series of high-profile crackdowns on the technology and education sectors. The policy document jointly issued by the State Council and the Central Committee does suggest that the regulatory regime will be beefed up significantly over the medium term.<ul>
<li>What this means is that any case for investing in China that is premised on the hope of eventually earning monopoly profits should now be dispensed with.</li>
<li>However, the document also goes beyond all that to call for increased transparency, precision, and professionalism in the government’s conduct of regulation. The focus on achieving “restraint” takes on particular significance, in our view, given the tendency for Chinese government officials to zealously carry out directions from the top, which then leads to policy overshooting.</li>
<li>These improvements in governance will add up to make for a more investible environment in the long run, in our view.</li>
</ul>

Despite the downside surprise to activity and credit growth in July, we do not think that interest rate cuts are forthcoming. The policymakers’ preference for a targeted and calibrated approach to macro-economic management means that further reserve requirement ratio (RRR) cuts to spur bank lending and fiscal measures e.g. infrastructure spending are more likely.
It is worth pointing out that the weaker macro environment of late is indicative of the pathologies of the Chinese economy: consumer spending is held back by a combination of structural and cyclical headwinds, while much of fixed investment is inefficient.
Taken together, this means that a) any meaningful credit stimulus quickly raises the risk of financial instability, and b) growth disappoints whenever the policy put is pulled out from under the rug. The key to long-term, sustainable growth continues to be reforms that raise the potential for quality sources of growth e.g. consumption, SMEs to drive the Chinese economy.
The other key question in China macro right now is the outlook for regulatory action going forward, following a series of high-profile crackdowns on the technology and education sectors. The policy document jointly issued by the State Council and the Central Committee does suggest that the regulatory regime will be beefed up significantly over the medium term.
What this means is that any case for investing in China that is premised on the hope of eventually earning monopoly profits should now be dispensed with.
However, the document also goes beyond all that to call for increased transparency, precision, and professionalism in the government’s conduct of regulation. The focus on achieving “restraint” takes on particular significance, in our view, given the tendency for Chinese government officials to zealously carry out directions from the top, which then leads to policy overshooting.
These improvements in governance will add up to make for a more investible environment in the long run, in our view.


China: Aggressive Stimulus Still Unlikely; Are There Silver Linings in the Regulatory Blitz?