Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

PK Basu has 34 years experience covering Asia's economies and markets (equities, fixed income and currencies), including 20 years covering the global economy. He was Chief Economist (SE Asia & India) at Credit Suisse First Boston for 5 years, and Chief Asia (x-Jpn) Economist at Daiwa Securities for a similar period. Among other roles, he was global head of research at Maybank Kim Eng, Malaysia equity research head and chief ASEAN economist at Macquarie, Chief Economist at ICICI Securities, ASEAN economist at UBS and the first chief economist at Khazanah Nasional (where he was co-head of research, and led all agri-business initiatives). PK Basu started his career in the Asia Service of WEFA (Wharton Econometrics) in Philadelphia in 1990, rising to be Director of their Asia Service in June 1994. 
PK's book, "Asia Reborn: A continent rises from the ravages of Colonialism and War to a New Dynamism" won the Tata Literature First Book Award (non-fiction) for 2018. It is the first single chronicle of the modern economic and political history of the whole of Asia (from Iraq and Turkey to Korea and Japan, and everything in between), told from an Asian perspective.

Chief Economist & Political Strategist

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REAL-Economics.com

Macroeconomics

With a RMB7.01tn (US$1.02tn) increase in total social financing (TSF) in 1Q 2017, China's real GDP accelerated to 6.9% YoY growth and industrial output to 7.6% YoY in March. While credit growth remains muted around the world, China (the economy suffering the greatest glut of credit and investment ever) continues to witness a surge of bank credit -- up "only" 12.4% YoY in March 2017 on an already unprecedented pile (while other fast-growing economies like India and Indonesia are experiencing single-digit YoY growth in credit). Although China's mother of all asset bubbles will eventually burst, ample credit and the global backdrop will buoy the economy (helped by rising property prices) for the next 3-5 months. Xi's passage to the NPC will be smooth.    Tighter capital controls, jawboning and the direction provided by daily settings have kept the RMB from depreciating; net capital and services/income outflows were a modest US$66bn in 1Q 2017. But China's M2 money supply has expanded much faster than US, EU or Japan money supply, and this will eventually undermine the RMB. (China's M2 is now double the EU's, while the opposite was true in 1Q 2008!). When China succeeds in constraining capital outflows, China's property market benefits -- but eventually, capital outflows will gather pace, and the RMB will resume depreciating in 4Q 2017 as Chinese buying buoys the rest of the world's property. China has averted being designated a currency manipulator by the US Treasury (until the next such review, due on 15 October 2017). Instead, a "100-Day Plan" (still being negotiated between the US and China) is focusing on boosting US exports to China -- rather than reducing China's exports to the US (e.g., via the imposition of the 45% tariff that comes with being designated a currency manipulator). The ban on China's imports of coal from North Korea (announced over a month ago, but finally implemented while Xi was meeting Trump) serves the dual purpose of bolstering US coal exports to China (thus mildly boosting Trump's standing in West Virginia and the rest of US coal country) and politically rein-in the roguish DPRK regime. That the 12-month rolling sum of China's trade surplus had moderated slightly to US$315bn in Feb17 (from $342bn a year earlier) aided in this benign outcome, although its sustainability still depends on further specific-market opening by China. With the key near-term dangers averted, we recommend staying overweight (but vigilant) on China.

With a RMB7.01tn (US$1.02tn) increase in total social financing (TSF) in 1Q 2017, China's real GDP accelerated to 6.9% YoY growth and industrial output to 7.6% YoY in March. While credit growth remains muted around the world, China (the economy suffering the greatest glut of credit and investment ever) continues to witness a surge of bank credit -- up "only" 12.4% YoY in March 2017 on an already unprecedented pile (while other fast-growing economies like India and Indonesia are experiencing single-digit YoY growth in credit). Although China's mother of all asset bubbles will eventually burst, ample credit and the global backdrop will buoy the economy (helped by rising property prices) for the next 3-5 months. Xi's passage to the NPC will be smooth.    Tighter capital controls, jawboning and the direction provided by daily settings have kept the RMB from depreciating; net capital and services/income outflows were a modest US$66bn in 1Q 2017. But China's M2 money supply has expanded much faster than US, EU or Japan money supply, and this will eventually undermine the RMB. (China's M2 is now double the EU's, while the opposite was true in 1Q 2008!). When China succeeds in constraining capital outflows, China's property market benefits -- but eventually, capital outflows will gather pace, and the RMB will resume depreciating in 4Q 2017 as Chinese buying buoys the rest of the world's property. China has averted being designated a currency manipulator by the US Treasury (until the next such review, due on 15 October 2017). Instead, a "100-Day Plan" (still being negotiated between the US and China) is focusing on boosting US exports to China -- rather than reducing China's exports to the US (e.g., via the imposition of the 45% tariff that comes with being designated a currency manipulator). The ban on China's imports of coal from North Korea (announced over a month ago, but finally implemented while Xi was meeting Trump) serves the dual purpose of bolstering US coal exports to China (thus mildly boosting Trump's standing in West Virginia and the rest of US coal country) and politically rein-in the roguish DPRK regime. That the 12-month rolling sum of China's trade surplus had moderated slightly to US$315bn in Feb17 (from $342bn a year earlier) aided in this benign outcome, although its sustainability still depends on further specific-market opening by China. With the key near-term dangers averted, we recommend staying overweight (but vigilant) on China. 

Xi Plays His Trump to Perfection