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The transfer of sovereignty over Hong Kong (also known as the handover) happened at midnight on July 1, 1997. At the time, Hong Kong had a population of about 6.5 million people and China had a population of about 1.23 billion people. But Hong Kong punched well above its weight class and its GDP as a percentage of mainland China's GDP was about 18.4% (see above). In other words, Hong Kong represented about 0.53% of the population, but almost 1/5 of China's economic output. Today, well as of 2018, this number has declined to 2.7% (again, see above). Hong Kong still possesses a number of structural benefits compared to mainland China, but its position as a global financial center is not guaranteed.
Graph: Investopedia
A few years ago I wrote a post talking about "depression babies." In it, I cited a research paper that looked at the impact of macroeconomic shocks on people's willingness to take on financial risk in the future. The term "depression babies" stems from the Great Depression and how it is believed to have impacted risk taking, savings rates, and probably many other things.
I was reminded of this when I read this recent article in the WSJ talking about how the Chinese have started spending -- and taking on the debt -- like Americans, particularly among Chinese under 30. It is the inverse of the depression baby phenomenon. In this case, it is arguably years of economic expansion leading to greater comfort around financial risk.
Here are a couple of figures from the article:
JPMorgan estimates China’s ratio of household debt to gross domestic product will climb to 61% by 2020. That’s up from 26% in 2010 and higher than current levels in Italy and Greece.
The level in the U.S. is about 76%, after falling from 98% in 2006, according to the International Monetary Fund.
By another measure—the ratio of household debt to disposable income—China appears to have already surpassed the U.S. Its ratio reached 117.2% in 2018, up from 42.7% in 2008, according to calculations by Lei Ning, a researcher at the Institute for Advanced Research at Shanghai University of Finance and Economics. The U.S. peaked at 135% in 2007 and dropped to 101% in 2018.
Not surprisingly, the article goes on to talk about how this dramatic increase in household debt might be something to worry about. Maybe. I'm not an economist. But I do think this is designed to boost the Chinese growth machine and I do think it makes them less reliant on other countries -- such as, maybe, the United States.
The transfer of sovereignty over Hong Kong (also known as the handover) happened at midnight on July 1, 1997. At the time, Hong Kong had a population of about 6.5 million people and China had a population of about 1.23 billion people. But Hong Kong punched well above its weight class and its GDP as a percentage of mainland China's GDP was about 18.4% (see above). In other words, Hong Kong represented about 0.53% of the population, but almost 1/5 of China's economic output. Today, well as of 2018, this number has declined to 2.7% (again, see above). Hong Kong still possesses a number of structural benefits compared to mainland China, but its position as a global financial center is not guaranteed.
Graph: Investopedia
A few years ago I wrote a post talking about "depression babies." In it, I cited a research paper that looked at the impact of macroeconomic shocks on people's willingness to take on financial risk in the future. The term "depression babies" stems from the Great Depression and how it is believed to have impacted risk taking, savings rates, and probably many other things.
I was reminded of this when I read this recent article in the WSJ talking about how the Chinese have started spending -- and taking on the debt -- like Americans, particularly among Chinese under 30. It is the inverse of the depression baby phenomenon. In this case, it is arguably years of economic expansion leading to greater comfort around financial risk.
Here are a couple of figures from the article:
JPMorgan estimates China’s ratio of household debt to gross domestic product will climb to 61% by 2020. That’s up from 26% in 2010 and higher than current levels in Italy and Greece.
The level in the U.S. is about 76%, after falling from 98% in 2006, according to the International Monetary Fund.
By another measure—the ratio of household debt to disposable income—China appears to have already surpassed the U.S. Its ratio reached 117.2% in 2018, up from 42.7% in 2008, according to calculations by Lei Ning, a researcher at the Institute for Advanced Research at Shanghai University of Finance and Economics. The U.S. peaked at 135% in 2007 and dropped to 101% in 2018.
Not surprisingly, the article goes on to talk about how this dramatic increase in household debt might be something to worry about. Maybe. I'm not an economist. But I do think this is designed to boost the Chinese growth machine and I do think it makes them less reliant on other countries -- such as, maybe, the United States.
I have Richard Florida’s recent book, The New Urban Crisis, sitting on my bedside table. I’m only about ¼ of the way through it, but I’m really enjoying it. I’ll write more once I’m done.
What I instead want to talk about today is a recent (and related) article that Florida published in CityLab called: Did Land-Use Restrictions Save the Rust Belt?
In it, he leans on the research of two economists – Chang-Tai Hsieh of the University of Chicago and Enrico Moretti of the University of California at Berkeley – and makes 3 valuable points.
They are:
It is estimated that land-use restrictions (which limit development / supply) have reduced overall GDP in the U.S. by about 9% or approximately $1.5 trillion per year. It is also estimated that housing supply constraints alone lowered overall growth by more than half between 1964 and 2009.
At the same time, these land-use restrictions may have benefited other regions – such as the Rust Belt – that would have otherwise lost more people and jobs to places like New York and San Francisco. The research found that without these land-use restrictions, employment growth between 1964 and 2009 would have been more than 1,000% higher in New York and almost 700% higher in San Francisco.
The final takeaway is one that we’ve talked about before on this blog. One of the most effective things we can do to counteract geographic inequality is to build great transit; transit that connects both people and land to the most desirable areas of our city.
And with that, Happy Canada Day weekend all.
Photo by João Silas on Unsplash
I have Richard Florida’s recent book, The New Urban Crisis, sitting on my bedside table. I’m only about ¼ of the way through it, but I’m really enjoying it. I’ll write more once I’m done.
What I instead want to talk about today is a recent (and related) article that Florida published in CityLab called: Did Land-Use Restrictions Save the Rust Belt?
In it, he leans on the research of two economists – Chang-Tai Hsieh of the University of Chicago and Enrico Moretti of the University of California at Berkeley – and makes 3 valuable points.
They are:
It is estimated that land-use restrictions (which limit development / supply) have reduced overall GDP in the U.S. by about 9% or approximately $1.5 trillion per year. It is also estimated that housing supply constraints alone lowered overall growth by more than half between 1964 and 2009.
At the same time, these land-use restrictions may have benefited other regions – such as the Rust Belt – that would have otherwise lost more people and jobs to places like New York and San Francisco. The research found that without these land-use restrictions, employment growth between 1964 and 2009 would have been more than 1,000% higher in New York and almost 700% higher in San Francisco.
The final takeaway is one that we’ve talked about before on this blog. One of the most effective things we can do to counteract geographic inequality is to build great transit; transit that connects both people and land to the most desirable areas of our city.
And with that, Happy Canada Day weekend all.
Photo by João Silas on Unsplash
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