Jeffrey Frankel writes:  When we talk about an economy’s size or power, we are talking about a broad range of questions – and a broad range of interlocutors. From the viewpoint of multinational corporations, how big is the Chinese market? From the viewpoint of global financial markets, will the RMB challenge the dollar as an international currency? From the viewpoint of the International Monetary Fund and other multilateral agencies, how much money can China contribute, and how much voting power should it get in return? From the viewpoint of countries with rival claims in the South China Sea, how many ships can its military buy?
For these questions, and most others involving total economic heft, the indicator to use is GDP at market exchange rates, because what we want to know is how much the renminbi can buy on world markets, not how many haircuts or other local goods it can buy back home. And the answer to that question is that China can buy more than any other country in the world – except the US.

Alibaba officially filed plans to offer shares in the US.  Alibaba appears to be very profitable, but did not show the revenue for Alibaba’s main marketplaces, how much the company makes from advertising or who will serve as the company’s new directors after the IPO.

The IPO reflects the growing ambitions in China and abroad of Alibaba, which was founded in 1999 in the eastern city of Hangzhou by a former English teacher named Jack Ma. Alibaba’s first business was a site to connect Chinese suppliers with Western buyers.

The filing showed the company had 231 million active buyers in 2013. A total of $248 billion was spent on Alibaba’s three retail sites in China last year, roughly equivalent to the annual economic output of Finland.

The payment processing Alipay, however, isn’t owned directly by Alibaba, but is instead controlled by a company 46%-owned by Alibaba founder Mr. Ma, according to filings from April. That structure is controversial, since it puts ownership of a company crucial to Alibaba’s business outside of Alibaba’s direct control.

The filing also revealed details about Alibaba’s lesser-known business renting computing time to other companies. Alibaba said this cloud-computing unit recorded $90 million in revenue in the final nine months of 2013.

But the filing said nothing about other questions on the minds of investors, particularly the breakdown of revenue among Alibaba’s primary sites: Taobao, a sprawling marketplace with more than eight million sellers, and Tmall, a destination for Western brands like Apple Inc., Nike Inc.and Gap Inc.   Together, those sites account for roughly 80% of all Chinese online shopping transactions, which stood at 1.84 trillion yuan ($296 billion) last year, according to research firm iResearch.

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Business Standard editorial comment on banking inclusiveness:  Perhaps on no issue have the finance ministry and the Reserve Bank of India (RBI) been in concordance over the past several years – except for financial inclusion. From the target of a banking presence in villages with a population of over 2,000 to the motivation to expand the banking sector by issuing new licenses and a host of other goals and initiatives, the agenda has taken centre stage, culminating in the Nachiket Mor committee’s report submitted to the RBI a few months ago. It might have been expected that the core recommendations of the report would have received priority attention from the RBI and the government with a view to initiating implementation wherever possible, while putting in place the supporting ecosystem for the more far-reaching ones.

Considering the importance that Governor Raghuram Rajan attaches to the agenda, one of the five pillars on which he is building his financial stability and development strategy, there were expectations of a big push based on the report. However, what seems to have come in the way are reservations expressed over their implementation. The new institutional model that is being proposed in the form of payment banks as a way to expand reach and access quickly apparently raises questions about appropriate prudential norms and, more importantly, the capacity to supervise and monitor them effectively. As is prone to happen in government, this process can continue endlessly, resulting in the whole initiative being stalled or, at best, implemented piecemeal, with no significant impact.  On the face of it, there is little question that mainstream commercial banks are pushing inclusion because they are mandated to, not because they see great opportunities in it. In whatever shape or form, other institutions must play a key role in the process. Whether as suggested by the Mor committee or in any other avatar, these will pose regulatory and supervisory challenges to the RBI. Either way, the bullet has to be bitten and it might as well be now rather than later.

Kemal Dervis sees different measure in the future.  Economic growth is going to slow in developed and emerging economies, in part because technological development will slow.   New technologists however argue that technology will bring us to the fourth industrial revolution with robots and intelligent machines making huge productivity increases possible.

If capital is becoming a substitute for all but the most highly skilled labor, and educational institutions are having a hard time training enough highly skilled workers for the future, the inequality between the highly trained and all other labor will worsen.

Climate change and natural resources constraints may also impede long term growth.

As these issues move to the top of policy agendas, growth defined as aggregate GDP and calculated on accounts invented a century ago may become less and less relevant.

The banks argues that banking is not a family business and financial family sucessors do not automatically become part of the bank’s ‘promoter’ group.  Madhu Kapur wanted to be able to appoint directors.  It is difficult to tell whether or not the fact that she is a woman plays into the interpretation of ‘regulations.’

Madhu is the legal heir of Ashok Kapur and according to the bank’s articles of association, inherits the rights of a co-promoter. She should be allowed to nominate directors on YES Bank’s board. Unfortunately, the bank is not willing to recognise her rights and settle the dispute. So, she will wait for the court’s verdict.

Raghuram Rajan, Governor of the Reserve Bank of India, writes:  As the world struggles to recover from the global economic crisis, the unconventional monetary policies that many advanced countries adopted seem to have gained widespread acceptance. In those economies, however, where debt overhangs, policy is uncertain, or the need for structural reform constrains domestic demand, there is a legitimate question as to whether these policies’ domestic benefits have offset their damaging spillovers to other economies.  More problematic, the disregard for spillovers could put the global economy on a dangerous path of unconventional monetary tit for tat. To ensure stable and sustainable economic growth, world leaders must re-examine the international rules of the monetary game, with advanced and emerging economies alike adopting more mutually beneficial monetary policies.

To be sure, there is a role for unconventional policies like quantitative easing (QE); when markets are broken or grossly dysfunctional, central bankers need to think innovatively. Indeed, much of what was done immediately after the collapse of US investment bank Lehman Brothers in 2008 was exactly right, though central bankers had no guidebook. But problems arise when these policies are extended beyond repairing markets; the domestic benefits are at best unclear when economies are deeply damaged or need serious reform, while the spillovers from such policies fuel currency and asset-price volatility in both the home economy and emerging countries.

Officials at multilateral institutions have not questioned these unconventional monetary policies, and have largely been enthusiastic about them. This approach carries fundamental risks: a breakdown of the rules of the game and the fact that source countries’ are unwillingto take spillovers into account causes unintended collateral damage in recipient countries.

Central banks could recognize adverse spillovers explicitly and minimize them. The threat posed by competitive monetary easing matters to everyone. In a world with weak aggregate demand, countries are engaging in a futile competition for a greater share of it. In the process, they are creating financial-sector and cross-border risks that will become increasingly apparent as countries exit their unconventional policies.  The first step to prescribing the right medicine is to recognize the cause of the illness. And, when it comes to what is ailing the global economy, extreme monetary easing has been more cause than cure. The sooner we recognize that, the stronger and more sustainable the global economic recovery will be.

The Chinese government may be serious about curbing overcapacity, but if so, the power industry has yet to get the word.

China added more new power generation last year than the total capacity of the United Kingdom or South Korea, according to figures from Bloomberg New Energy Finance, cited by Britain’s The Guardian newspaper.

On the bright side, China installed a record amount of new solar power capacity, more than any other country in the world, but it also added more than three times as much in new coal-fired generation, The Guardian said.

The addition may be justified if China succeeds in taking older, dirtier coal-fired plants offline in the future, Scissors said, but the capacity numbers suggest that the shutdowns have not taken place yet.

Scissors said the central government is also likely to meet with resistance from state-owned enterprises (SOEs) that have been told to close inefficient plants, which provide employment and enjoy local support.

“The SOEs always want another SOE to contract,” he said.

The question of compliance brings the issue back to shadow banking and estimates of economic growth.

Financed off the books

Since state-owned banks have been barred from lending to overcapacity industries, further operations can only be financed off the books.

“That way, it makes the local government happy because they’re continuing to lend, and it makes the national government happy because it’s not on the books,” Scissors said.

The combination of seemingly contradictory data, the overcapacity campaign and the forces behind shadow banking may indicate that China’s economy is actually growing faster than the 7.7-percent GDP growth rate.

“If there’s more off-book activity, that would suggest a strengthening economy,” said Scissors.

The theory may leave world markets increasingly in the dark as they react to economic reports from China, but it could help to explain some of the seeming contradictions in recent data, as well as the increase in urban smog.