Uncertainty In China

If you were wondering why FDI inflows had sharply decreased, why consumers were wary of spending, part of the reason might be elevated economic and economic policy uncertainty.

Here are three measures of uncertainty; text based policy uncertainty from South China Morning Press, from mainland China newspapers, and the World Uncertainty Index (WUI) based on Economist Intelligence Unit reports.

Figure 1: EPU-China based on mainland China newspapers (blue, left scale), EPU-China based on SCMP (tan, left scale), and WUI-China (green, right scale). Light orange shading denotes Xi Jinping; gray shading denotes ECRI defined peak-to-trough recession dates. Source: policyuncertainty.com, and worlduncertaintyindex.com, and ECRI.

Jardet, Jude and Chinn (RIE, 2023) (discussed here) shows the negative impact of WUI on FDI (foreign direct investment) inflows.


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