What We Read Today 26 October 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary “reading list” which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for “reading list” items are gratefully reviewed, although sometimes space limits the number included.

The Canary in China’s Central Bank (Daniel Altman, Foreign Policy) Prof. Altman suggests watching what happens with the the leadership of the Peoples’ Bank of China (PBoC). Governor Zhou Xiaochuan has a term that runs until 2018 but he could be removed and replaced by Yi Gang, a U.S.-trained academic and internationally respected expert on capital markets and exchange rates.

Yi has run the State Administration of Foreign Exchange, the government’s currency board, since 2009, and as such he has been at the vanguard of Zhou’s agenda. But Altman says Yi is more cautious and if he were to replace Zhou it would represent a desire to go slower on reform. Zhou is outspoken in his support of moving to a freely floating currency and placing the renminbi along side the U.S. dollar and the euro as a widely used exchange currency. Such a situation would almost certainly lead to the renminbi appreciating significantly, diminishing China’s competitive advantage in world trade while increasing domestic buying power and a more rapid increase in domestic consumption. China has the world’s lowest consumption share of GDP and many have said the country needs to increase consumption to have a sustainable economy.

UK on track to be fastest growing G7 economy despite slowdown (Katie Allen, The Guardian) GDP grew by 0.7% in the third quarter, down from0.9% on Q2 but equal to expectations. The UK is on track to be the fastest growing economy in the G7 for 2014 and also the fastest growing in the EU-27.

Deficit Talk in an Election Year (Editorial, The New York Times) What happened? Is The New York Times actually criticizing austerity?

Highest Ice Age human settlements found in the Peruvian Andes (Amina Khan, Los Angeles Times) Archaeologists have found habitation sites as high as 14,698 feet (4,480 m.) above sea level that date to almost 13,000 years ago. These are the oldest habitations found above 4,000 m. by more than 1,000 years and were used only about 2,000 years after humans first arrived in South America. Scientists are changing their ideas about how early humans adapted and evolved to withstand harsh environments. Incidentally, humans live permanently at even higher elevations today. La Rinconanda, Peru sits at 16,700 feet (3.16 miles) above sea level.