Thread by @Brad_Setser

Interesting piece.

But I really don't like taking China's GDP growth in dollar terms as a proxy for China's impact on the rest of the world. Not when China's imports are falling as a share of its GDP

(1/x)

https://twitter.com/adam_tooze/status/1092513119606267907

China's GDP is way up by any measure.

Trade though is down as a share of China's GDP (non commodity trade that is).

Exports are only a bit over their pre-WTO level now; imports are well below their pre-WTO levels.

Net out processing trade, and imports of manufactures are are around 5% of China's GDP --

and exports aren't really out of line with China's economic size at around 11-12% of GDP (in line with the euro area)

to understand China's impact on the world you need to primarily look at its net commodity demand (and more recently its demand for vacations, especially in Asia)

and look at the ratio of its manufacturing surplus to its non-processing manufacturing imports

(4/x)

China of course matters -- the rebound in its demand in 17/18 helped a number of regions, and most especially Europe (which lacks internal demand of its own)

but total Chinese imports in 2018 were only a bit more than in 2013 ...

Judged by non-petrol import growth, not GDP, the US actually has been a far bigger source of support of global demand than China over the last 5ys.

and trade in goods remains the most direct channel for one economy to impact another

(7/x)

By my rough calculations the US has provided about 3 times as much support for global manufacturing demand as China over the last 5 years (though watch the recent downturn from China)

p.s. blog coming on this theme

(8/8)