, 9 tweets, 3 min read Read on Twitter
a) it is always a little dangerous to disagree with Dr. Krugman ...

b) I think he may be giving China a bit too much credit here ...

China's stimulus likely has been more effective than Trump's stimulus but not all that effective (absolutely)

The IMF estimates that China's 1.5 pp of GDP stimulus will only provide 0.8 pp of GDP in support for growth, as it does things like cut the personal income tax.

(paragraph 15 of the staff report)

China cut the personal income as well as reducing VAT (and it doesn't collect much personal income tax). The IMF:

"[the] Personal Income Tax (PIT) reform decreased the progressivity of the tax system as a whole as it reduces the already small share of progressive tax revenues"
And it raised the VAT refund for exports (one of those strange Chinese things, the amount of the VAT refund is a policy tool) -- which helps business not consumers.

While cutting the central government spending to offset the budget impact of tax cuts
There are lot of complexities now in analyzing China's trade data, not the least the swing in semiconductor prices (+ base effects).

But ex the U.S. and ex commodities, China's imports look very weak
Gavyn Davies thinks China's stimulus averted a recession in China ...

But based on the trade data, I am not so sure

China did enough stimulus to offset the trade war (or woudl have, had its stimulus been better targeted ...).

But China's own economic cycle had turned, and it isn't clear that China has done enough to offset both its own cycle and the trade war
That at least is the conclusion I draw from the trade data. Even taking the U.S. out (to control for the tariffs in a modest way), China's imports of manufactures are down -- absolutely, and relative to its exports.
There is an argument that the trade data doesn't capture China's current economy, as the growth sectors (services and the like) aren't highly traded. And chip prices have a huge impact on trade.

But judged simply on the trade data, China's economy is still weak.

(rant over)
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