1/5 It's not so much Atlanticism but international relations more generally that will remain in retreat no matter who wins the US election, and although the world tends to be obsessed with the US and with its bilateral relationships, this retreat won't...
3/5 intensify, and anti-foreign and anti-immigrant feelings rise, and I think this remains a global issue. Perhaps because of its obsession with the US and with, more recently, the Trump circus, much of the world (and the global press) seems to focus on bilateral problems the...
4/5 US has with Europe, China and Russia, but in fact the three have equally, and often more, serious problems with many of their own immigrants, neighbors and international relationships, and this says nothing about either intra-European conflict or similar problems affecting...
5/5 India, the UK, Saudi Arabia, Brazil etc. Unfortunately I think the widespread desire to turn inwards and reject "foreigners" is structural, based on domestic economic imbalances, and so will continue for a few more years before reversing.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
1/6 China’s total social financing (the best official measure of debt) rose in the first quarter by 8.8% year on year, to RMB 390.3 trillion. This is the lowest rate of increase in over 20 years, which may at first seem like a good thing from...
2/6 a debt-sustainability point of view, but according to China's NIFD, the country's "macro leverage" ratio, a proxy for debt-to-GDP, "inched up" (according to Caixin) by 6.8 percentage points in the first quarter of 2024, to 294.8%.
http://114.115.232.154:8080/
3/6 In fact that's a very large increase. It rose by just twice that amount, or by 13.5 percentage points, in all of 2023, which already represented a pretty bad year for debt. In the three years before COVID, for example, it rose by 3-4 percentage points a year on average.
1/15
Foreign ministry spokesperson Li Jian says that the U.S. "overcapacity" narrative is a very blunt US policy tool whose purpose is to undermine Chinese industry. He isn't completely wrong: there is a lot of confusion over what "overcapacity" means.
2/15
China's domination of certain industrial sectors, for example, isn't in itself overcapacity. As Li noted, "The US exports 80% of its chips, especially advanced chips, and is a large exporter of pork and agricultural products. Is that 'overcapacity' according to US logic?"
3/15
A week earlier vice finance minister Liao Min said something similar – "the so-called 'overcapacity' is a manifestation of the market mechanism at work, where supply-demand imbalance is often the norm".
1/8 Although Russell Napier is right to identify China's high and soaring debt as a major problem for the economy, he then says: "China needs to not just reflate its economy but to inflate away its debts."
2/8 That would be a terrible mistake, and I think the PBoC understands why.
You cannot just "inflate away" debt. Inflation is just a mechanism for resolving debt by passing on the costs to net monetary savers.
3/8 In China's case, businesses, SOEs and the government are net borrowers, while households are high net savers. Inflating away the debt simply means forcing household savers to subsidize businesses, SOEs and borrowers.
1/6 This NYT article shows just how confused many economists continue to be about trade. They worry that because in recent years a few economies have been implementing trade and industrial policies, this means an end to free trade and free markets.
2/6 This turning away from free markets, they say, will constrain future growth.
Leave aside that industrial and trade policies have often expanded growth, their worries show just how little they understand what free trade and comparative advantage mean.
3/6 The world turned away from free trade decades ago. The large, persistent surpluses that have characterized global trade since the 1980s are largely the consequences of beggar-thy-neighbor trade policies aimed at boosting domestic growth a the expense of trade partners.
1/5 Chinese GDP grew by 5.3% in the first quarter of 2024, well above expectations, reinforcing concerns that GDP growth in China means something quite different than GDP growth in economies that operate under hard-budget constraints.
2/5 While most economists inside and outside China recognize that sustainable GDP growth in China requires that consumption play a stronger role in driving growth, with investment and the trade surplus playing a declining role, the opposite happened in the past three months.
3/5 Retail sales continued to lag in the first quarter, while much of the period's growth was driven by higher investment in infrastructure and (especially) manufacturing and a large trade surplus. China is still having trouble boosting domestic consumption, in other words.
1/5 FT: "Japan’s central bankers and government officials say the country may finally become a “normal” economy. Companies will be able to pass on increased costs to consumers in the form of higher prices, and workers will demand better pay."
2/5 We've heard this story before, and I think there are at least two reasons to remain skeptical. First, while wage-driven growth in domestic consumption would certainly be a good thing in the medium term, in the short term it runs into the same old problem.
3/5 Manufacturing accounts for 20% of Japan's GDP (versus 16% for the world), and its international competitiveness is still partially underwritten by implicit and explicit transfers from households. Reversing those transfers, which is necessary for any revival in domestic....