1/8
Given how complex the global trading system is, Adam, I think we would have to be careful about assuming simple relationships, like China's joining WTO automatically causing a shock to the US economy. First, I think what mattered in China’s case was not WTO but rather...
Given how complex the global trading system is, Adam, I think we would have to be careful about assuming simple relationships, like China's joining WTO automatically causing a shock to the US economy. First, I think what mattered in China’s case was not WTO but rather...
https://twitter.com/adam_tooze/status/1370877178582294534
2/8
the long process during which the household income share of GDP was forced down.
This accelerated in the early 2000s when China cleaned up its NPLs by forcing households to absorb the losses, and was the main reason, I would argue, that China’s...
the long process during which the household income share of GDP was forced down.
This accelerated in the early 2000s when China cleaned up its NPLs by forcing households to absorb the losses, and was the main reason, I would argue, that China’s...
3/8
persistent (since 1993) but small trade surplus exploded after 2004. That is when household consumption “collapsed”, from the already-low 46% of GDP in 2000 to the unprecedented 34% in 2010, driving up the savings rate to well above the more-or-less constant investment rate.
persistent (since 1993) but small trade surplus exploded after 2004. That is when household consumption “collapsed”, from the already-low 46% of GDP in 2000 to the unprecedented 34% in 2010, driving up the savings rate to well above the more-or-less constant investment rate.
4/8
Because China’s trade surplus exploded 3-4 years after it joined WTO, it is tempting to argue that the latter caused the former, but I think the rapid cleaning up of NPLs amounting to 20-30% of China’s GDP was the main factor.
Because China’s trade surplus exploded 3-4 years after it joined WTO, it is tempting to argue that the latter caused the former, but I think the rapid cleaning up of NPLs amounting to 20-30% of China’s GDP was the main factor.
5/8
But whatever the reason, this explosion in China’s trade surplus does not correspond to any explosion in the US trade deficit – which grew gradually from 1998 to 2005 before leveling off for three years – because global trade is too complex for that. Remember that...
But whatever the reason, this explosion in China’s trade surplus does not correspond to any explosion in the US trade deficit – which grew gradually from 1998 to 2005 before leveling off for three years – because global trade is too complex for that. Remember that...
6/8
Chinese surpluses corresponded at the time to a massive importing of commodities (whose prices began soaring around 2003-05), the displacement of trade surpluses in other countries, and the creation of trade deficits (or reduction of surpluses) in countries that directly...
Chinese surpluses corresponded at the time to a massive importing of commodities (whose prices began soaring around 2003-05), the displacement of trade surpluses in other countries, and the creation of trade deficits (or reduction of surpluses) in countries that directly...
7/8
or indirectly absorbed China’s exports of savings, so that the impact on the US was always likely to be much more complicated than any “China shock” story might imply.
I am not arguing that “China shock” stories cannot ever exist – after all I do argue that peripheral...
or indirectly absorbed China’s exports of savings, so that the impact on the US was always likely to be much more complicated than any “China shock” story might imply.
I am not arguing that “China shock” stories cannot ever exist – after all I do argue that peripheral...
8/8
Europe probably experienced a “Germany shock” story after 2003-05 – but rather that the way the global trading regime absorbs one of these stories tends to be fairly complex and often with countervailing imbalances.
Does that make sense?
Europe probably experienced a “Germany shock” story after 2003-05 – but rather that the way the global trading regime absorbs one of these stories tends to be fairly complex and often with countervailing imbalances.
Does that make sense?
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