1/7
Even bank analysts, who should know better, are confusing rising trade surpluses with rising export growth, and are suggesting that slower increases in China's exports next year should result in smaller surpluses.
scmp.com/economy/china-… via @scmpnews
Even bank analysts, who should know better, are confusing rising trade surpluses with rising export growth, and are suggesting that slower increases in China's exports next year should result in smaller surpluses.
scmp.com/economy/china-… via @scmpnews
2/7
Export growth may indeed slow next year as more countries resume normal supply chain operations, but if the trade surplus contracts, the latter will have very little to do with the former.
Export growth may indeed slow next year as more countries resume normal supply chain operations, but if the trade surplus contracts, the latter will have very little to do with the former.
3/7
China's trade surplus has surged in the past two years mainly because household income growth has continued to lag GDP growth, and this has pushed up the overall savings rate just as Beijing was trying to rein in non-productive investment.
China's trade surplus has surged in the past two years mainly because household income growth has continued to lag GDP growth, and this has pushed up the overall savings rate just as Beijing was trying to rein in non-productive investment.
4/7
If Chinese savings rise relative to Chinese investment, the of course the trade surplus will rise, no matter how quickly or slowly exports grow. This may sound counterintuitive, but only to those economists who don't view the economy systemically.
If Chinese savings rise relative to Chinese investment, the of course the trade surplus will rise, no matter how quickly or slowly exports grow. This may sound counterintuitive, but only to those economists who don't view the economy systemically.
5/7
This dynamic will continue. We are all hoping that household income in 2022 will finally accelerate relative to GDP, in which case the trade surplus should decline, but if it doesn't, China's...
This dynamic will continue. We are all hoping that household income in 2022 will finally accelerate relative to GDP, in which case the trade surplus should decline, but if it doesn't, China's...
6/7
trade surplus will largely reflect Beijing's success in getting debt under control: the stricter they are on debt, the higher the trade surplus must be.
trade surplus will largely reflect Beijing's success in getting debt under control: the stricter they are on debt, the higher the trade surplus must be.
7/7
In that case even if export growth slows substantially, this just means that import growth will slow even more. It makes no sense to treat external imbalances as separate from internal imbalances. One simply reflects the other.
In that case even if export growth slows substantially, this just means that import growth will slow even more. It makes no sense to treat external imbalances as separate from internal imbalances. One simply reflects the other.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
