1/9
A lot of analysts and Chinese policymakers are worried about slowing export growth and are suggesting that Beijing may need to take steps to boost exports, but I think that not only is this interpretation a mistake, it is a dangerous mistake.
wsj.com/articles/china… via @WSJ
A lot of analysts and Chinese policymakers are worried about slowing export growth and are suggesting that Beijing may need to take steps to boost exports, but I think that not only is this interpretation a mistake, it is a dangerous mistake.
wsj.com/articles/china… via @WSJ
2/9
It's true that exports in the first two months of the year were "only" 16% higher than in the same period last year, less that the 21% year-on-year growth in December and November, but last year saw truly extraordinary export growth in China.
It's true that exports in the first two months of the year were "only" 16% higher than in the same period last year, less that the 21% year-on-year growth in December and November, but last year saw truly extraordinary export growth in China.
3/9
The dollar value of exports during the year grew by 30%, which is roughly twice the dollar value of nominal GDP growth. This means that China's overreliance on the export sector – rare for large economies – grew last year when it really should be shrinking.
The dollar value of exports during the year grew by 30%, which is roughly twice the dollar value of nominal GDP growth. This means that China's overreliance on the export sector – rare for large economies – grew last year when it really should be shrinking.
4/9
if China is to rebalance demand, an almost inevitable consequence will be a reduction in the export share of GDP. But if Beijing responds to "weakening" export growth, it will do so with supply-side measures that will only worsen China's domestic imbalance.
if China is to rebalance demand, an almost inevitable consequence will be a reduction in the export share of GDP. But if Beijing responds to "weakening" export growth, it will do so with supply-side measures that will only worsen China's domestic imbalance.
5/9
It's not a coincidence that consumption growth is relatively weak whenever export growth is relatively strong, and vice versa. Both of them depend on the domestic distribution of income, but in inverse ways.
ft.com/content/a9572b…
It's not a coincidence that consumption growth is relatively weak whenever export growth is relatively strong, and vice versa. Both of them depend on the domestic distribution of income, but in inverse ways.
ft.com/content/a9572b…
6/9
A rise in the household income share of GDP boosts domestic consumption but slows export growth, and vice versa. That's why "dual circulation" never stood a chance, and probably explains why for all its former ubiquity, no one seems to refer to it anymore.
A rise in the household income share of GDP boosts domestic consumption but slows export growth, and vice versa. That's why "dual circulation" never stood a chance, and probably explains why for all its former ubiquity, no one seems to refer to it anymore.
7/9
Beijing is caught up in a weird feedback loop: they are afraid of weak consumption growth, and so implement policies that boost exports as a way of compensating for this weak consumption growth, but it is these very policies that ensure that consumption growth will stay weak.
Beijing is caught up in a weird feedback loop: they are afraid of weak consumption growth, and so implement policies that boost exports as a way of compensating for this weak consumption growth, but it is these very policies that ensure that consumption growth will stay weak.
8/9
Already the Commerce Ministry has warned that Beijing must implement measures that support export growth, but rather than continuing to subsidize manufacturing, Beijing should really be focusing on repairing domestic demand.
Already the Commerce Ministry has warned that Beijing must implement measures that support export growth, but rather than continuing to subsidize manufacturing, Beijing should really be focusing on repairing domestic demand.
9/9
The former only increases China's reliance on trade surpluses and public-sector investment to resolve domestic demand deficiencies. This is the opposite of what Beijing says it has wanted to do for years.
The former only increases China's reliance on trade surpluses and public-sector investment to resolve domestic demand deficiencies. This is the opposite of what Beijing says it has wanted to do for years.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
