Thread by @michaelxpettis

1/7
Chinese exports have soared recently, and its trade surplus is the highest in its history, and yet Beijing is still far more enthusiastic about further promoting and subsidizing trade than about developing its weak and lagging domestic consumption.
en.people.cn/n3/2022/0308/c…

2/7
According People's Daily, "China has released guidelines focusing on cross-cyclical adjustments to help companies secure industrial and supply chains, guarantee foreign trade orders, stabilize expectations, and further unleash the growth potential of exports and imports."

3/7
The new guidelines include "strengthening fiscal and financial policy support, encouraging development of new business formats such as cross-border e-commerce and overseas warehouses, and easing international logistics pressure on businesses."

4/7
These measures also involve "stabilizing development of processing trade, cultivating businesses with strong competitiveness in global export and import markets, and enhancing trade liberalization and facilitation."

5/7
Finally Beijing also plans to "accelerate export tax rebates, increase export credit support, and improve export credit insurance."

6/7
Its no wonder "dual circulation" and "common prosperity" seem to have fallen by the wayside. In selecting such a high growth target for the year, Beijing has given itself no choice but to step on the supply-side accelerator – and hope the demand side sorts itself out.

7/7
But because all these subsidies ultimately come at the expense of households, it is hard to see how demand rebalances this year.
carnegieendowment.org/chinafinancial…