It is a bit hard to believe that any story involving China has been underreported, given China's large role in the global public debate.
But China's transformation into a major auto exporter has been wildly underreported.
(see the hockey stick in exports of finished cars)
1/
China has gone from a large net importer of finished (mostly from the EU, the Japanese firms never thought they could sell in China w/o producing in China) to a net exporter remarkably quickly ...
(China has been a net exporter of auto parts for some time)
2/
The US has long been a net importer of autos (mostly from Japan and Korea, but to a degree from Europe too).
And the EU has long been a net exporter of autos.
China has suddenly become a major global competitor
3/
I suspect that you need a Ph.D in political science -- or perhaps psychology and trade law :) -- to understand why the Commission's main response to a surge in Chinese competition (primarily in EVs) has been to threaten to challenge the US in the WTO ...
4/
I do understand that the IRA discriminates against European EV exports to the US (there aren't very many yet & the EU EV market is also undersupplied & will absorb any lost sales)
But the big swing in global demand for EU autos right now is coming from China, not the US.
5/5
this thread was inspired both by this Bloomberg story, and the EU's current freakout over the IRA (& its long silence over China's obviously discriminatory policies in the EV sector, which have had a much bigger impact on EU auto exports and employment)
In 2023, the eight largest US pharmaceutical companies
collectively did not pay ANY US corporate income tax.
Time for a real "America first" corporate income tax reform, one where big American companies actually pay a bit of income tax in the US
1/
Why the big "zero" when the US income tax paid by "Big Pharma" is summed up?
Simple. Despite charging high prices in the US and generating the bulk of their revenue in the US, Big Pharma claims (in their corporate disclosure) to be losing money in the US
2/
They do report making money of course -- they just report that all their earnings on their operations abroad.
It is a tax game of course, but one with real consequence
American pharmaceutical companies don't pay anything like 21% (or even 15%) in corporate income tax -- and they certainly don't pay anything like that to the US Treasury.
tax paid to the US Treasury in 2023 was a bit lower than the norm. But only a bit!
2/
Why don't US pharmaceutical companies pay US tax?
Well, the obvious reason is that they report losing money on their US operations (despite high US drug prices) and report making all their money abroad
The end of Milei's honeymoon with the (international bond market) over concerns that Milei and Caputo want to use scarce fx to support the peso is useful reminder to cough, the IMF, that foreign debts are paid out of foreign exchange not dollar GDP
1/
Milei wants to use Argentina's foreign exchange reserves to "to buy pesos on the parallel market" and prop up the peso. Dollar GDP would increase; if you have fiscal model of payments, Argentina's capacity to pay dollar debt goes up ...
2/
The market tho -- at least the market for Argentina (it is less clear in the restructuring cases) -- is worried that using sscarce fx to prop up the peso means less fx to clear Argentina's massive fx payments arrears & to pay external debt
Lots of talk about the dollar's role as a reserve currency.
Less talk about the United States role as the main (net) borrower in the global economy -- and the interest the US has to pay as a result.
thread
1/
US (net) external debt is around 45% of GDP (down a bit from its peak b/c of fast GDP growth and the mark to market losses of foreign bond holders)
2/
But just taking current interest rates times net debt doesn't produce a good estimate of net interest payments (say 4% *45% = 1.8 pp of GDP ... ), the actual total is more modest ...
3/
My subtle reframing of the reserve currency debate, in the WSJ --
1/
I may be a bit biased, but I think this is a pretty good chart -- the stock of US Treasuries held by private US investors is still pretty small
* custodial holdings in Belgium and Luxembourg blur the line between foreign private and foreign official
2/
A chart that I use to push back against those who claim that the US borrows at a low cost because of the dollar's position as "the" reserve currency and the dominant role of the Treasury market. The US actually pays the highest yield of the major reserve currencies!
It isn't exactly a secret that I think the IMF has made an error by deprioritizing balance of payments based analytic tools and concepts in a range of contexts, including in its analysis of China. Let me see if I can explain why ...
2/
Lets zoom in on the chart on gross outflows of China, and focus on the red bar (other, or bank outflows). The positive numbers in 20 and 21 (big outflows from China relative to now) stand out I think