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1/8
Xinhua: "China's manufacturing sector topped the world in size for 13 consecutive years in 2022, with the sector's added value contributing to over 30 percent of the world's total."
This may seem at first like a good thing, but while Chinese...
english.news.cn/20231207/183d0…
Xinhua: "China's manufacturing sector topped the world in size for 13 consecutive years in 2022, with the sector's added value contributing to over 30 percent of the world's total."
This may seem at first like a good thing, but while Chinese...
english.news.cn/20231207/183d0…
2/8
manufacturing accounts for over 31% of the world's total, Chinese consumption accounts for only 13% of global consumption. Globally every dollar of manufacturing is supported by $4.7 of consumption (and by $6.1 in the world ex-China). In China it is supported by only $1.9.
manufacturing accounts for over 31% of the world's total, Chinese consumption accounts for only 13% of global consumption. Globally every dollar of manufacturing is supported by $4.7 of consumption (and by $6.1 in the world ex-China). In China it is supported by only $1.9.
3/8
This means that if China is to keep growing its share of global GDP, there are literally only two ways it can do so. One way is to redirect resources from manufacturing to consumption, so that Chinese supply growth is balanced by growth in domestic demand.
This means that if China is to keep growing its share of global GDP, there are literally only two ways it can do so. One way is to redirect resources from manufacturing to consumption, so that Chinese supply growth is balanced by growth in domestic demand.
4/8
The other is for other countries to agree to accommodate a faster expansion in Chinese manufacturing than in Chinese demand by reducing their own manufacturing shares of GDP.
The former doesn't seem to be happening. The recent decline in the GDP share of property...
The other is for other countries to agree to accommodate a faster expansion in Chinese manufacturing than in Chinese demand by reducing their own manufacturing shares of GDP.
The former doesn't seem to be happening. The recent decline in the GDP share of property...
5/8
investment hasn't been matched by an equivalent rise in the GDP share of consumption but rather by a rise in the GDP share of manufacturing investment. This suggests that if anything, the imbalance between manufacturing and consumption in China is likely to rise.
investment hasn't been matched by an equivalent rise in the GDP share of consumption but rather by a rise in the GDP share of manufacturing investment. This suggests that if anything, the imbalance between manufacturing and consumption in China is likely to rise.
6/8
As for the latter, if major economies like the US, the EU, India and Japan expect to implement policies to protect or expand their own manufacturing shares, the world will not be able to accommodate further unbalanced growth in the Chinese share of global GDP.
As for the latter, if major economies like the US, the EU, India and Japan expect to implement policies to protect or expand their own manufacturing shares, the world will not be able to accommodate further unbalanced growth in the Chinese share of global GDP.
7/8
The result will be a worsening fight over trade, which will be especially painful for countries with weak domestic demand. As we saw in the 1930s, beggar-thy-neighbor trade wars are especially painful for surplus countries, if less so for deficit countries.
The result will be a worsening fight over trade, which will be especially painful for countries with weak domestic demand. As we saw in the 1930s, beggar-thy-neighbor trade wars are especially painful for surplus countries, if less so for deficit countries.
8/8
After years of predicting worsening trade relations, It may seem alarmist for me to say we are further away than ever from a resolution, but the arithmetic is pretty simple and hard to refute. I show this in my most recent piece published by Carnegie.
carnegieendowment.org/chinafinancial…
After years of predicting worsening trade relations, It may seem alarmist for me to say we are further away than ever from a resolution, but the arithmetic is pretty simple and hard to refute. I show this in my most recent piece published by Carnegie.
carnegieendowment.org/chinafinancial…
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