If Trump did not agree to give China access to the B-chip, that at least is a bad concession withheld. But what did this meeting actually accomplish? The short answer is not much 1/4

https://twitter.com/business/status/1983761811749970278

The wrangling over tariffs, levies, deals etc is notable only because it’s an easier story and of no enduring significance. I suspect the more intense trade weaponisation in recent months - to the point of intrusion into sovereign threat - warranted both sides to back off 2/4

This is an interesting story where everything is in the caveat by ⁦@TheEconomist⁩ adding, ‘if they’re not lying’. Read on 1/ China is being fuelled by inspiration, not perspiration (from @TheEconomist) economist.com/finance-and-ec… The backdrop is the re-estimation of TFP for China by folk at Penn now using official Chinese GDP stats. This lifted TFP growth from stagnant to 2.3%. Pretty good, you might say. But the problem is that official GDP stats are a lie. And the govt in Beijing must know that too 2/4

Sharing my deep-dive on Chinese industrial policy, and its features, fame, foibles and effects. Truly one of the biggest macro/geopol issues of our time, bigger than Trump's tariffs by far. 1/7 Chinese industrial policy, trade and the global order geostrategy.org.uk/research/chine… China's aim is to lead the so-called 4th industrial revolution, and it is most probable that this week's 4th Plenum will double down on this long standing goal, approving the 15th FYP's prioritisation of national security and further industrial might 2/7

To Adam Smith it was heresy. But mercantilism, which has deep roots in China, is the scourge of the global order, and now spreading. This essay looks at the arch-practitioner., and asks Is China’s mercantilism cracking up? 1/4 engelsbergideas.com/essays/is-chin… The reference really is to the negative consequences of mercantilism both on China’s own development and economy, and on global trade and pushback by a rising number of nations incl EM and middle income 2/4

I like this @peterfrankopan piece, framing Alaska into a BRICS+ setting. He leaves it open at the end, as to whether Trump or China/BRICS have the upper but I think there's an important supplementary. 1/4 The real reason Trump’s Alaska summit matters spectator.co.uk/article/the-re… Global trade and commerce is fragmenting, fracturing into blocs. The BRICS+ share of world GDP at PPP is neither here nor there. On every econ metric that matters bar pop size, indust prod and inv/GDP (all China), CRINKs et al are minnows comp to US and US leaning nations 2/4

This is all in line with last year's 3rd Plenum, and Econ Work Conf, and NPC earlier this month. Three things to note. 1/4 China unveils plan to ‘vigorously boost’ weak consumption via @ftft.com/content/399724… 1 There are a few demand oriented things, like the trade-in scheme confirmation, modest rises in pensions and other bens, intentions to stabilise stock prices, real estate, and encourage higher urban and rural incomes. Also paid leave, more childcare and oldies facities etc 2/4

I enjoyed this, thanks to @ZichenWang for compiling these pro-consumption demand boost views. It's interesting, but also misses something imp. 1/7 These 11 Chinese mainstream economists all call for govt aids to Chinese households, by @ZichenWanghere open.substack.com/pub/pekingnolo… Interesting cuz it adds weight to the 'something has to change' cry coming from several China economists for ages. That these Chinese economist openly call for same, is noteworthy and might be reflected in policies quite soon as the govt tries to rescue its 5% GDP target 2/7

So much 3rd plenum parsing about, much of it questionable. Here are a few takeaways so far but we really have to await the Decisions doc details to be fair. But here goes, for the moment 1/6 The read out indicates party is as focused on security as on economy. No change there. But there’s an unusual big focus on international relations material. Suggests econ, security, geopol are indistinguishable. Message for foreign firms: you’ve been warned, know it or not 2/6

New Productive Forces is China’s new industrial policy on steroids. In this piece, I examine what it is, metrics, contradictions, and whether it can work to rescue the economy and win at geopolitics, 1/6 China’s Quixotic Quest to Innovate | Foreign Affairs foreignaffairs.com/china/chinas-q… This will most likely be centre stage at July’s 3rd Plenum, and today the IMF is the latest to lay into the risks China is running by going he’ll for leather for a huge mfg production push, which will ‘externalise’ in effect China’s weaknesses at home by exporting to others. 2/6

There is a lot wrong with this, hard to know wher to begin but let's give it a go 1/9
America is pulling up the drawbridge via @ftft.com/content/97024f… In the first place, tariffs and protection didn't strat in the US. You have to go back to the sea change in Chinese industrial and trade policy in the 2000s to get to the heart of what we are reaping today 2/9

In this column, I argue there’s little point and much risk if the Yuan is allowed to drop significantly, but it could happen regardless 1/5 Risk of a renminbi devaluation is real via @FT
on.ft.com/4a7RAhb It’s not even about the $ as much as a) Chinese interest rates converging on zero, esp since real interest rates have surged as deflation risk has stalled China b) there’s every chance that their economy is going to fade again as policy support weakens and ….2/5

This is a great quote from a Chinese official, who’s offering the West a lecture in trade theory and competitive advantage. The trouble is, as you might guess, it’s totally blowing smoke to deflect criticism 1/5

https://twitter.com/jchengwsj/status/1785519766351851659

If you want to frame this all in comp advantage, look only to Adam Smith, arch free trade guy, who was well aware of the virtues of trade. He also despised mercantilism viscerally, if countries earning exp surpluses didn’t use their comp advantage to also then boost imports 2/5

For 1st time in almost 30 years, China’s GDP in $ fell in 2023 to about $17.5trn, while U.S. gdp rise 6% to about $27trn. The gap widened by about $2trn. And China’s share of world GDP slipped to just under 17%. How meaningful is this? 1/4 To the extent that the yuan dropped sharply, not very. Exch rates jump around all the time. But… in yuan terms, nominal GDP rose barely more than 4.5%, and this is more set than surprise, reflecting weak demand and incipient deflationary pressures. 2/4

What's in store for China this year, and beyond? In this piece, I look at several of the things that have combined and coalesced to create China's systemic headwinds 1/6 | George Magnus theguardian.com/business/2024/… It's against this backdrop that Xi's China is said to be treading a tightrope between security and the economy. This isn't wrong, but real issue is how and if to reform the economic development model so that this choice doesn't have to be made. The focus then is on policy. 2/6

In this piece, I wanted to shine a light on China’s >21% youth unemployment rate because it’s economically structural, socially corrosive and curious for a rapidly ageing nation 1/4 China cannot allow jobless young to ‘lie flat’ via @FT
on.ft.com/3KaMJl3 The ‘lie flat’, and ‘let it rot’ movements and the tendency of young to live at home and be paid by patents for work are all indicative of degrees of pessimism about jobs, expectations and social mobility. But overlaid is hysteresis risk, which is esp awful for the young 2/4

‘Turn that frown upside down’ says @FTAlphaville as they kindly publish my De-Dollarisation rebuttal. Some of this takes issue with a recent paper by Stephen Jen which FTA covered earlier this week. Some is more general 1/3 Dollar :-) via @FT
on.ft.com/41qO5ip Big shout to @Brad_Setser and @sobel_mark who are must read thinkers on this, incl on Twitter. The assertion that central banks were big sellers of USD reserves last year, more than the IMF reports, doesn’t pass muster and is anyway accounted for by bond valuation changes 2/4

Current FA with good pieces on eg India, Asia, Africa, and a gr8 front cover tease ‘The West, the Rest and the new Global Disorder’. Well noted, cos 4 some of the biggest protagonists, China, Russia, Iran, multipolar is a polite word for shaping the world to suit autocracy 1/4 One of the essays is The Myth of Multipolarity. Authors acknowledge US/USSR bipolarity -> unipolar US world, but now at best bipolar w/ China,but even then not quite. However, US hegemonic position clearly less and it’s behaviour has to recognise that 2/4 foreignaffairs.com/united-states/…

We have our own bank regulatory mess but don’t forget China has its own. The new regulator and its political overlords make China’s system even more very centralised, politicised, and Minsky-ish 1/3 The risks of China’s regulatory shake-up via @FT
on.ft.com/3ZqFYjY While a new state regulator will absorb existing ones, the PBoC will be weakened as its Federal type regional offices become provincial political control centres, and some of it brief is taken over. 2/4

I was a big fan of Fareed’s interview of @MrKRudd recently. But this is arrant nonsense, and poorly informed. The lack of understanding of int’l monetary system is stunning. See @michaelxpettis @RobinBrooksIIF for example

https://twitter.com/fareedzakaria/status/1640058728752840707

First look at the $ narrow trade weighted index DXY. It’s been soft but still a lot higher than 2-3 years ago 2/6

This is an interesting theme that merits a bit of delving, as I shall do now. There are close similarities, several differences, same ending? 1/10 China’s economy is looking at a new wave of Japanification ft.com/content/ee9ef5… Japan offers a useful, if inexact, template for modern China. Both feature a similar development model, systemic bop surpluses, property boom and bust, and a growth to debt transition. 2/10

This is an interesting set of recommendations from 6 prominent Chinese economists, that’s both hit and miss. Here’s a couple of thoughts 1/5

https://twitter.com/zichenwanghere/status/1599000126152118273

They think the gdp target should be set at 5% or higher next year. Well if you believe in the practice - which many economists don’t - then to be fair, it’s do-able beating in mind China’s 2020 and our own 2021 covid bounces. Esp as q4 this year will be another negative 2/5