1/5
China's March trade numbers were a big surprise, with exports up less than expected and imports way up. Given how volatile things have been, we don't want to read too much into one month's numbers, but if they reflect a new reality, they matter.
english.news.cn/20260414/f5b3a… 2/5
Exports were up a measly 2.5% year on year in March, well below the 21.8% surge in the first two months of the year. Imports, driven mainly by higher commodity prices, were up an astonishing 27.8% in March, versus an already high 19.8% in the first two months of the year.

1/9
Very good FT article on why overcapacity is structurally embedded into the Chinese economy. It quotes one (anonymous, of course) investor who notes that "Officials are scared of missing their GDP targets. Nobody is scared of overcapacity."
via @ftft.com/content/7d51a6… 2/9
I was nonetheless impressed by the number of Chinese who spoke openly about the difficulties created by the current growth model. This didn't use to be the case, but the fact that we're seeing more and more of this suggests that we may finally be seeing a change in the way policymakers think.

1/15
IMF: "If coordination proves difficult, the best course of action for each country is clear: start addressing domestic imbalances now, regardless of what others do."

This is one of several discordant lines in an otherwise interesting paper.

imf.org/en/blogs/artic… 2/15
It is good that the IMF (along with others) increasingly recognizes the adverse consequences of persistent trade imbalances, and recognizes that "the relevant metric is the overall position of a country against the rest of the world, not bilateral or sectoral balances."

1/7
Martin Wolf, in an important piece on unsustainable current account imbalances, makes a point that most American economists miss: "the counterpart of external deficits tends to be unsustainable domestic borrowing."
via @ftft.com/content/49e38e… 2/7
He goes on to say: "The Keynesian hypothesis looks right: the inflow of net foreign savings, shown in capital account surpluses made big fiscal deficits necessary, because domestic demand in the US would otherwise have been chronically inadequate."

1/12
Bloomberg: "Canada pitched expanding its financial services presence in the Chinese market as the northern nation aims to increase exports to its second-largest trading partner in a push to diversify from the US." bloomberg.com/news/articles/… 2/12
The article continues: "Expanding Canadian financial services activity in China is key to achieving the government’s goal of increasing exports by 50% by 2030, according to Finance Minister Francois-Philippe Champagne."

1/12
Caixin: "For the first time, China has embedded a dedicated plan to raise household incomes into a top-level national policy document, signaling a change in priorities as policymakers grapple with persistently weak consumer spending."
caixinglobal.com/2026-03-30/cov… 2/12
"The diagnosis is widely shared," the article notes, as it quotes Yang Weimin, a former deputy director of the CFEAC, that “The reason for China’s low share of consumption in total demand is mainly the low share of residents’ income in national income.”

1/6
FT editorial: "Other governments have not done much to play the role the US once did of seeking to anchor the world trading system. Mark Carney, Canada’s prime minister, and others have been talking about an alliance of middle powers seeking to save...
ft.com/content/0ed61c… 2/6
multilateral trade. So far, this has mainly been conspicuous by its absence."

Of course it has. That's because for all the huffing and puffing, "the world" is not looking for someone to bring order to the world trading system.

1/12
On the centennial of Britain's 1926 general strike, the FT reviews three new books that discuss and explain the events that year. I haven't read them (although I'd love to do so), but it is worth noting what those events tell us about current conditions.
ft.com/content/ab0875… 2/12
Although most stories of the general strike discuss it in terms of good guys and bad guys (mine owners or workers, depending on your political preferences), in fact both sides were caught up in a structural trap that neither could resolve.

1/9
Reuters: "China said that Mexico's trade measures against it, including tariff increases, ​constitute trade and investment barriers and that it had ‌the right to take countermeasures."
rld/china/china-says-it-has-right-retaliate-against-mexicos-tariff-hikes-2026-03-25/ 2/9
This story was predicted by, and can be explained through, the insights of both Michael Kalecki and Joan Robinson.

In the former case, it illustrates the Kalecki Paradox as it applies to global trade.

1/5
This new paper by the Fed concludes that China's export success stems from weak domestic demand "rooted in structural features of China's economy and financial system—particularly those that constrain household consumption."
federalreserve.gov/econres/notes/… 2/5
"As China's export share has increased, exporters in advanced economies have experienced widespread losses in global market share. Losses are evident across most sectors and are particularly pronounced in economies with strong manufacturing bases, such as Japan and Germany."

1/6
China's deflationary environment continues to improve, with high-than-expected numbers in February. CPI inflation was 1.3% year on year and 1.0% month on month. Month-on-month inflation has been positive since December and mostly positive since July.
english.news.cn/20260309/3fc64… 2/6
The Spring Festival always makes January and February data noisy, but ever since Beijing decided to go after the problem of involution last May and June, we've seen deflationary pressures ease. But we also saw investment growth decelerate sharply. This isn't just coincidence.

1/8
Bloomberg: "China will issue 300 billion yuan of special sovereign bonds to recapitalize some of its largest banks, marking an expansion of Beijing’s efforts to fortify the nation’s financial system against a cooling economy and market volatility."
bloomberg.com/news/articles/… 2/8
Chinese banks are caught between record low net-interest margins and worsening loan quality, and so are forced to recapitalize, but this just reflects the same set of inconsistencies between high growth targets and low consumption that we see everywhere else in the economy.

1/5
Atif Mian's article in F&D Magazine summarizes his related academic pieces in which he refutes the claim that because the rich save a higher share of their income than the non-rich, rising income inequality leads to rising saving.
imf.org/en/publication… 2/5
That would only be true if rising income inequality caused a rise in investment, but in the US, where investment is more likely to be constrained by weak demand than by scarce saving, rising income inequality is more likely, as Mian shows, to lead to higher household debt.

1/7
Xinhua: "China will actively boost consumption and implement an income growth plan for urban and rural residents, according to a government work report submitted Thursday to the country's top legislature for deliberation."
english.news.cn/20260305/4203c… 2/7
This is certainly the right thing to say – the only sustainable way to raise the consumption share of GDP is to raise the household income share – but it tells us very little.

Raising the household income share means reducing the business and/or government shares.

1/6
Xinhua: "China targets an economic growth of 4.5 percent to 5 percent this year."

While this is the lowest target in decades, it's still roughly twice what I think the economy can sustainably deliver without a lot more more non-productive investment.

english.news.cn/20260305/d0f4b… 2/6
It is a good sign that Beijing has set a lower target this year (certainly better than rigidly sticking to a 5% GDP growth target), but the truth is that it doesn't change much. China will still have trouble – for all its promises – getting consumption growth to accelerate.

1/12
Very interesting Bloomberg article on one of my favorite topics – how, in a hyperglobalized world (i.e. one with very low transportation, communication, and financial-transaction costs), countries that control their external accounts effectively...
bloomberg.com/news/articles/… 2/12
externalize domestic economic conditions by passing them on to the rest of the world via trade- and capital-flow imbalances. These imbalances are automatically absorbed by those of their trade partners who choose to exert less control over their external accounts.

1/9
Good piece in Nikkei Asia by former acting deputy U.S. trade representative Wendy Cutler on trade-related discussions during Trump's upcoming trip to China. She argues, however, that for a president focused on...
asia.nikkei.com/opinion/trump-… 2/9
rebalancing, Trump must "hold China's feet to the fire," including pressing for export restraints in sectors like steel and autos and tougher action on transshipments – or tariff dodging via third countries.

1/7
Bloomberg: "China is balancing productivity gains from AI with labor stability, as automation could displace workers and trigger an economic spiral."

I think this whole AI-will-cause-unemployment argument is very confused.
bloomberg.com/news/articles/… 2/7
Getting workers to become more productive doesn't cause workers to be fired. In fact that's the only way to make them richer.

What really matters is whether or not wage growth for the overall economy keeps pace with productivity gains.

1/5
SCMP: "“China needs to move decisively towards consumption-led growth,” Sonali Jain-Chandra, IMF mission chief for China, said in an interview with the South China Morning Post."
scmp.com/economy/china-… 2/5
Yes, but how? The IMF has urged China to put into place a stronger social safety net, but even if China were to do so, until it is credible (which will take years, even decades) it will have little impact on current consumption.

1/5
Bloomberg: "The scale of the problem is staggering. Trade data released Thursday showed a record $112 billion gap between what China reported exporting to the US and what US Customs said actually arrived last year."
bloomberg.com/news/features/… 2/5
"Put simply," Bloomberg continues, "that suggests that as much as a quarter of what Asia’s top economy shipped to American shores last year slipped under the tariff radar."

1/6
Bloomberg: "Instead of fighting over quotas and rules, officials should be rolling up their sleeves and thinking honestly about where the EU has a fighting chance of competing — not “picking winners, but letting the losers go.”"
bloomberg.com/opinion/articl… 2/6
This might be perfectly good advice in a "normal" trading environment, in which countries maximize exports in order to maximize imports and domestic consumption, trade is broadly balanced, and production shifts according to comparative advantage.