1/7
For all the talk of rebalancing domestic demand in China, Chinese exports continue to climb much faster than imports in 2025. In the first seven months of 2025, exports were up 6.9% in RMB terms, while imports were up 1.2%.
english.news.cn/20250908/e41cd… 2/7
For just the month of August, exports were up 4.4% year on year to $321.8 billion while imports were up 1.3% to $219.5 billion, leaving China with a trade surplus of $102.3 billion, its fifth trade surplus this month of over $100 billion, with five out of...

1/6
I often make fun of the sheer hysteria that tariffs generate amount academic economists, but Navarro's comment is just as hysterical, even if in the opposite way. Tariffs are not tax cuts.

https://twitter.com/SpencerHakimian/status/1964373522706477291

2/6
They are, like many other policies, a mechanism for transferring income from one sector of the economy to another, in this case from households to producers. In that sense they work like a currency devaluation, by taxing imports and subsidizing exports.

1/8
Rather than treat Mexico and Canada as trade rivals, Washington should recognize that both are substantial deficit countries that, by helping to absorb global trade and savings imbalances, actually reduce trade pressures on the US.
wsj.com/economy/trade/… 2/8
The deep, flexible, and well-governed American financial markets, along with its completely open capital account, have given the US the role of "absorber of last resort" of global savings imbalances, which is just another way of saying "consumer of last resort".

1/10
Ngozi Okonjo-Iweala is concerned mainly about countries following the WTO rulebook, and as head of the WTO, perhaps this makes sense, but it also suggests why the WTO has become largely irrelevant to global trade.
ft.com/content/344ef0… 2/10
For her, the problem has emerged mainly "in the past six months", in the form of tariffs from the US and, increasingly, from other countries as they struggle to absorb huge, persistent trade surpluses and China's rapidly expanding share of global manufacturing.

1/4
I hate to disagree with Albert Einstein, but technological progress does not lead to unemployment. To the extent that it causes productivity to rise, what really matters is whether or not the resulting rise in productivity is matched by a commensurate rise in wages.

https://twitter.com/RelearningEcon/status/1963133813233688590

2/4
If it is, rather than a rise in unemployment we're more likely to see a shift in employment from the sector that benefitted from technological progress to other sectors. That's because as the real cost of the former's products declines, households will spend more on the latter.

1/9
Good Keith Bradsher article on strengths and weaknesses of China's approach to EV manufacturing. As the summary has it: "Beijing has run out of patience with companies slashing prices, and is urging restraint. But fierce competition is also producing a surge of innovation."
nytimes.com/2025/09/02/bus… 2/9
As the article notes, China bears worry about the huge losses in the industry, even after substantial direct and indirect subsidies that come at the expense of domestic demand. China bulls focus instead on the rapid technological advances that characterize the industry.

1/16
While Bloomberg is right to say that "a less hegemonic dollar would [adversely] affect America’s geopolitical prowess," it is wrong to assume that it would also adversely affect the US economy, or that it would raise US interest rates.
bloomberg.com/news/articles/… 2/16
There is no evidence at all that a country's economy must benefit from the wide use of its currency. To the extent the global use of a currency primarily reflects the extent to which other countries want to acquire local assets in exchange, its only obvious economic impact...

1/11
Caixin: "A wave of minimum-wage increases is sweeping across China, with major economic hubs like Beijing and regions such as Hunan province announcing fresh hikes as part of a national push to lift incomes for the country’s lowest-paid workers."
caixinglobal.com/2025-08-28/chi… 2/11
This is certainly good news. If raising minimum wages is done in a meaningful way, it will easily be the most effective of all the various ways in which Beijing has tried—without much success so far—to raise the household share of GDP and, with it, the consumption share.

1/15
This interesting essay by Oliver Kim on Chinese underconsumption was set off by a recent C40 Policy brief that argues, in the words of its title, that "China's consumption is not nearly as low as it appears."

global-developments.org/p/does-china-u… 2/15
The C40 essay illustrates some of the confusion that surrounds the issue of Chinese underconsumption. It argues that the Chinese don't underconsume because when corrected for prices or for income, Chinese consumption is more or less "normal".
pekingnology.com/p/chinas-consu…

1/9
FT: "investors worldwide were already nervous about owning too many US dollar investments. This news only energised a growing conviction by them to seek other places to put their money, including the emerging markets."
ft.com/content/85e589… 2/9
I am not sure this is actually happening—it's not what the BoP data suggest—but if it were, it would be a very good thing. Capital should not flow from fast-growing, capital-poor economies to slower-growing capital-rich economies. It should flow in the opposite direction.

1/15
Very good Bloomberg piece on Beijing’s recent push to curb overcapacity through an “anti-involution” campaign. It is important to remember in this context that while excess capacity has been...
bloomberg.com/news/articles/… 2/15
a problem in China for at least 10-15 years, it's latest manifestation was a direct consequence of the collapse of a property bubble which was itself set off by policies Beijing implemented in order to protect the economy from an earlier case of weak demand and deflation.

1/7
According to Caixin, "China’s rental housing market is facing an unusual squeeze this summer: listings are soaring while rents keep falling, underscoring a supply glut that landlords are struggling to absorb."
caixinglobal.com/2025-08-22/chi… 2/7
This is why I've often argued that one of the most common proposals to shore up property prices—getting local governments to buy up empty apartments and funding these purchases offering out cheap rentals—would not help stabilize property prices.

1/8
Reuters: "China's top court ruling that makes it illegal for businesses and employees to avoid social insurance payments is stoking fears about jobs and the survival of small firms."
reuters.com/sustainability… 2/8
This seems like a classic problem of income distribution. Improving the pension system should boost the household share of GDP, which in turn should boost the role of domestic consumption in driving growth.

1/9
Kenya is in talks to convert the debt it owes to China from USD to RMB. About $5 billion of its $40 billion in external debt is owed to China.

It makes sense for developing countries to diversify their external debt away from a single currency.
bloomberg.com/news/articles/… 2/9
Some argue that this is because RMB interest rates are lower than USD interest rates. For example, the article cites Kenya's Treasury Secretary as saying: “The moment we move from US dollar to renminbi, automatically, the interest rate reduces by almost half."

1/6
WSJ: “While the U.S. is—and will remain—an important trading partner, Europe should also aim to deepen its trade ties with other jurisdictions, leveraging the strengths of its export-oriented economy,” Lagarde told a panel at the World Economic Forum.
wsj.com/articles/europ… 2/6
Of course Europe is always likely to be better off any time it deepens its global trading relationships, but this is true whether or not the US implements tariffs. It will do almost nothing, however, to reduce European susceptibility to a rise in US tariffs.

1/16
This article notes that Xi Gao's recent attack on the claims by Ray Dalio that excess debt accumulation inevitably results in financial crises "is part of the ongoing debate between deficit hawks and doves in China over debt-fuelled fiscal spending."
chinabankingnews.com/p/chinese-econ… 2/16
This debate is important because it will determine how long China's excessively high GDP growth targets can be maintained. If Chinese economic activity is to "grow" by more than the underlying economy can productively sustain, the way to so is by forcing those parts of...

1/6
It takes real effort to miss the point as completely as Albrech does. If income is constant, then it is obvious that lower prices will boost consumption. But to separate income from production, as he does, requires a very bizarre understanding of economics.

https://twitter.com/BrianCAlbrecht/status/1955708693091074132

2/6
The point I made is that if the real value of American production rises, Americans will be able to consume more—regardless of whether prices rise or fall nominally. If it declines, even falling nominal prices will not prevent them from consuming less without a rise in debt.

1/6
In my latest piece for FT Alphaville, I argue that American consumption doesn't increase when Americans import goods more cheaply but rather when they produce more goods and services.
ft.com/content/89110b… 2/6
This means that if more cheap imports are balanced by more exports, American households will indeed be better off. But if they are not balanced by more exports, then consumption can only be sustained by exporting assets, and American households won't be better off.

1/4
Yicai: "China’s margin trading balance on the Shanghai and Shenzhen stock markets topped CNY2 trillion yesterday for the first time in a decade. The balance has been climbing steadily since early June", rising by just over 12% as of yesterday.

yicaiglobal.com/news/margin-fi… 2/4
For the past year I've been telling my clients that I expected more upside than downside on mainland stock markets, and Shanghai CSI is up nearly 30% from a year ago, but as margin levels rise, it becomes more complicated.

1/8
SCMP: "Beijing now employs a wider arsenal of tools to manage volatility, with the key challenge being whether the yuan can open the door wider to market pricing and secure a larger international role – without destabilising swings."
scmp.com/economy/china-… 2/8
That is indeed the key challenge, and one about whose resolution we should be very skeptical. For the yuan to become more open to market pricing and to secure a larger international role, Beijing would have to reduce and even remove restrictions on the capital account.

1/7
WSJ: "China’s exports grew at a faster clip in July, showing that U.S. tariffs so far haven’t curtailed China’s export machine, although trade with America has fallen."

wsj.com/economy/trade/… 2/7
I wish we could just abandon the mistaken idea that if US tariffs on Chinese exports reduce China's exports to the US, they're likely to reduce total Chinese exports. That's not how trade works. What matters is what happens to total US net imports.