I continue to believe - as I've said in prior HN comments - that the Chinese leadership welcomes this slowdown and the related trade dispute as a means to rebalance the domestic economy, while placing the blame for the rebalancing on the United States. I note that at least one distinguished China watcher agrees:
Rebalancing the domestic economy toward greater household income is necessary to provide sustained growth in China, and that's what Michael Pettis argues in your link to his blog.
Make no mistake though, the national and Party leadership is deathly afraid of low growth and it is exactly what they seek to avoid. The leadership knows they must create domestic consumer demand and that this must happen through an increase in household spending or, as Michael Pettis notes, in spending on behalf of households. Low auto sales seems like evidence that this isn't happening quickly enough.
They can use the threat of trade war to convince others of the need for this shift, but actual trade war, or actual low growth? No thanks. When you are riding a tiger, you don't want it getting too hungry.
China has a long history of civil unrest, the Taiping Rebellion being a good example. Twenty to thirty million people were killed, and economic depression following a trade war was the impetus. The result of this horror was China on her knees, and is precisely what the leadership seeks to avoid.
https://www.facinghistory.org/nanjing-atrocities/nation-buil...
The return to authoritarianism can be seen as battening down the hatches before the storm.
Shifting spending to household income goes against powerful interests. A large national health program and social security could help, but debt funding is not an option now, and the alternative is taxing wealthy individuals and wealthy local governments. This also creates unrest.
> The return to authoritarianism can be seen as battening down the hatches
Obligatory not a "China expert" but I think you're very much correct. A lot of people don't seem to understand how different, and explosive, the political situation is in China. There is very little social trust, certainly little trust in government, and things could fly apart quickly and violently. The CCP is in a very difficult situation, trapped between fragmented and competing power bases, from a gigantic and angry rural underclass to godlike and kleptocratic SOEs to the tier-1 (and even 2) cities who by this point are practically mini-states with a law unto themselves. It is no surprise they have pulled every trick in the book to try to keep the music playing.
I totally agree that there needs to be a proper national health and social security system; this will be on the same magnitude as the "New Deal" the US had after the great depression. This could only be accomplished by a massive tax, and even more importantly power, overhaul. Xi Jinping is totally unreadable to me and I have no idea whether he is consolidating power just because that's what "strongmen" do or because he understands he needs it to execute on the desperately needed reforms. I doubt anyone not literally in the Politburo could say for sure. I hope it's the latter.
I keep saying this every year but the stakes just keep getting higher - things in China will come to a head sooner rather than later. And when they do, I want to be very far away, because it is a whole lot of shit, and a very big fan...
But also isn’t China half way through its industrial revolution, with still a massive rural population almost living in the previous century? Are there other examples of countries that stalled in that process and the political consequences of a two tier population?
The rural labour pool is running pretty low at this point, it’s mostly just kids growing up and going to work in the cities rather than actual untapped capacity. Of course given China’s scale that’s still millions of workers looking for jobs every year. I’d say at this point China is very much an industrialised country with a young but burgeoning domestic economy.
Wages for manufacturing workers have been rising steadily as a result though and low value manufacturing that relies on the lowest wages is moving on to places like Vietnam. It’s still pretty rough out in the countryside, my wife is Chinese and I’ve been out in the countryside, but it is getting better.
China has had 4 or 5 revolutions (depending on whether you want to count the Cultural Revolution; it was perhaps an anti-revolution where while revolutions normally attempt to overthrow the government, the cultural revolution attempted to maintain the government's power) in the last century. There are few countries in the world that can say they've gone through five revolutions within the last century. https://en.wikipedia.org/wiki/Chinese_Revolution
I believe it has a long history of unrest in the modern era compared to all large countries (measured by population) out there. The Chinese government knows their own history and people well, and I believe they are managing the risk with a serious mindset. Their methods may be up for debate, but they're not of the mindset that there's no risk.
I don't think this is the best way of looking at things.
China is virtually a continent unto itself. It's a huge and fractous territory. It is little surprise that when the empire fell at the beginning of the 20th century after 4000 years, in the most tumultuous period of world history, that it went through a long phase of war and revolution. It was divided among the West's great powers, repeatedly invaded by a rising Japan, hit by successive ideological waves of nationalism and communism - and had to navigate being the third cog of the Cold War. I don't it's helpful to chalk up the instability of China during this period to some 'essential' characteristic of China; it is not naturally unstable or violent - any country that endured what it has would be unstable and violent.
But you could paint such a dramatic story for many parts of the world.
At the start of the 20th century the UK controlled so much of the world they said the sun never sets on the British Empire. It led the industrialisation of the planet, lost millions of men to the trenches of the first world war, then was nearly wiped out and turned into a slave state by Hitler before successfully liberating Europe with its allies. It went through enormous social turmoil in the middle of the 20th century: socialist governments and ultra-militant unions repeatedly damaged its economy so badly that by the end of the 1970s it was significantly worse off economically than Germany - a country it had flattened in world war just 40 years earlier, and which had then been split in half by the Soviets. Professional and well armed terrorists repeatedly attacked the government, in one case almost managing to assassinate the Prime Minister [1].
That all sounds like a much more traumatic modern history than China's. Despite that there has never been a revolution in the UK. The closest you can find is probably the English Civil War in the mid 1600s, which ended with the king being invited back to become King again after the revolutionaries turned out to suck more than he did.
So I don't think we can just write off China's history or concerns of its leadership by saying it's merely large, and not naturally unstable or violent. For whatever reason China does seem to have gone through far more revolutions than other countries have done despite the apparent lack of external events that could have triggered such instability.
"That all sounds like a much more traumatic modern history than China's."
That is so far off the mark.
China was turned into a tributary state by the Western powers. It was repeatedly - successfully - invaded by Japan. Tens of millions died in the fires of civil war and revolution. It industrialised within a span of 50 years. It was hit successively by waves of nationalism, communism, and capitalism in a single century. Nothing compares to ANY of that in the UK's recent history.
The UK was one of the world's great powers at the start of the twentieth century. It drew men, wealth and geopolitical advantage from its empire. It enjoyed the sympathy of Canada and the United States - already far and away the most powerful state in the world. It fought into two world wars, yes, but that did not tear at the fabric of Britain - it never suffered a land invasion, or the realistic prospect of one. Even if Germany had won the air-battle, Britain's navy would always have precluded the possibility of a German armada crossing the channel.
It was not turned into a vassal state by a strange and more powerful civilization. It did not undergo revolution. There were not major ideological explosions. The same political system and governing class stayed in place. Britain had the advantage of industrialising first, in the late eighteenth and early nineteenth century.
The modern history of the UK is exceptional for being so stable.
"Socialist governments and ultra-militant unions". The Labour Party was Keynesian in economics, social democratic in politics, supported NATO and trident and yoked itself to America in the Cold War, and was hardly the direct cause of the crisis of the 1970s - a crisis, by the way, that was general to the West. Unions are, almost by definition, on the soft side of the socialist spectrum - certainly in the context of socialism in the 20th century - hence Lenin's quip about 'trade union consciousness'.
I guess my point wasn't specific to the UK, but rather that quite a few countries have had dramatic and society-redefining events happen to them without experiencing a large number of revolutions as a consequence. So we can't say that China's revolutionary past is an obvious consequence of anything in particular that happened to it.
With respect to which country has had more drama in the 20th century, I'm not sure there's a scale that can be applied to compare them - to me it seems both countries have been through a lot. And that's what I'm getting at. Clearly, experiencing war, invasion or very real threat of invasion (Hitler was trying his best to destroy the navy!) and rapid industrialisation is not by itself sufficient to lead to revolution. There may be something else at work beyond mere events, perhaps a cultural aspect.
The British political parties of the 50s and 60s were hardly Keynesian except in the sense that they liked spending money, and no the crisis of the 1970s wasn't "general to the west". The USA was busy putting a man on the moon in this era, the German economy was outstripping the UK's quite significantly. The UK had to go to the IMF for a bailout its economy was so sick. The cause was pretty clearly and directly militant socialism - once Thatcher got the unions under control and liberalised the economy, the UK caught up with its erstwhile foe and was no longer the 'sick man of Europe'. There was a lot for Thatcher to do because at the time she came to power the British government owned huge quantities of ailing industries, including things like hotel chains and removal companies. Not so dissimilar to China's model where so much industry is state owned.
"Quite a few countries have had dramatic and society-redefining events happen to them without experiencing a large number of revolutions as a consequence. So we can't say that China's revolutionary past is an obvious consequence of anything in particular that happened to it."
This argument is obviously fallacious.
It does not follow from the fact that lots of societies (L) have had X happen to them that no number or combination or tempo of X's can have an effect that was not present in L.
I'm not sure if the proposition that we can't ascribe China's revolutionary past to 'anything in particular that happened to it' is even coherent. How else do you think historical change takes place? From nothing?
"The UK had to go to the IMF for a bailout."
It's now historical consensus that the UK didn't have to do this at all. It was based on a miscalculation of the UK account (not that the economy wasn't in dire straits).
"The crisis of the 1970s wasn't "general to the west".
It was, for at least three reasons: (i) the collapse of the Bretton Woods system and the beginning of dollar seigniorage; (ii) the OPEC crisis in 1973; (iii) and the emergence of widespread stagflation in 1973-1975.
"The cause was pretty clearly and directly militant socialism - once Thatcher got the unions under control and liberalised the economy, the UK caught up with its erstwhile foe and was no longer the 'sick man of Europe'."
I'm not going to get into this, because it's a rabbit hole. But that is clearly a highly simplified and ideologically charged perspective. I would mention that the rate of growth under post-war social democratic Keynesianism was higher than under Thatcherism and her epigones. I would recommend the work of David Edgerton, probably the foremost scholar of British economic history in the twentieth century - whose work reveals a quite different story to your own.
I don't believe it's impossible for you to be correct and for the Chinese government to still be seriously concerned about revolution risk. Whatever the reasons are, it is what it is. FWIW, I do agree with all your points too. A tour through their national history museum in Xian shows how proud they are that Mao was able to finally set China on its own feet on the global stage such that it no longer would be forced to be a vassal state in the future. It opened my mind about why and how the Chinese government creates and implements its foreign policy. It never again wants to be a vassal state, and everything is seen through that lens.
But just as they are worried about the threats from without, they are also worried about the threats from within. This is what I see in their domestic policies.
Interesting point. To expand on it... By analogy, western Europe has a long history of basically continual war, generally featuring some combination of France, Prussia, England, and Spain.
No one analyzes Brexit as a return to literal western European warfare, at most as an analogy of interests.
The last century featured advances in weaponry that changed the cost benefit of armed conflict in a way to make some types of historically prevalent warfare much more rare.
You could argue that the difference with China is the fear that information control and the other authoritarian elements of the communist party are masking significant internal discontent, making the political situation more volatile than can be reliably observed.
And... that civil wars aren't the type of warfare that technology has made more rare. (Really just limiting superpower territorial invasions of other superpowers?).
But who knows. China is such an enormous complicated country that there are basically no parallel examples to help us predict its future... Even China's past is limited help. China of the Tang dynasty was more similar in population to present day Myanmar. Its problems and issues and politics might have basically no discernable relationship to China's real issues today.
It's a traditional Chinese mindset that people should own land properties or houses. A man who does not own a house would be deemed not worth marrying, thus making overhyping real estate price possible since some people would take it anyway.
China always had a requirement to grow 6% for every city. So I believe some numbers are inflated ( mostly about real estate eg. Ghost cities, ..). This doesn't give many issues, because there is actual growth.
The reasoning goes that when the growth slows, the entire pyramid goes crumbling down ( debts).
As weird as it is, I think it's an objective overview of everything China related. It's a personal hunch of all the FOMO I read about China and can't support it with links.
The reasoning I follow is: expansion internally (China), expansion externally ( requirement) with Africa / one road one belt, knocking down on bank fraud, no export of money internationally, ... In the process, trying to become too big too fail.
My understanding is that both of you can be right.
The "Chinese government" is not a singular, monolithic entity in the same way the "US Government" is actually a bunch of departments, branches and jurisdiction levels each with competing and sometimes differing interests and goals. (but yes, it is more unified in China in the sticking to party line).
The Chinese federal government has been wanting to make this re-balancing for a long time (a shift away from exports towards domestic consumption, and shifts from inefficient state owned enterprises to companies that can operate more efficiently and are "market oriented").
Where you are also correct is that many of the inflated GDP numbers and "inefficient" investments / capital towards things like ghost cities are mostly driven by state governments, in their attempt to meet the "goals" as stated by the federal government.
I've seen it in various economics articles/readings on the topic regarding the governments long term economic strategy. (see article below I found)
You are also right - yes one of the biggest complains IS that many Chinese businesses are "owned" by the government with lots of influence there. However, the big resistive force here preventing this further breakup is that they are such huge employers, and it is not politically easy to reduce and remove so many people from the payrolls. So it has been a slow process.
I was reading an article some time back some Chinese businesses in order to get loans had to give a stake in their company to the government. It is not something heard about often but gives the government even more sway over private businesses.
Are they giving a stake to the government, or to the government officials? Because the latter is just plain corruption, and to be honest isn't very surprising anywhere.
I'm sure there are a few technocrats that have this as one of their goals in China but (note: this is speculation) I doubt the reason there is friction from moving away from state sponsored businesses is changing payrolls.
Communist party leaders own huge portions of their state sponsored businesses and directly benefit from their success. Chinese leaders don't want fair competition, they want to be rich.
Yes - but deploying capital in the way that brings the greatest returns is the way to become rich. Many SOEs either break even or make little money, especially when considering their size.(feel free to do research on that). You are saying they wouldn’t want to sell off some of these/make them more efficient (by liquidating some of their holdings or by laying off people who aren’t doing anything so that they can’t deploy that new capital elsewhere?). Many SOE jobs’ main utility here (from the government perspective) is to dispense wages, have people employed and keep employment numbers up. I don’t buy that the real power in China loves the current state of their SOEs.
I love all these "You are also right" comments. One of the skills I hear about being prized in Chinese culture is the ability hold two conflicting ideas in your head at once, without feeling stressed about it.
And that skill seems to help when trying to understand China itself!
No, Chinese do not have a culture to have conflicting ideas and not feeling stressed, not as anything I know from my 24 years of living and studying as a native Chinese.
If you are talking about "求同存异" that's for agreeing to have disagreement, which is a common cooperation culture around the globe.
If you are talking about "无为而治" from the Taoism philosophy of doing without actually forcing, that's not something relevant here though.
PS: I am often amused by people coming up with obviously-weird/nonsensical claims on Chinese, China or its culture, and the readers seemingly unable to apply common sense to disapprove them. This, to me, is an unconscious (or actually intentional) way of reinforce stereotype on China, which can be useful, for example, in mwny cases when someone in power wants to mobilize the common people, such stereotype really makes things easier to get approved.
Conflicting ideas means believing that princess Diana was murdered by MI6 and that she was kidnapped by another shadowy party. Or that migrants will simultaneously take all the jobs and that they all just come to leech our welfare system dry.
Where have you heard this about Chinese culture in particular? I’ve only heard of such a trait in reading Robert Altemeyer’s book The Authoritarians, where it is described as a common trait of right wing authoritarians, who appear to not be very good about comparing the various ideas they have together to see if they are contradictory. Altemeyer describes it as the result of an upbringing that emphasizes loyalty and submission and that posits that truth is something that comes from an authority figure, rather than something that can be derived from available facts for oneself. But I think that applying that critique to an entire country seems harsh, without evidence.
You should be interested in reality rather than projections. Alibaba, Tencent, Baidu, Huawei, etc. are corporate entities separate from the Chinese government.
Since the default expectation is that public companies operate quite independently from the govt., it would be nice to reference some sources alleging with evidence close relationships between these companies and the Chinese govt.
I think Chinese government has to welcome slowing down because it's just impossible to maintain a growth rate like that indefinitely. The GPD of China already come close to that of US. At this scale, the same growth rate is naturally becoming harder and harder to achieve and simply pursuing that number might lead to catastrophic outcome. A slow down in economy growth gives China more time to fix the structural problems caused by rapid growth, and reduces the chances of a sudden crush. Overall I'd say it leads to a much more healthier economy.
It has side effects of course, but Chinese government have much better control of the macro-economy compared to free markets in most other countries, and that would help a lot in avoiding economical crisis. The debt issue is concerning, but I think Chinese government is much faster in acting on and fixing problems.
Some of the slow down mentioned in the article, such as the fall in housing market, seems to be exactly what the government want, as they've tighten the rules for real estate by a lot earlier this year. There're strict criteria people have to meet to be eligible for purchasing a house. This is a good thing because the current real estate market in China is almost insane.
> The reasoning goes that when the growth slows, the entire pyramid goes crumbling down ( debts).
Since every bank in China is under the direction of the central government it's up to a committee therein to decide which companies end up bankrupt. China might look like it has a modern capital market but it's still centrally controlled for key parts. National banks can and will infinitely extend credit lines to unprofitable companies if it's in the governments interest (for example to prevent public unrest).
Absolutely no leader welcomes an economic slowdown. Especially not the leader of an authoritarian government.
Your hypothesis does not explain why the Chinese government is acquiescing to American trade demands. If they welcomed this economic slowdown they would be holding firm in trade negotiations.
What we are actually seeing happen is a rebalancing of foreign investment. American businesses have purchased stock in excess in the previous quarters using existing supply chains and are now moving supply chains out of China. Money that used to flow into China is now flowing into neighboring countries such as Vietnam. Mark my words, if the Chinese government allows this transfer to complete it will never come back to China and China's middle and lower class will be gutted.
Imagine if America's manufacturing economy was outsourced to China in the 60s rather than in the 90s when it already had a thriving service economy. That is what is happening in China.
Many people believe that authoritarian leaders are less beholden to their people than democratic leaders and because of this are able to withstand economic disasters easier. What they fail to realize is that when an authoritarian country fails economically there is only one group of people to blame and when judgement occurs it's not through polls but through violence.
FDI is one thing, but remember China, before the trade war even starts, has began to remove benefits from the foreign companies and replace them with domestic companies.
A larger picture here is China is going through its own deleveraging campaign. They can't take more debt to stimulate the economy. Traditionally the government would ramp up massive investments in infrastructure or just remove the control over the overheated housing market. Both of those approaches are now out of the table. The infrastructure result in big debt, while the housing bubble is already the biggest probably in human history. It is unfortunate for the Chinese government to run into the trade war with US now, but it only accelerates the coming of the inevitable, the delayed reckoning.
But China is big enough to make its problem, the world's problem, just like US. It won't be the first to fall in this game, even though it might start it.
Sure but that is not the actual trade off. You don't prevent an economic crisis by allowing foreign investment to slow down.
To use another medical analogy the idea that you can prevent an economic crisis by slowing growth is like the idea that you can cure diseases by using leeches to suck out them out.
The way to prevent economic crisis is to stamp out fraud and high risk investment practices (curing the actual disease). Encouraging American business to move factories outside of China does neither of those things.
No sane people would believe indefinite high growth is maintainable, and slowdown is of course welcome if that helps avoid bigger problems down the road.
>No sane people would believe indefinite high growth is maintainable
It might not be but that doesn't mean you don't want it to occur for as long as feasibly possible. Maybe until you even reach parity with the US on a per capita income basis?
> and slowdown is of course welcome if that helps avoid bigger problems down the road
A slowdown is the problem itself, this is like saying you want to die of heart disease now because you might die of cancer later in age.
This is a common pattern amongst Chinese apologist
Economy: Everyone says it's been failing for 10 years -> Chinese leadership is omnipotent regarding economy -> it's just a temporary slowdown, government will print more money -> Chinese leadership planned this slowdown
Human rights: look at US! -> ignore comparisons to other countries other than US -> It's not really a concentration camp, since there's no mass murder -> prisoner organ harvesting isn't bad compared to US separating families at the border, or slavery 300 years ago
I am no apologist for any country, but wouldn't a better point be the very real, widespread, and constitutionally-protected prisoner slavery, which is happening in America today not just 300 years ago?
That’s bad sure, but does it really compare to sourcing 65% of transplant organs, circa 10,000 a year, from executed prisoners in a system with an opaque legal system, minimal civil rights and in which even the number of executions per year is a state secret?
Without trying to justify anything, no system is perfect but at least we can talk about it. In China even having this conversation might make you liable to a citizenship points penalty that could end up with you being denied basic rights like the ability to book even domestic flights.
It's definitely true that it's a stronger argument, but you're playing right into the design of apologist propaganda. By making constant half-assed arguments against something, you get people to disagree with the crap argument then you get other people to present the strongest argument for the sake of arguing. This successfully gets people arguing both sides of an argument about a subject that wasn't part of the original criticism in the first place.
The best trolls tell something almost true to get people involved in a fight about details rather than countering the larger misdirection.
This is actually pretty genius. Perhaps the Chinese economy is recession-proof. But I doubt it. It's at the height of a 30-year bull market. It doesn't seem insane that a downturn could happen.
And the party seems to be pretty weak when the Chinese economy isn't doing swimmingly. If things finally do turn sour, what a convenient time. You can just blame it on someone else.
The Chinese economy has had plenty of recessions in the last 30 years: 1990, 1998, even 2008 was probably a dip in real terms. It’s not like the economy hasn’t gone sour before.
This time I wonder if some businesses are moving out of China due to the instability of the relationship with the US and China, not to mention the future instabilities to come.
I can tell you that Caterpillar has planned to move almost all production out of China with the majority coming back to the US. They're even spinning up casting plants that have been shuttered for over a decade because of this.
The rebalancing China needs is towards domestic consumption, even for itself to be more sustainable. What this has done is reduced investment and worsened consumption. It isn't really what the leadership want. China currently retains near the lowest consumption-as-a-proportion of GDP worldwide.
Controlling the Chinese economy is relatively easy with the state corporation machinery through the investment component and brings in robust economic growth in GDP numbers, but consumption really sags.
FWIW the entire western economic system canters around the consumption portions of GDP. That's why everyone loves to export to the US/Europe/Australia. Consumption is resistant to short term economic shocks.
You'll have many around here boasting higher saving rates in Asian nations, but these are the reasons the economies are far behind (inc Japan). Look at the other side of savings, more spending means more is earned as well creating a net social surplus for everyone beyond the private scale of saving. It takes exports to make up for this shortfall.
I think you are partially right: the trade disputes make for a convenient scapegoat for a slowdown that was way overdue. As for how the people take it, will they blame America or the CCP, the latter of which has basically encouraged a lot of moral hazard (you can’t lose on real estate, it’s backed by the government!)? It’s not like they can just throw the turkeys out of it’s the latter.
If during a boom the economy picks up significant malinvestment (inefficient or oversubsidized firms, firms that were in a particularly good position to benefit from low-interest loans but weren't necessarily the most competitive firms that should have gotten it, etc. etc.) most of those firms are going to survive until there's a significant bust. China has artificially propped up a lot of industries and firms, and over time the deadweight loss of decisions like that builds on itself like barnacles on a ship, getting worse and worse. While I personally don't think the leadership is smart enough to want a slowdown, it might be a really good thing for their economy in the long term.
Meanwhile US exports to China are eating dirt. This trade war is not going well for America, although this slow growth headline will be used to bolster a false narrative:
US exports to China for 2018 will be around $123-$126 billion.
That compares to $129 billion for 2017, and $115 billion for 2016 and 2015. So US exports will be up vs 2016 & 2015, and down a mere couple billion versus 2017. Meaningless in other words.
Your premise is incorrect. So far China is paying for most of the trade war [1] through its producers slashing prices and by allowing its Yuan to drop in value (which is a wealth transfer from the Chinese people to prop up its exporters so they can hopefully run in place rather than get hit hard). That's why the US isn't seeing any consequential pricing / inflationary pressure at all from the trade war.
Chinese import growth over 2018 was mostly in the double digit range (averaged 14.6% Jan. through Nov.). Its imports from Europe, Japan and ASEAN grew 10% or higher.
Both Japan and the EU (Germany with the world's largest trade surplus) have larger export markets in relation to the size of their economies than the US does. That's also one reason the US runs perpetually large trade deficits with Japan and the EU.
US exports to China haven't gone up meaningfully since 2013 (in fact they declined 2013 vs 2015/2016). That's not the case with the EU and Japan. Has nothing to do with the trade war, which didn't exist in 2013-2016, it has to do with what (and where) the US manufactures and exports.
It's also worth noting that Chinese manufacturing is to one extent or another a representation (proxy) for the US consumer economy, since major US corporations utilize China for so much manufacturing (part of the where and why reference in the last paragraph). US companies make products in China and then sell them to US consumers, which complicates the import/export discussion. This is pointed out constantly in critical discussions (eg about the environment or labor & wages), and ignored in discussions like these where it's an inconvenient fact. Over time the EU and Japan have outsourced less of their major manufacturing to China than what the US has.
If you look at the graph I provided and zoom out to the 5 year chart, you would see a fairly large drop in Chinese imports around 2015-16. Part of that might have been due to commodity price drops, but I suspect the correlation of US export to China with Chinese total import is higher than you gave credit for, in a normal year that is.
Saying I'm wrong, doesn't make it so. Your claim - that US exports are "eating dirt" - is unsupported by the actual export numbers. US Exports are down a few billion dollars only vs 2017, and they're up vs 2015 and 2016. In a $20.5 trillion economy it's entirely meaningless to see a $3 or $5 billion drop in exports to China and doesn't square with your outlandish claim about dirt eating.
China is benefitting from what's called front-loading, which is a temporary bump in exports to beat the implementation of tariffs. It has been widely discussed in dozens of business publications over the last few months (including some breathless articles about ships desperately racing to beat the tariff dates), there's nothing surprising about it.
The gap is what matters, not the year over year totals. Trump’s stated objective was to lower the trade gap and he (so far) is failing. Front loading is evidence that US demand is as high as ever. US companies have no real options other than Chinese suppliers and that’s why they’re buying as much as possible ahead of Trump’s tarrifs, which only really punish US buyers and the end consumers.
The fact that China can use its currency to fight this trade war is only more evidence that the US is being outmaneuvered.
You can spin it all day long, but the US soybean farmers and steelworkers are not winning this trade war.
"Hug a business owner or farmer who exports to China" is the equivalent of a "think of the children" argument. It ignores how little relevance they have in the overall trade with China in order to oversize a problem.
See the sibling comment for how little the total numbers have declined.
Someone is going to get fucked in a tariff change. Tariff changes area always a question of greater good.
2. I think the trade war is going pretty well for the US. They basically can't lose it this is why I don't understand that Xi did not compromise in the first place.
The article doesn’t affirm what you are implying. I don’t think its a blame game when you have a country to feed. But long story short - USA will definitely be the first one to blink. China today is pretty much like Russia in the old days. Country was poor and in debt, their people starve or froze to death in millions and still praised their leader. This may as well happen in China today, and noone will blink. Meanwhile in USA I don’t think even average size group of people will allow the country to slide into full blown depression China-style, because some dude in White House wants to play a War game.
https://carnegieendowment.org/2018/07/27/china-s-best-option...