Mercantilism: “the economic theory that trade generates wealth and is stimulated by the accumulation of profitable balances, which a government should encourage by means of protectionism.” Public domain.
Veronique de Rugy, Mercatus Center, on Pres Trump and tariffs. “Debating trade issues with President Trump’s anti-trade supporters is a constant game of goal-shifting. If you point out that the Trump tariffs are raising revenue for Uncle Sam on the backs of American consumers, they reply that China is hurting the most. If you note that the trade war is the main reason the stock market is losing its mind, not actions by Jerome Powell, the Federal Reserve chairman, they reply that China is ‘a brutal Communist police state that abuses its own people and steals from the world.’” https://www.nytimes.com/2019/10/07/opinion/trump-trade.html
CHIMERICA ISN'T DEAD: HOW MANUFACTURING IS NOT RETURNING TO AMERICA & HOW CHINA'S COMPARATIVE ADVANTAGE IS DIMINISHING
China’s half-full glass
Paul Wolfowitz | AEIdeas
With US-China trade talks set to resume next month, the trade war still appears to have no end in sight. Claude Barfield evaluates China's past promises and whether they have been kept.
As US-China trade talks restart, a checklist of Chinese structural ‘reforms’ to date
Claude Barfield | AEIdeas
At the heart of US negotiating priorities are a series of structural reforms in the deeply embedded Chinese technology mercantilist protection system.
The ‘China hands’ got China wrong, but listen to them now
Hal Brands | Bloomberg
With some economic indicators flashing warning signs, are we on the verge of a global recession? Desmond Lachman evaluates the disconnect between global bond and risk markets.
What the global bond market is telling us
Desmond Lachman | The International Economy Magazine
The global sovereign bond market and global risk markets appear to be sending conflicting signals about the world economic outlook. While sovereign bond markets appear to be pointing to trouble ahead for the global economy, risk markets are much more sanguine. At a time when the world debt-to-GDP ratio is at a record level, a triggering of economic risks or major geopolitical event could have major repercussions for the global financial system. If bond markets are right and risk markets wrong, no one will be able to say they weren't warned.
Is a global currency war still possible?
Desmond Lachman | The International Economy Magazine
There is increasing cause for concern that we may be sleepwalking toward a world currency war. The main driver for concern is that the Trump administration’s policy actions are at odds with its policy objectives. When those objectives are not met, the administration might double down on its protectionist America First trade policy and respond in-kind to what it perceives to be Chinese and European exchange rate manipulation. There has seldom been as much need as there is today for responsible US international economic leadership to prevent a destructive currency war.
Why Egypt's construction boom creates ghost towns
Egyptian leaders from Anwar to Sisi have attempted — and failed — to build lavish cities to relocate dense urban populations.
As pound improves, Egypt floats customs dollar rate
The Egyptian Ministry of Finance recently floated the customs dollar rate, after having imposed a fixed rate in 2017 in an attempt to contain prices after floating the pound.
The interplay between exchange rates and inflation in Iran
While the Iranian rial has strengthened against the dollar, inflation remains high, and the budget deficit is not helping the matter.
James Pethokoukis | AEIdeas
Anti-China hawks in the US are eager for a New Cold War that would disentangle the two mega-economies, especially their technology sectors.
The IMF's (New) China Problem
Posted on August 13, 2019
by Brad W. Setser
Andrew Collier, managing director of Orient Capital Research in Hong Kong and author of Shadow Banking and the Rise of Capitalism in China, in re: the Hong Kong protests. Carrie Lam’s offer to withdraw the original extradition bill was widely well received; but large numbers of young people are angry. This looks as though it’ll drag on for a while. Companies have been hurt: airlines, tourism, rentals to tourists, and retail sector all have diminished, but the big multinationals are all right, Investment banks, retailers, and the like, if damaged financially, may have to leave. Carrie Lam’s earlier effort to quit and its having been denied by Beijing, which has hit back against a wall and doesn't know what to do. Will this affect Mainland in any way? Not much.
In a new AEI report, Derek Scissors puts China’s economic “miracle” in context by comparing the country’s various stages of reform to Japan and Korea at analogous stages. Scissors reveals that historical comparison to Japan and Korea across a range of indicators shows that China’s miracle has faded prematurely, leaving the country far from rich and with little prospect to become so. Learn more here.
China may be losing its influence over the North Korean denuclearization process, writes Oriana Skylar Mastro in a Foreign Policy op-ed. North Korea has become more of an independent actor, adeptly playing each country off another. While this strategy is nothing new, Kim Jong Un’s provocative diplomacy certainly is, and it is creating challenges for China, which wants to ensure that any resolution to North Korea favors its own interests. Continue here.
In a Hill op-ed, Gary Schmitt explains that it is time for Western democracies to take the security threat the rise in Chinese military power poses seriously. China is no longer satisfied with being simply an Asian power, and Beijing has made it clear that it intends to be a serious player in the Arctic and Africa, which are the backdoors to Europe. Read more here.
CHINA'S BELT TIGHTENING CONTINUES, THE DECOUPLING OF US FROM CHINA MOVES FORWARD & HOW BEIJING IS WINNING THE TRADE WAR?
The US can play China against Russia
(The Hill) A strategically astute American policy would encourage competition and conflict between Moscow and Beijing from which the West would benefit.
(What’s Left of) Our Economy: New U.S. Trade Figures Show More Decoupling – of Growth from Soaring Deficitsby Alan Tonelson
Why the China trade war is justified
Derek Scissors | The Hill
It’s Not About the Soybeans
Security and power are at issue between China and America.
Trump Plays Long Game On China
By CONRAD BLACK, Special to the Sun | August 8, 2019
China Is a Rival, Not an Enemy
By Bonnie Kristian, The Hill: "China has one-fifth of the planet's population; the world's second largest economy; a small but significant nuclear arsenal for deterrence; and an increasingly repressive government which combines elements of market economics with single-party totalitarianism, incredibly invasive surveillance, mass internment camps; and a newly minted “president for life,” Xi Jinping. Should it also be the recipient of Washington's antagonism?"
Unjustified China madness
Derek Scissors | AEIdeas
CHINA'S WORST ECONOMY YET, WHY EVERY PRESIDENT SINCE REAGAN GOT CHINA WRONG & CHINA'S PUSHING DRUGS INTO USA
Every president since Reagan was wrong about China’s destiny
Hal Brands | Bloomberg Opinion
We are unlikely to meet the profound challenge China poses unless we first come to grips with what was tried, and what failed, before.
China has a master economic plan. Is it better than America’s?
James Pethokoukis | The National Interest
Sleepwalking toward a currency war?
Desmond Lachman | InsideSources
China tariffs, trade, and public opinion today
Karlyn Bowman | Forbes
Bond market madness wrought by the central banks
Desmond Lachman | AEIdeas
Trump’s bad idea of dollar intervention
Desmond Lachman | The Hill
China will find it hard to cut fentanyl trade
Roger Bate | AEIdeas
China Global Investment Tracker
Derek Scissors | AEI and the Heritage Foundation
Chinese investment: State-owned enterprises stop globalizing, for the moment
Derek Scissors | AEI | January 17, 2019
The bond market and the stock market can’t both be right
Desmond Lachman | AEIdeas
Considering that the bond market has been a better economic forecaster than the stock market, policymakers would be well-advised to pay attention to what the US and global government bond markets are trying to tell them.
The Global Trade War Comes Full Circle
Veronique de Rugy, Reason
When "Trade Wars" End Badly
by Gordon G. Chang via Strategika
“I think we’re going to be strategic partners,” said President Donald Trump on June 29 at his Osaka G-20 press conference, in response to a question from Olivia Qi Zhang, a reporter for Caixin, the Chinese news organization. “I think we can help each other. I think, in the end, we can—if the right deal is structured, we can be great for each other.”
China’s take on trade
Dan Blumenthal and Annie Kowalewski | AEIdeas
China Wins the Trade War
Howard Gold, MarketWatch
Chinese and US capital markets: For once, ‘leveling the playing field’ is not a protectionist cover
Claude Barfield | AEIdeas
Recently introduced legislation would force foreign companies to delist from American stock exchanges unless they come into compliance with US accounting practices within three years.
HOW TARIFFS HELP US Continue here.
More countries are joining the BRI in name, but the overall extent of activity is shrinking. Learn more here.
The ‘Xi Doctrine’: Proclaiming and Rationalizing China’s Aggression
By Bradley A. Thayer & Lianchao Han, The National Interest: "The United States must respond to China’s belligerence with greater strength, adamantine determination, and more vigorous diplomatic and military measures."
For most of the last six years, Xi Jinping has been largely free to define the terms of his rule. But with challenges piling up from the U.S. trade war to mass protests in Hong Kong, his presidency is increasingly being dictated by events. – Bloomberg
Salvatore Babones writes: Given Beijing’s bluster, it can be easy to forget that China is still a relatively poor country with a GDP per capita less than one-sixth the U.S. level. Compared to the America’s, China’s economy is relatively inefficient and undifferentiated, and its markets are poorly developed. The simple fact is that China needs the United States more than the United States needs China. In itself, that’s no reason to start a trade war. But if the trade war really does heat up, there’s little doubt who will win. – Foreign Policy
Since he took power seven years ago, President Xi Jinping has faced a growing din of foreign condemnation over his government’s human rights record, a trade war that has sapped China’s strength and now, for a second time, mass protests in the streets of Hong Kong. – New York Times
Xinjiang and the Belt and Road Initiative
By Rebecca Warren, Strategy Bridge: "Since Deng Xiaoping’s Reform and Opening-Up policies, China has modernised to a startling extent. However, this growth has been uneven and has caused severe inequality across the country. China’s Belt and Road Initiative (BRI) is often seen as promoting China’s influence across the world, but this is not its only purpose."
Time For New Trade Tactics With China: Data Sheet
quoting Raghuram Rajan via Fortune
Eleven long months ago, at Fortune’s Brainstorm Tech conference in Aspen, Colo., New York Times columnist Thomas Friedman cogently explained how a rational, effective president of the United States would handle a trade dispute with China. He’d sign the Trans-Pacific Partnership trade deal, bring European allies into the agreement, and then negotiate quietly with the Chinese in a way that would save them embarrassment.
Dean Cheng writes: Whether it was confidence due to his growing domestic strength, a belief that the balance of economic power in the U.S.-China relationship had already shifted, or a concern about appearing weak in front of Trump, Xi seems to have reached the conclusion that China, under his leadership, can successfully challenge the United States. This appears to have been a dangerous miscalculation. Xi may soon find that a perfect storm of agricultural problems, internal unhappiness, and his own chosen hard line on the trade war could undermine the domestic power he has worked so hard to consolidate. – War on the Rocks
HOW THE CHINESE COMMUNISTS ARE NOT PREPARED FOR A TRADE WAR & HOW THE TRADE WAR ENDS BY STEPHEN MOORE
Gerald F. Seib writes: American negotiators are trying to force the Chinese to make systemic changes in their system, particularly in the dominance of state-owned businesses and the ability of the government to extract technology and intellectual property from the business sector. But such components of the Chinese system no longer appear to be simply temporary structures as China matures, but rather pieces of the new model. – Wall Street Journal
Peter Morici writes: It is time to join the commercial cold war on China. The United States must fully implement the sanctions against Huawei and other technology pirates, implement a system of auction quotas that limit imports from China to the value of exports to China, and develop aggressive national strategies within advanced computing, space exploration, and artificial intelligence that ensure national survival. The real danger lies not from Beijing but rather in pressures from members of Congress who are not willing to accept higher prices for clothing and gadgets and lost farm exports and pass up the opportunity to make those an issue for 2020. – The Hill