Dollar doomed as China shifts to consumptionThe US dollar may lose a third of its value, with a chronically low savings rate, a large current account deficit and a huge federal financing requirement likely to force a sharp devaluation of the greenback,
report Uwe Parpart and David Goldman.
report Uwe Parpart and David Goldman.
| the_vise_tightens_on_the_dollar_by_stephen_s._roach_-_project_syndicate.pdf |
Falling Trade, Rising Imbalances...
by Brad W. Setser
by Brad W. Setser
Is the Almighty Dollar Slipping?
Nouriel Roubini sees the recent depreciation as a symptom of short-term factors, though challenges lie ahead.
Nouriel Roubini sees the recent depreciation as a symptom of short-term factors, though challenges lie ahead.
America’s New Debt Bomb
Todd G. Buchholz draws parallels to the World War II era and proposes solutions for avoiding a fiscal cliff.
Todd G. Buchholz draws parallels to the World War II era and proposes solutions for avoiding a fiscal cliff.
Financial Repression Revisited?
Anne O. Krueger has reservations about a long-used method for reducing massive public liabilities over time.
Anne O. Krueger has reservations about a long-used method for reducing massive public liabilities over time.
America’s Coming Double Dip
Stephen S. Roach argues that the pandemic's continuing impact on consumer demand all but rules out a V-shaped recovery.
Stephen S. Roach argues that the pandemic's continuing impact on consumer demand all but rules out a V-shaped recovery.
The Dark Heart of Gold
Jeffrey Frankel explains why the recent record price for the metal should not determine US monetary policy.
Jeffrey Frankel explains why the recent record price for the metal should not determine US monetary policy.
Dual Circulation and China’s New Hedged Integration Strategy | Center for Strategic and International Studies - Jude Blanchette and Andrew Polk
The latest, and perhaps most consequential, development in the Xi administration’s ongoing efforts to position China to withstand volatile geopolitical exigencies is the new “dual circulation” strategy (DCS), first announced at the May Politburo meeting. The strategy, which envisions a new balance away from global integration (the first circulation) and toward increased domestic reliance (the second circulation), stems from Beijing’s belief that China has entered a new paradigm that combines rising global uncertainty and an increasingly hostile external environment with new opportunities afforded by a floundering and listless United States, which China has long viewed as its most important geopolitical rival. Ever the dialectician, Chinese leader Xi Jinping declared in April that China must “take the initiative to seek change, and successfully capture and create opportunities in the midst of the crises and difficulties before us."
This new worldview sees the continued decoupling of global supply chains as an enduring trend, and so Beijing now seeks to attempt a new “big thing”—balancing emphases on both internationalization and self-sufficiency (自力更生) that marks China’s own version of “hedged integration.” This model entails engaging international capital, financial, and technological markets when advantages can be gained while simultaneously bolstering indigenous capabilities to avoid overreliance on the global economy—due to national security concerns or the vagaries of global economic cycles...
If the DCS begins to bear fruit, the impacts on the global economy would be momentous. While Chinese policymakers and commentators have been clear that the DCS does not mean a full-scale pivot away from global economic integration or reliance on external demand, even a marginal shift by China away from its focus on mercantilist export practices could fundamentally reshape global trade and investment flows. But perhaps more importantly, Yu’s argument that China should renew its focus on high-end manufacturing—rather than services and consumer sectors—may mean that China will seek to replicate the German manufacturing model. If successful, such a move would represent a major challenge to industrialized economies. China’s scale of production could begin to disrupt a range of new market segments—as has happened with solar and lithium batteries in the past.
The latest, and perhaps most consequential, development in the Xi administration’s ongoing efforts to position China to withstand volatile geopolitical exigencies is the new “dual circulation” strategy (DCS), first announced at the May Politburo meeting. The strategy, which envisions a new balance away from global integration (the first circulation) and toward increased domestic reliance (the second circulation), stems from Beijing’s belief that China has entered a new paradigm that combines rising global uncertainty and an increasingly hostile external environment with new opportunities afforded by a floundering and listless United States, which China has long viewed as its most important geopolitical rival. Ever the dialectician, Chinese leader Xi Jinping declared in April that China must “take the initiative to seek change, and successfully capture and create opportunities in the midst of the crises and difficulties before us."
This new worldview sees the continued decoupling of global supply chains as an enduring trend, and so Beijing now seeks to attempt a new “big thing”—balancing emphases on both internationalization and self-sufficiency (自力更生) that marks China’s own version of “hedged integration.” This model entails engaging international capital, financial, and technological markets when advantages can be gained while simultaneously bolstering indigenous capabilities to avoid overreliance on the global economy—due to national security concerns or the vagaries of global economic cycles...
If the DCS begins to bear fruit, the impacts on the global economy would be momentous. While Chinese policymakers and commentators have been clear that the DCS does not mean a full-scale pivot away from global economic integration or reliance on external demand, even a marginal shift by China away from its focus on mercantilist export practices could fundamentally reshape global trade and investment flows. But perhaps more importantly, Yu’s argument that China should renew its focus on high-end manufacturing—rather than services and consumer sectors—may mean that China will seek to replicate the German manufacturing model. If successful, such a move would represent a major challenge to industrialized economies. China’s scale of production could begin to disrupt a range of new market segments—as has happened with solar and lithium batteries in the past.
| THE COMING CHINESE SLOWDOWN |
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