I feel like they didn’t substantiate their core argument. Why does China having more exports than imports mean that their growth comes at “the expense” of other nations? There was one Goldman...
I feel like they didn’t substantiate their core argument. Why does China having more exports than imports mean that their growth comes at “the expense” of other nations? There was one Goldman Sachs graph but otherwise not even a conceptual explanation of why that would be the case.
I read this a few days ago and remember the takeaway being that China's increasing share of exports is causing other countries' exports to drop. In the past, China's increasing exports would still...
I read this a few days ago and remember the takeaway being that China's increasing share of exports is causing other countries' exports to drop. In the past, China's increasing exports would still lead to some positive growth in exports for other countries because China needed to import machinery and raw materials, but as China has become more self reliant, that has decreased. This is the first time where an increase in Chinese exports leads to a decrease in rest-of-world exports.
Could this be due to falling global demand or less dynamic economies? If countries aren't willing to respecialize or pivot production, comparative advantage doesn't mean as much.
Could this be due to falling global demand or less dynamic economies? If countries aren't willing to respecialize or pivot production, comparative advantage doesn't mean as much.
Let's take the most extreme hypothetical case: China can produce enough of everything for everyone on Earth, and cheaply enough that it's still profitable to ship it in rather than manufacture...
Let's take the most extreme hypothetical case: China can produce enough of everything for everyone on Earth, and cheaply enough that it's still profitable to ship it in rather than manufacture locally. In this instance China needs nothing from other countries and still ruins everyone's domestic production because the Chinese stuff is still better/cheaper than building domestically.
Historically, there's been a balance of trade, where different countries import and export things, and it more or less balances out. When it doesn't, that's when people start worrying about trade deficits. If China imports nothing and sells things, over time, the assets available to other nations will flow to China as it accumulates more of the resources that used to be spread more evenly. You can think of it as equivalent to Amazon's strategy of selling at a loss to drive other competitors out of business. The longer China sells more than it imports and at a rate that diminishes the competitive capability of other nations the stronger they'll be by comparison.
A problem with this kind of analysis is that it leaves out investments. A country that exports more than it imports is increasing its investments in other countries (since they don't do it for...
A problem with this kind of analysis is that it leaves out investments. A country that exports more than it imports is increasing its investments in other countries (since they don't do it for free) and that's not necessarily a bad thing for either side.
The US has historically been a very good place to invest, which is why it can run trade deficits.
I wonder how much of US tech stocks are foreign-owned and how that will work out for them? So far, so good I suppose.
In case of a war, owning US assets might turn out to be a bad move, though, as Russia found out when they were frozen.
Is this the case for China in specific though? China isn't a Free Market, and is famously restrictive of Chinese people trying to move their money overseas.
A country that exports more than it imports is increasing its investments in other countries (since they don't do it for free)
Is this the case for China in specific though? China isn't a Free Market, and is famously restrictive of Chinese people trying to move their money overseas.
A Chinese company exporting goods to the US earns money in US dollars, so their problem is how to convert at least some of what they earn into yuan, so they can pay their suppliers and workers....
A Chinese company exporting goods to the US earns money in US dollars, so their problem is how to convert at least some of what they earn into yuan, so they can pay their suppliers and workers.
Apparently they will exchange dollars for yuan with their bank, so the bank ends up with US dollars. Banks can sell dollars to the Chinese government to get yuan. So, a result of China being a large exporter is that the Chinese government ends up with US dollars that they can use to buy foreign investments.
It’s difficult for the Chinese to get their money out of the country due to capital controls, but I suppose exporting goods would be a way to do it, if it’s profitable.
But does China export services? The US is famous for dominating technology, and cities like London touch everywhere in the world. While their goods are increasingly dominant, I doubt it'll ever...
But does China export services? The US is famous for dominating technology, and cities like London touch everywhere in the world.
While their goods are increasingly dominant, I doubt it'll ever get this extreme.
China has managed to make some popular games recently, and that's about it, as far as I know.
Who has contributed more to the rest of the world’s growth this year: China or the United States?
The answer is the U.S., and it isn’t even close. Even as the U.S. rolls out tariffs, its imports are up 10% so far this year from a year earlier. And as China moralizes against protectionism, its imports are down 3%, in dollar terms.
A recent report by economists at Goldman Sachs starkly laid this out. In the past, they wrote, 1% more output in China would raise the rest of the world’s output by 0.2% as it pulled in imports.
In their new forecast, the Goldman team has concluded that the relationship has turned negative. China’s growth, they write, is being driven by its “leadership’s determination and capability to further advance manufacturing competitiveness and boost exports.”
This is positive for other countries insofar as cheaper Chinese goods boost purchasing power. But that benefit is more than offset by the hit to their manufacturing sectors from Chinese competition. The upshot is that Goldman sees China growing about 0.6 percentage point a year faster over the next few years, but that will reduce the rest of the world’s growth by 0.1 point a year.
I feel like they didn’t substantiate their core argument. Why does China having more exports than imports mean that their growth comes at “the expense” of other nations? There was one Goldman Sachs graph but otherwise not even a conceptual explanation of why that would be the case.
I read this a few days ago and remember the takeaway being that China's increasing share of exports is causing other countries' exports to drop. In the past, China's increasing exports would still lead to some positive growth in exports for other countries because China needed to import machinery and raw materials, but as China has become more self reliant, that has decreased. This is the first time where an increase in Chinese exports leads to a decrease in rest-of-world exports.
Could this be due to falling global demand or less dynamic economies? If countries aren't willing to respecialize or pivot production, comparative advantage doesn't mean as much.
Let's take the most extreme hypothetical case: China can produce enough of everything for everyone on Earth, and cheaply enough that it's still profitable to ship it in rather than manufacture locally. In this instance China needs nothing from other countries and still ruins everyone's domestic production because the Chinese stuff is still better/cheaper than building domestically.
Historically, there's been a balance of trade, where different countries import and export things, and it more or less balances out. When it doesn't, that's when people start worrying about trade deficits. If China imports nothing and sells things, over time, the assets available to other nations will flow to China as it accumulates more of the resources that used to be spread more evenly. You can think of it as equivalent to Amazon's strategy of selling at a loss to drive other competitors out of business. The longer China sells more than it imports and at a rate that diminishes the competitive capability of other nations the stronger they'll be by comparison.
A problem with this kind of analysis is that it leaves out investments. A country that exports more than it imports is increasing its investments in other countries (since they don't do it for free) and that's not necessarily a bad thing for either side.
The US has historically been a very good place to invest, which is why it can run trade deficits.
I wonder how much of US tech stocks are foreign-owned and how that will work out for them? So far, so good I suppose.
In case of a war, owning US assets might turn out to be a bad move, though, as Russia found out when they were frozen.
Is this the case for China in specific though? China isn't a Free Market, and is famously restrictive of Chinese people trying to move their money overseas.
A Chinese company exporting goods to the US earns money in US dollars, so their problem is how to convert at least some of what they earn into yuan, so they can pay their suppliers and workers.
Apparently they will exchange dollars for yuan with their bank, so the bank ends up with US dollars. Banks can sell dollars to the Chinese government to get yuan. So, a result of China being a large exporter is that the Chinese government ends up with US dollars that they can use to buy foreign investments.
It’s difficult for the Chinese to get their money out of the country due to capital controls, but I suppose exporting goods would be a way to do it, if it’s profitable.
But does China export services? The US is famous for dominating technology, and cities like London touch everywhere in the world.
While their goods are increasingly dominant, I doubt it'll ever get this extreme.
China has managed to make some popular games recently, and that's about it, as far as I know.
This smells like sinophobia.