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IMPORTANT THREAD RE: CHINA 1/n
Back in March, near the beginning of the US lockdown, I warned those predicting a US economic "supply shock," stemming the fall in exports by China not to count China out. That China would battle back with a vengeance,... https://twitter.com/DanielAlpert/status/1234469517599834112">https://twitter.com/DanielAlp...
Back in March, near the beginning of the US lockdown, I warned those predicting a US economic "supply shock," stemming the fall in exports by China not to count China out. That China would battle back with a vengeance,... https://twitter.com/DanielAlpert/status/1234469517599834112">https://twitter.com/DanielAlp...
2/n
...using every tool at its disposal, including currency devaluation, industrial subsidies and household support - in addition to its overwhelming attack on #COVID19. I said then that China would be playing an aggressive game of economic "catch-up. >> https://twitter.com/DanielAlpert/status/1234469519453827073?s=19">https://twitter.com/DanielAlp...
...using every tool at its disposal, including currency devaluation, industrial subsidies and household support - in addition to its overwhelming attack on #COVID19. I said then that China would be playing an aggressive game of economic "catch-up. >> https://twitter.com/DanielAlpert/status/1234469519453827073?s=19">https://twitter.com/DanielAlp...
3/n
And China has done exactly that, with astounding success in terms of restoring growth to its economy:
"With Covid-19 Under Control, China’s Economy Surges Ahead" reported by @KeithBradsher
>> https://nyti.ms/2T8bkMG ">https://nyti.ms/2T8bkMG&q...
And China has done exactly that, with astounding success in terms of restoring growth to its economy:
"With Covid-19 Under Control, China’s Economy Surges Ahead" reported by @KeithBradsher
>> https://nyti.ms/2T8bkMG ">https://nyti.ms/2T8bkMG&q...
4/n
China& #39;s currency devalued rapidly during the crisis, as the #PBOC widened trading bands for the #RMB, falling to 7.14/US$1 by the end of May of this year, giving its renewed exports a strong tailwind.>>
China& #39;s currency devalued rapidly during the crisis, as the #PBOC widened trading bands for the #RMB, falling to 7.14/US$1 by the end of May of this year, giving its renewed exports a strong tailwind.>>
5/n
And while the RMB has rallied against the dollar sharply since June, it has done so largely in measure with other non-Chinese major currencies, as the US economy slumped along:
And while the RMB has rallied against the dollar sharply since June, it has done so largely in measure with other non-Chinese major currencies, as the US economy slumped along:
6/n
Meanwhile, China supported its firms with enormous subsidies and loans:
>>
Meanwhile, China supported its firms with enormous subsidies and loans:
>>
7/n
And China ramped up its always enormous investment in internal infrastructure to create additional jobs to offset its Q1 2020 downturn:
>>
And China ramped up its always enormous investment in internal infrastructure to create additional jobs to offset its Q1 2020 downturn:
>>
8/n
China has played the game of "catch-up" well and & #39;for keeps& #39; without concern for the long term condition of its trading partners. After all, its exports were in demand globally. China is, again, a net trade surplus nation:
>>
China has played the game of "catch-up" well and & #39;for keeps& #39; without concern for the long term condition of its trading partners. After all, its exports were in demand globally. China is, again, a net trade surplus nation:
>>
9/n
Demand for Chinese products from the manufacturing-infrastructure-starved US has surged so much that shipping costs to the US have reached all-time highs and for the most part remain so:
Demand for Chinese products from the manufacturing-infrastructure-starved US has surged so much that shipping costs to the US have reached all-time highs and for the most part remain so:
10/n
Meanwhile, the US administration points fingers at China, calling #COVID19 the "Kung-flu" or "Wuhan-flu." With some sections of the US right-wing even suggesting that China developed the virus as a way of attacking the rest of the world.
>> https://youtu.be/GHiDVPokUsY ">https://youtu.be/GHiDVPokU...
Meanwhile, the US administration points fingers at China, calling #COVID19 the "Kung-flu" or "Wuhan-flu." With some sections of the US right-wing even suggesting that China developed the virus as a way of attacking the rest of the world.
>> https://youtu.be/GHiDVPokUsY ">https://youtu.be/GHiDVPokU...
11/n
@michaelxpettis is, of course, correct here. The foregoing will exacerbate trade conflict between China and the rest of the world.
>>
@michaelxpettis is, of course, correct here. The foregoing will exacerbate trade conflict between China and the rest of the world.
>>
12/n
Yet China& #39;s surge back via exports has only been viable because it& #39;s trading partners have not been playing & #39;for keeps& #39; themselves.
1) We have been allowing, if not encouraging via policy choices, our manufacturers to produce abroad;
2) We have failed to develop our own...
Yet China& #39;s surge back via exports has only been viable because it& #39;s trading partners have not been playing & #39;for keeps& #39; themselves.
1) We have been allowing, if not encouraging via policy choices, our manufacturers to produce abroad;
2) We have failed to develop our own...
13/n
...industrial and development policies;
3) We have not invested in our infrastructure to provide domestic manufacturers with a stable source of orders (as has China); and
4) We have ignored the well-being of our households - setting off threatening political division.
>>
...industrial and development policies;
3) We have not invested in our infrastructure to provide domestic manufacturers with a stable source of orders (as has China); and
4) We have ignored the well-being of our households - setting off threatening political division.
>>
