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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
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
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
...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
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
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
4/n
China'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'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 'for keeps' 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 'for keeps' 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.
>>
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.
>>
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's surge back via exports has only been viable because it's trading partners have not been playing 'for keeps' 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's surge back via exports has only been viable because it's trading partners have not been playing 'for keeps' 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.
>>
END
Yes, China has been playing rough, and "cheating" frequently. But, as Shakespeare wrote for Cassius's lips:
"The fault, dear Brutus, is not in our stars. But in ourselves, that we are underlings."
We've always had the tools to step up our own game...
...and outdo China.
Yes, China has been playing rough, and "cheating" frequently. But, as Shakespeare wrote for Cassius's lips:
"The fault, dear Brutus, is not in our stars. But in ourselves, that we are underlings."
We've always had the tools to step up our own game...
...and outdo China.
