If you want more hot takes on China's 15th Five-Year Plan, here you go! I joined my RAND Europe colleague @fraghi.bsky.social on her "Geoeconomic Competition" podcast. open.spotify.com/episode/3zFd...
Over the past few years, Beijing has been mirroring the U.S. economic-security toolkit. China is developing its own architecture to manage risk, preserve chokepoints, and respond in kind. It's also learning from the United States.
Thank you for cross pollinating. Too many platforms.
Also, it's legitimately funny to me that they have secret but publicly disclosed orders.
Four-fifths of China’s lost exports to the US have already found alternative markets in the second quarter, the top destinations being Southeast Asia and Europe: www.hinrichfoundation.com/research/art... @gdp1985.bsky.social #trade
In my CLM piece, I argue that PRC exporters have found new markets for ~80% of their lost exports to the US and transshipment is low. I updated those figures to include July data. The conclusion is the same. To the extent there is transshipment, it's mostly via SE Asia.
In the latest China Leadership Monitor, I offer some thoughts on China's economy in the trade war. Lots of charts!
www.prcleader.org/post/changin...
China nerds, rejoice! The Relevant Organs is back and on here. Follow them for all the news you need.
@relevantorgans.bsky.social
Facing U.S. tariffs, China’s exports to the U.S. are down—while exports to Southeast Asia are up. Is that trade diversion and potential transshipment? My estimate: at most 34% of the increased PRC exports to SE Asia in Q2 could reflect trade diverted from the United States.
The US and China have a new framework to de-escalate. Whether that'll be durable is unclear. What is clear is that China can and will weaponize its export dominance. We discuss what the trade war teaches us about China's economy in our new RAND Commentary. www.rand.org/pubs/comment...
I'll be on a stellar panel this evening discussing the resilience of China's economy. I'll be providing the view from Europe.
With the excellent Jude Blanchette, @fraghi.bsky.social @gdp1985.bsky.social - for fans of imposter syndrome, this is not to be missed!
www.rand.org/randeurope/a...
The Trump administration is trying to reindustrialize with tariffs, especially on China. But China has lessons to teach the US about industrial strategy. A new RAND Commentary with @fraghi.bsky.social and Benjamin Lenain. www.rand.org/pubs/comment...
I would interpret the US tariff exemptions primarily as an attempt to mitigate the impact on electronics and consumers more than as a signal of a US-China deal. The exempted categories cover about 22% of US imports from China. content.govdelivery.com/bulletins/gd...
So, CA deficit contributing to CA surplus (income) rather than CA deficit contributing to FA surplus. Got it.
Which US industries are most exposed to the China market? Looking at US majority-owned foreign affiliates, the answer is wholesale trade, computers & electronics, chemicals & pharma, autos, and semiconductors. This could matter for US-China talks and potential PRC retaliation to US tariffs.
Taiwan is nervous. With good reason. Jude Blanchette and I discuss in our new RAND Commentary. www.rand.org/pubs/comment...
China's total fiscal deficit is set to increase by at least 2 percentage points of GDP in 2025. That's maybe not the massive stimulus some wanted, but it's not small either. The question is the composition and effectiveness of the measures.
China's retaliation to the new 20% US tariffs:
- 10-15% tariffs on US ag imports
- 10 US firms on Unreliable Entities List
- 15 US firms on export control list (Illumina maybe most affected)
- No product-specific export controls
Less than proportional response.
This is a strong possibility.
China/BRI nerds, does anyone know if MOFCOM expanded the countries it counts as BRI in its stats? Is there a list by year? Reported BRI projects and investment surged in 2023. Is this due to categorization?
China Econ and Trade nerds, apply to this!
I meant "slowdown" in terms of GDP growth *rates*. But if you want *absolute* GDP growth for China and the US, here you go! Whether one uses nominal growth at market exchange rates, real growth at fixed exchange rates, or nominal growth at PPP exchange rates makes a difference.
Yes. But then I added NEVs (they defined it before NEVs were big) so people wouldn't ask about the very-popular NEVs.
Do it anyway
Two narratives about China's economy:
- Macro weakness
- Technological and industrial strength
They're both true! How? The "new economy" is a small share of the overall economy. I discuss in a new RAND Commentary.
www.rand.org/pubs/comment...
When in Taipei...
Perfect broth. NTD 200 ($6). 😋
In that case, the "skills" people were wrong. It *was* an aggregate demand problem. Those people got jobs when the economy improved but with lasting harms. Young Chinese shouldn't similarly blame themselves for macro policy failures. 2/
Excellent Baiguan piece on 🇨🇳 youth unemployment with data and stories. This reminds me of the "skills mismatch" debate after the US Great Recession. People said the problem was poor or incorrect training or education. Others said it was just a demand problem. 1/ open.substack.com/pub/baiguan/...
There's a tension between Trump's emergent desire for a clear US sphere of influence in the Americas and his opposition to those economies being integrated with the US. 🤔
Haggis is great
