Chinese Economics Thread

Wrought

Wrought

Junior Member
Registered Member
lube said:
You have articles saying how Michael Pettis is being read by the Trump team, because it provides them with intellectual backing for bad ideas.

They're economic cranks talking non-stop about global trade imbalances (conveniently ignoring services) as the literal explanation for 99% of all bad things happening around the world. Tariff the bad people and the problem will go away.
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That's giving Pettis/Setser/etc far too much credit, and Trump et al. far too little blame. Pettis, for example, thinks Trump's tariffs are misguided and pointless (and Trump has been on the record liking tariffs for many decades anways).

https://twitter.com/i/web/status/1907629516043784509

But even that much supposes that Trump et al. care about adhering to some brand of economic legitimacy. They don't. They literally cited academic papers and then slapped on random multipliers because they felt like it. The professor who wrote said paper called them out on it.

https://twitter.com/i/web/status/1907974351967633570

You have Trump et al. going on TV and saying "Tariffs are not inflationary" as if that wasn't the literal definition of a tariff (raising prices). I have no fondness for economists who are overly wedded to some model of imbalanced trade or capital flows or whatever, but at least they have a mathematically consistent model. Trump insists that 2+2=5 because tariffs are the most beautiful word in the dictionary.
 
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lube

Junior Member
Registered Member
Wrought said:
That's giving Pettis/Setser/etc far too much credit, and Trump et al. far too little blame. Pettis, for example, thinks Trump's tariffs are misguided and pointless (and Trump has been on the record liking tariffs for many decades anways).

https://twitter.com/i/web/status/1907629516043784509

But even that much supposes that Trump et al. care about adhering to some brand of economic legitimacy. They don't. They literally cited academic papers and then slapped on random multipliers because they felt like it. The professor who wrote said paper called them out on it.

https://twitter.com/i/web/status/1907974351967633570

You have Trump et al. going on TV and saying "Tariffs are not inflationary" as if that wasn't the literal definition of a tariff (raising prices). I have no fondness for economists who are overly wedded to some model of imbalanced trade or capital flows or whatever, but at least they have a mathematically consistent model. Trump insists that 2+2=5 because tariffs are the most beautiful word in the dictionary.
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I think he's just gaslighting us.

Pettis has been on the record saying that tariffs can be a tool used to rebalance trade against surplus countries (Germany, China).
Just because he doesn't like his name being attributed to Trump trying this out in practice, doesn't mean he never said it.


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So wouldn’t US tariffs — a tax on consumption — make American consumers worse off? Not necessarily. American households are not just consumers, as many economists would have you believe, but also producers. A subsidy to production should cause Americans to produce more, and the more they produce, the more they are able to consume.

Tariff policy is “successful”, in other words, if it raises domestic production by enough to pull consumption up with it — ie, if it causes Americans to consume more by producing even more. In that case American consumers are clearly better off, even as the share they consume of total domestic production declines. ...

...

If ... the US was to put tariffs on electric vehicles, the relevant question is whether US manufacturers would be incentivised to increase domestic production of EVs by enough to raise the total American production of goods and services. If they are, American workers would benefit in the form of rising productivity. In turn, this would lead to wages rising by more than the initial price impact the tariffs had and American consumers would be better off.
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He's just "asking questions" on a hypothetical.
 
Wrought

Wrought

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lube said:
I think he's just gaslighting us.

Pettis has been on the record saying that tariffs can be a tool used to rebalance trade against surplus countries (Germany, China).
Just because he doesn't like his name being attributed to Trump trying this out in practice, doesn't mean he never said it.


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He's just "asking questions" on a hypothetical.
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He attached very clear conditions on the effectiveness of targeted sectoral tariffs. Which is not particularly controversial, given the widespread use of tariffs by China and many other countries (including the US well before Trump) for similarly specific goals. Tariffs are indeed a tool which can be used (successfully) for a variety of purposes. Not without cost, but they can certainly work.

the relevant question is whether US manufacturers would be incentivised to increase domestic production of EVs by enough to raise the total American production of goods and services. If they are, American workers would benefit in the form of rising productivity.
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The difference is that Trump is throwing tariffs on literally everything and everyone, while insisting obvious drawbacks like inflation don't exist. It doesn't take a genius to realize that's a very stupid idea. The only idiot dumb enough to advocate professionally for it is Peter Navarro.

“The message is that tariffs are tax cuts, tariffs are jobs, tariffs for national security, tariffs are great for America, tariffs will make America great again,” the White House senior counselor for trade and manufacturing declared on Fox News Sunday. The Orwellian assertion, which runs counter to what
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has said about tariffs' impact on the American consumer and economy, was met with wholesale criticism that spanned the political spectrum.

In addition, the top White House aide and recently released convict claimed that the president’s other promised tariffs — which will be unleashed on April 2, what Trump is touting as “Liberation Day” — could bring in as much as $6 trillion over the next decade. Trump, meanwhile, has reportedly urged his White House team to be even more aggressive during this trade war as he ponders a universal tariff.
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W20

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"Until China starts to improve its domestic capital markets the country will forever be relegated to just making things for American consumers (again, see my point about China as an aggregate exporter of products) at a very cheap price. I for the life of me do not understand why you people feel this is preferable or beneficial in any way shape or form."

(Abenomics12345)

E x a c t l y

This, and deflation, and consumption especially in rural areas, are very important pieces of the puzzle.

如果这是一场战争，请把子弹交给人民
 
Nevermore

Nevermore

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dingyibvs said:
Yeah, I think that's the best immediate retaliatory measure. It doesn't punish any country in particular. The extra fees the US imposes on Chinese ships specifically can be fairly easily avoided by most shipping companies so does not require specific retaliation.
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But now the new orders from Chinese shipyards have declined, and the prices of second-hand ships have also dropped
 
G

GiantPanda

Junior Member
Registered Member
W20 said:
"Until China starts to improve its domestic capital markets the country will forever be relegated to just making things for American consumers (again, see my point about China as an aggregate exporter of products) at a very cheap price. I for the life of me do not understand why you people feel this is preferable or beneficial in any way shape or form."

(Abenomics12345)

E x a c t l y

This, and deflation, and consumption especially in rural areas, are very important pieces of the puzzle.

如果这是一场战争，请把子弹交给人民
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If China had a stock market like that of the US where 80% of the people are invested then the Chinese economy would have been fucked to high heavens over the past few days/months/years.

There is a reason why developing economies do not have great capital markets -- they do not control the levers of liquidity built over the centuries by the West. One day, a great capital market will happen in China but not yet. Not now.

It takes just a bit of hot money from the outside to pump up and draw in all the resources from the unsophisticated residents of your developing country and then when they reverse the lever and cash out you'll be left with nothing.

You need a mature economy and population to make this work and to be honest, it had only really worked if you are Western or allied with the West.

There is no great capital market in the developing world except for China and India and neither does much for their economies.
 
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