Today, we’re fortunate to have Willem Thorbecke, Senior Fellow at Japan’s Research Institute of Economy, Trade and Industry (RIETI) as a guest contributor. The views expressed represent those of the author himself, and do not necessarily represent those of RIETI, or any other institutions the author is affiliated with.
Category Archives: China
“Re-examining the Effects of Trading with China on Local Labor Markets: A Supply Chain Perspective”
From the paper by Zhi Wang, Shang-Jin Wei, Xinding Yu & Kunfu Zhu:
The United States imports intermediate inputs from China, helping downstream US firms to expand employment. Using a cross-regional reduced-form specification but differing from the existing literature, this paper (a) incorporates a supply chain perspective, (b) uses intermediate input imports rather than total imports in computing the downstream exposure, and (c) uses exporter-specific information to allocate imported inputs across US sectors. We find robust evidence that the total impact of trading with China is a positive boost to local employment and real wages. The most important factor is employment stimulation outside the manufacturing sector through the downstream channel. This overturns the received wisdom from the reduced-form literature and provides statistical support for a key mechanism hypothesized in general equilibrium spatial models.
Ungated version here. This is a slightly older paper (2018). A paper with related findings by Feenstra and Sasahara (2018) here, while ungated working paper version is here.
This is a reminder that import competition has direct impacts, but international trade allows firms access to lower cost inputs, and benefiting from comparative advantage. Separate from the question of net benefits is whether costs imposed on those negatively impacted outweigh those who gain, either in dollar or “util” terms.
The RMB’s Progress (in Internationalization)
The rapid ascent in CNY reserves was in 2018, with some resumption in 2020. From 2016 to 2019, Renminbi turnover rose from 4% to 4.3% (out of 200%).
Winning (per Trump Dictionary)! US-China Trade
Chad Bown, US-China Phase 1 Tracker:
No matter how you look at it – use data on China’s imports or US exports – through November, China purchased only slightly more than half of the US goods Trump pledged it would buy over all of 2020 under his Phase One deal.
On “Intimidation” (and a very short, truncated history on the Chinese diaspora in America)
At the risk of excessive navel-gazing, a commentary on what responsibilities Asian-Americans have in calling out China. An Econbrowser reader writes:
[D]o I think Menzie is a China apologist? No. Do I think Menzie is thoroughly intimidated by China? Absolutely.
But he is hardly alone in this.
Nevertheless, there is a bigger picture. If China follows trend, if this trend leads to open conflict with the US, then Menzie will regret not having taken a more public and determined stand to argue for democracy in China. As I have stated: Our best hope for China’s peaceful rise to superpower status is the rapid development of that country’s internal democracy.
The July Trade Release
Trade deficit grows. US-China goods trade deficit is now growing too.
The US-China Trade War/Soybean Front: Home before the (Next Batch of) Leaves Fall
On July 9, 2018, over two years ago, reader CoRev wrote:
Those of us arguing against the constant anti-tariff, anti-Trump dialogs have noted this will probably be a price blip lasting until US/Chinese negotiations end. We are on record saying the prices will be back approaching last year’s harvest season prices.
Guest Contribution: “Is China’s economic growth lower than officially announced?”
Today, we are fortunate to present a guest contribution written by Laurent Ferrara (SKEMA Business School and QuantCube Technology), Alice Froidevaux (QuantCube Technology) and Thanh-Long Huynh (QuantCube Technology).
“The US and China in the global order: the role of the dollar and tensions with China”
Yesterday, I had the pleasure of joining a virtual panel sponsored by the Official Monetary and Financial Institutions Forum (OMFIF), is think tank covering central banking, economic policy and public investment.
“Kung Flu” in (Recent) Historical Perspective
On the 38th anniversary of Vincent Chin’s murder. From Politico:
President Donald Trump’s top spokesperson on Monday defended his use of the term “kung flu” to describe the novel coronavirus has sickened millions across the globe, asserting that the president was merely trying to emphasize the virus’ place of origin in China.
…
“The president does not believe that it is offensive to note that this virus came from China,” McEnany said Monday when asked about Conway’s condemnation of the term.