12
You have to understand how international debt works. These are not loans, but bonds. China buys a US bond for, e.g., 98 USD. This bond is a promise by the US Treasury to pay 100 USD one year from now. China owns a lot of this type of bonds. Once the bond hits maturity, China is paid 100 USD and the thing it typically does with these 100 USD is it buys the ...
10
Intermediate and capital goods used in the production of other goods are often very expensive and made by Germany. Think fancy manufacturing equipment in chemicals, semiconductors, and metal fabrication as well as precisely manufactured consumables like processed chemicals and auto-parts. Chinese goods are ubiquitous because they are skewed towards final ...
5
World Trade Organization (WTO) rules prohibit export subsidies and China joined the WTO almost 15 years ago (in December 2001). As a condition of membership, China had to eliminate export subsidies in the late 90s. So, strictly speaking, China can't subsidize its exports.
However, Dani Rodrik considers that China subsidizes them indirectly through the ...
4
Just because a country has a lot of resources (including human capital), it does not necessarily form a path for a developed nation. China is also very involved in military conflicts. It just takes one war for a country to drift back decades. Also, you can't ignore the brain drain problem.
With that, "developed" nation is a fluid definition. What does that ...
3
Under Mao the Chinese government was a planned economy, prices were set by the party, not by the free market. Procurement prices of agricultural produce, what the government payed to farmers, were lower than consumer prices of the same produce, what the government got from selling the produce to the consumers. The difference in prices becomes state revenue. ...
3
China's currency, the yuan (CNY), only partially reflects what goes on
in China's economy. It doesn't trade freely; the Chinese government
sets an official rate for it every day and only allows it to fluctuate
1 percent around that level every day. In fact, it doesn't even vary
that much; the average difference between the high and the low price
...
3
I couldn't read the FT article... but...
According to this article here, China imports a lot of raw material from Australia. This means that if Chinese economy is doing well, they import a lot of stuff from Australia... hence AUD will appreciate.
This news piece, for example, says that as China is hit with new tariffs, AUD falls. This is because the ...
3
Table 2.2 of https://www.bea.gov/scb/pdf/2017/10-October/1017-international-services-tables.pdf suggests
US exports of services to China in 2016 worth $\$54$bn and
US imports of services from China in 2016 worth $\$16$bn
Later parts of table 2.2 give a breakdown of types of services. Travel (for all purposes including education) - which should not ...
3
As was said above, buying debt to affect the exchange rate and make Chinese exports more attractive may be one reason to buy these Treasuries. Surely all of these are not reinvested into buying more debt and some of it is put into other civic projects.
The other reason to buy debt is to have a string of payments over time that may become more valuable later ...
2
The major reasons that I understand are that:
the Chinese government subsidizes shipping.
the US Postal Service, eBay China, and Hong Kong Post office have a trilateral agreement called the ePacket service which roughly speaking, allows shipping of small packages to the US at bulk pricing (instead of at the price for individual sales).
I don't think it's ...
2
The answer is in the the first line and title of the articles. Not all debt is government debt. One calculation also includes household and corporate debt.
2
Also remember that China's holdings of US Treasury's are a manifestation of the fact that they run a current account surplus with the US e.g. they sell more stuff to us than what they buy from us, which ends up creating dollars for them to hold which they invest mostly in USTs for obvious reasons related to safety and liquidity.
Even if they dumped their ...
2
China's interior consumption only represents 30% of its GDP, it's economical growth is not based on its interior consumption but on its exportation, a big part of its consumers are the USA. China has a huge commercial surplus due to the fact that it exports way more than it imports and its main consumers are the USA, with this surplus China chooses to buy US ...
2
Consider an exact same product, say an umbrella, which is both imported from China in India and locally produced. The reason why the Chinese product is cheaper compared to the local one could be related to differences in productivity or total factor productivity. The Chinese product could be relatively cheaper because Chinese firms use better production ...
2
Similar to previous answers but with some additional sources (and possibly simpler?)
By investing abroad dollars(or any other currency) are purchased in exchange for Yuan, this reduces the value of the yuan and drives up the value of the dollar, supply and demand. This keeps the exchange rate favorable for exporting from China.
The same effect is achieved ...
2
I do not think there is some dataset that has such an detailed breakdown that you want. However, one of the most widely used datasets on financial assets held by households are the various national surveys including the Survey of Chinese Consumer Finance and Investor Education (SCCFIE), China Household Finance Survey (CHFS), or Chinese Survey of Consumer ...
2
The article pretty much answers this:
China has issued 100 billion yuan (about 14.1 billion U.S. dollars) of special government bonds for COVID-19 control measures in a bid to support local infrastructure construction and epidemic prevention and control, the senior official added.
It is set to counter the downward pressure on economic growth, expand tax and ...
2
The article reflects a consensus view of the trade situation between US and China. Personally I see it differently : China has been willing to make and ship trillions of dollars’ worth of goods to US in return for entries in a computer (Treasury bonds). This is undoubtedly good for US consumers, as you say.
2
This issue has been at the fore among China watchers for many years. While bubble classification is often subjective (even the Fed concedes):
[The] econometric detection of asset price bubbles cannot be achieved
with a satisfactory degree of certainty.
However, there is mainstream consensus that China's real estate sector likely has cause for concern. The ...
1
The United States was paying the bill. (This has now changed).
1
First a disclaimer: Trade imbalances are something that we should expect to happen, especially between two massive economies like the US and China. In fact, it will probably be very hard to find a pair of countries that don't have a trade imbalance (unless they don't trade at all).
This does not mean that there is something wrong necessarily, however, a ...
1
I'm not sure how helpful this is but the way the information is displayed is really nice. https://oec.world/en/profile/country/chn/
1
One answer and one comment here make the false claim that tariffs are equivalent to currency depreciation, playing around with the exchange rate of your currency can "eliminate" a tariff, and so forth.
I think they are being confused by a well-known equivalence result, which says that a simultaneous import tariff and export subsidy at the same rate is ...
1
Assume that a chinese company is selling a product for 100 RMB or 16 USD.
With the 10% tariff the cost for an american importer rises to 17.6 USD.
If the the RMB depreciates 8% and the price in RMB is unchanged the importer pays 8% less in USD or 16.192 USD.
Depreciating the RMB by 8% offsets (almost all of) the effect of the 10% tariff.
This ...
1
Well, due to Lerner's Simmetry Theorem, an import tax has the same effect of an export tax. When China makes its imports from the US more expensive, its exports get more expensive too.
1
Short answer, yes, they are considered Chinese imports. Your excellent question speaks to the flaw in using Gross Domestic Product as a measurement of the health of a nation's economy.
The flaw is that the simplistic assignment of "import" and "export" completely misses the reality of modern manufacture and trade, where parts come from multiple nations.
If ...
1
Barry Naughton is an authority on the Chinese economy. He offers evidence on China's government control over the economy in a nice paper called "Is China Socialist?"
China's government controls an unusually large proportion of national income flows. He argues that these income streams have grown dramatically as a share of GDP since the mid-1990s. He shows ...
1
Good data sources from China are hard to come by. For official data, you can find nearly all available data series through the company called CEIC, although this is somewhat expensive. In general, the history of many of these series doesn't go very far back either, since it is only in the last decade or two that China has really become serious about ...
1
The cost of the umbrella is the sum of the cost of input raw resources (wood / plastics / metal / fabric), labor, transport and retail. Assuming the retail costs are the same (you're buying in the same store, for example), then the difference is on the other factors.
Keep in mind that the cost of all the factors can be manipulated by the Chinese and ...
Only top voted, non community-wiki answers of a minimum length are eligible