Chinese worker loading aluminium tapes at an aluminium production plant in Huaibei

Comments 11

Los tambores de la guerra comercial

Apr 24, 2018 Yu Yongding , Yongding Yu

BEIJING – El mes pasado, el gobierno del presidente estadounidense Donald Trump disparó la primera andanada de medidas de lo que rápidamente se está convirtiendo en una guerra comercial con todas las letras. Si bien el comercio es hace tiempo motivo de fricciones en la relación sinoestadounidense, pocos esperaban semejante escalada, sobre todo porque los economistas en general consideran que las guerras comerciales perjudican a todas las partes. ¿Cómo llegamos a este punto? ¿Podemos revertirlo antes de que sea demasiado tarde?

Ante todo, Trump no parece entender cómo funciona el comercio internacional. Piensa que los 500 000 millones de dólares de déficit comercial de Estados Unidos con China implican una pérdida: el resultado de gobiernos estadounidenses “incompetentes” que permitieron a sus homólogos chinos aprovecharse de ellos. De hecho, según Trump, Estados Unidos ya perdió una “guerra comercial” con China hace años.

Pero la cuestión de la balanza comercial es mucho más compleja que como la interpreta Trump. Para empezar, gran parte de las exportaciones chinas incluyen componentes fabricados en otros países, de modo que su superávit comercial en realidad incluye también los de muchos otros.

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.

Featured

Poland’s Dictatorship of Myth

Aug 13, 2018 Sławomir Sierakowski
Why the Bank of England Should Target Growth

Aug 10, 2018 Linda Yueh
Trump’s Victorious Retreats

Aug 9, 2018 Anatole Kaletsky
No to Academic Normalization of Trump

Aug 7, 2018 Dani Rodrik
The Need for a Global Patent Market

Aug 6, 2018 Edmund S. Phelps & Eskil Ullberg

Yu Yongding

42 Commentaries

Yu Yongding, a former president of the China Society of World Economics and director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, served on the Monetary Policy Committee of the People’s Bank of China from 2004 to 2006. He has also served as a member of the Advisory Committee of National Planning of the Commission of National Development and Reform of the PRC.

Yongding Yu

3 Commentaries

0 Comments on this paragraph, 11 in all 11 Comments on this article

nigel southway Apr 24, 2018

Look…the target is not just China and its trade imbalance with US, it’s all international trade that unnecessarily adds waste to our national economies and the planet with the extra transportation burden….

International Trade is not “free” and although it should exist, it needs to be controlled by each nation far more for the good of the national citizens.

Global trade has increased 8 times since 1980 but global GDP has flatlined in most major economies with vast amounts of “Unfair” wealth transfer.
- Kien Choong Apr 26, 2018
  
  Hi, Nigel.
  
  As I understand it, the conventional view says that global trade generates aggregate gains (benefits outweigh costs) to each country, and it is up to each country to make sure those gains are distributed fairly within that country. You seem to have a different view?
  
  I hope when you next comment on this issue, you will elaborate on your view (in case I have misunderstood them), and also explain the reasons for your views (so I can learn from you!). Cheers!
  - nigel southway Apr 26, 2018
    
    KIEN CHOONG
    Yes, you are correct…The conventional and academic view by most economists is that free global trade is a general gain. But the model is too simple and is only true if the system of trade expands or optimizes with a balanced trade between equal competitive nations. If these conditions exist then yes it can be a general benefit. But we don’t have that situation at all….. we have a wealth transfer machine between mature economies and young economies with mainly labor arbitrage issues generating rank in-equality. Plus, we have over extended and grown global trade to the point that it is an unstable part of a national economy and has become a dangerous necessity rather than an option.
    Further we have added almost 50% more labor to the global labor force but the demand for that labor is about 50% of the capacity we have developed so we currently have a global under-employment rate of 25% of the global workforce… So...this is the age of over-supply.... But, through improved communication we have generated an expectation of employment that in some ways is causing mass economic migration to chase what is now an expectation to be employed and share the global demand.
    
    To complicate matters globalization is ecologically unsustainable with the planet taking a beating in many ways.
    
    Globalization linked with the spread of technology is also enabling the global population to explode mainly in the new economies. So, we will be stressed on resources as well as a stable and sustainable planet...
    
    Many now are thinking we are moving too fast and the national economic model with more self-sustaining policies that finds ways to trade less to satisfy its citizens will be a better sustainable model that will demand less wasteful trade, and many of us are looking at this more local balanced and less wasteful trading models as the next and important part of the economic journey.
    
    In other words the notion of global free trade that benefits all is just a bad idea for all of us going forward, or at least until we figure out a more realistic model.
    - Kien Choong Apr 26, 2018
      
      Thank you for taking time to reply! So many points ... my head spins!
      
      On the issue of "balanced trade between equal competitive nations", just wondering what that means? Suppose there are 3 countries (and only these 3): United States, China and Australia.
      
      Australia buys more from the US than it sells to the US, and so has a bilateral deficit with the US. China buys more from Australia than it sells to Australia, and so has a bilateral deficit with Australia. The US buys more from China than it sells to China, and so has a bilateral deficit with China.
      
      Suppose there are no capital flows in this world. Is this a state of "balanced trade between equal competitive nations"?
      - nigel southway Apr 26, 2018
        
        kien-choong
        
        I hope this will help.
        
        The real issue is that global free traders have assumed in a very naive manner that all trade is win-win for both nations involved in the global trade… The new thinking is that this is a very poor assumption.
        
        The conditions that make it win win Are:-
        
        1/ The trade between 2 nations is balanced
        
        2/ The sum of all internal and external trade associated with these 2 nations increases….
        
        If these 2 conditions are not met then wealth transfer takes place…
        
        Also, it is a lot harder to have balanced trade between 2 nations when the economies are at vastly different points of development, as it will probably lead to labor arbitrage and wealth transfer.
        
        The preference is that the trade should be balanced between any two trading nations to prevent imbalances and this needs to be controlled with tariffs or other trade control devices… just allowing trade to flow free is not in the interest of most of the mature economies.
        
        Also, excessive global trade is wasteful when such resources, services, products are already available in the receiving country. In principal global trade only has value when it increases overall trade activity in and between the two nations or allows one to have access to resources or IP to assist that economy.
        
        Just substituting global trade for national trade that could have happened in the national trade area will create negative value, and this is the issue so far with how global trade has grown.
        
        Also, there are significant ecological sustainability issues with unnecessary movement of resources and goods driven by this globalized trade mentality.
        
        The best approach is to as much as possible have a national policy of digging up, growing and making what you consume, and only trading with others for resources or products that are currently not available in your own economy. This will take a rethink of how trade should be undertaken.
        
        Kien Choong Apr 26, 2018
        
        Thank you, it does help somewhat, as I'm trying to understand your "mental model" of how the world works!
        
        Reading your explanation leads me to wonder if the same forces you describe operating at the global level (between two countries) also operate at the national level, say between New York (rich) and Alabama (poor). Is there a case to restrict trade between New York and Alabama, given that New York is much more developed than Alabama?
        
        My own thoughts on this is that the issue has more to do with "unbalanced capital flows" than "unbalanced trade". Perhaps each country could be careful to limit the national debt owed to foreigners. In your two country world, if neither country borrows from the other, then trade would become balanced!
        
        That said, I do think there is a role for capital flows, and capital flows are generally benign, but can be harmful in some circumstances.
        
        Just a thought!
        
        nigel southway Apr 27, 2018
        
        Capital flows are a form of trade. and they can be even more a danger to sustainability than product or service or resource trade if not managed as they provide no value adding component to the local economy.… Capital is NOT benign if not controlled. look at the story about the Iceland banks prior to 2008…
        
        Prior to the 1970s we had much more global capital controls in the form of the post WW2 Bretton Woods "gold exchange standard" and this was abandoned due to oil price instability caused by the west losing control of the global oil supply, as well as other conceptual and fiscal mistakes made by economists at that time.
        
        Capital is used badly to balance trade such that nations can create loans against trade rather than earn it… example is how the US is paying for the china imports. And you are 100% correct debt or capital owned by others outside the nation is a sustainability risk and mostly at best must be managed.
        
        Economist use capital as “value” equal to products and services and resources, but it is not value it is a promise of value that still must be earned using the capital. So to be profound. the stock market has zero value until it uses that capital to earn value through using that capital to support a business to make product services or make resources available. we have lost the plot as far as the meaning of capital is concerned… Too much so-called wealth is being generated by moving capital around rather than its correct use in supporting real wealth creation. Karl Marx had a good point!
        
        You mention interstate or city balances. well national and local governments control localized economies or imbalances with taxes and subsidies to assist low growth in unsustained parts of the nation to encourage investment and growth,
        
        The bottom line… the lesson of free trade globalization…It does not work without balance and controls. National governments must control their economies and cannot leave it to the “free hand” of the market…. An integration of rule of law managed capitalism and state managed economies at the national level is the way to go.
        
        The free market globalists will freak at this viewpoint, but many are now looking toward this alternative.
        
        Kien Choong Apr 27, 2018
        
        Thank you for taking time to explain your views!
        
        I think you are right that we can't just leave it to the market; there is a role for government to ensure that the gains from global trade and capital flows are fairly distributed. There is nothing in economic theory that guarantees a fair distribution of growth.
        
        I personally feel that emerging countries will tend to be worse off without global trade; and it would be sad if developed countries think it is better not to trade with emerging countries. That said, each country must decide for itself what course to pursue.
        
        But I sincerely hope that we do not have exclusively self-regarding preferences, and how other people (including foreigners) go matter to us.
        
        I look forward to the day when every person in this world is equally free to live lives and pursue goals that they each have reason to value! We don't all have to be equally wealthy, but some equality of opportunity seems to be an ideal we can all aspire to achieve, whatever our national identity.
        
        nigel southway Apr 28, 2018
        
        I agree with your statements and I have traveled and worked in many different countries and economic environments and I firmly believe we can reset the global economic journey to better suite everyone
        
        But, it must change a lot from its current form
        
        We do have issues…
        
        Mass economic migration must stop as it is destroying the stability of the existing emerging economies
        
        Massive unplanned growth of the population in the emerging economies will lead to over-capacity against demand and the inability to meet a sustainable position whatever economics we use.
        
        Birth control may be a mandated condition in the future before we offer help.
        
        The mature economies need a break from globalization as it exists, and the economists who have quite frankly provided the wrong roadmap, need a reset as well. We need to teach economists about systems theory in any ultra large system such as a global market. It needs to be well designed sub systems (national or group of nation trade blocs) and this is to ensure system stability. Each subsystem should be as self-sustaining as possible which will create for stability at the total system level. Each inter-system inputs and outputs need to follow strict rules of balance so that they and the system can function. Allowing a system to operate with no sub systems and no inter system rules will lead to overall system failure as well as huge difficulty in correcting issues that may arise, such as total system breakdown and low performance overall.
        
        Free trade and limited national controls provides a poor system architecture and we need to fix it!
        
        Kien Choong Apr 28, 2018
        
        Ha, ha. Thank you for sharing your insights.
        
        I think you are right that a systems-based approach is required. I understand economists distinguish between: (i) "partial equilibrium analysis", and (ii) "general equilibrium analysis". The latter may be what you have in mind in terms of a "systems-based approach". General equilibrium analysis is hard to do, but perhaps you have insights from systems theory that economists could benefit from. I'm afraid this lies beyond my competence!
        
        I would also agree that rules need to be reviewed to ensure that they deliver just outcomes. Might "mandatory birth control" be regarded by most people as unethical?
        
        I do think that a lot of our concerns about just outcomes could be easily addressed if governments were to play a greater role in redistributing the gains from growth/trade. The current rules seem to concentrate wealth in the hands of a few, and while "socialising" the cost of globalisation!
        
        Thank you for taking time to read my comments!
Joseph Zorzin Apr 24, 2018

Everyone's now talking about the "Made in China 2025 strategy". But, all China watchers should read "The Hundred-Year Marathon" subtitled "China's Secret Strategy to Replace America as the Global Superpower" by Michael Pillsbury. There is an hour long interview of the author on the Asia Society web site.