December 15, 2018
The NYT ran a piece on China’s economy implying that it is reeling from the tariffs that Donald Trump has imposed on imports from China. The article outlined China’s economic problems and then told readers that China’s President Xi:
“…has been forced to make concessions to the United States as President Trump’s trade war intensifies.”
The problem with the claim that Xi has been “forced” is that China’s trade surplus with the United States is actually considerably larger in 2018 than it was in 2017. For the first ten months of this year, its surplus in goods has been $344.5 billion. That compares to surplus last year of $309.2 billion. While it is possible that China’s surplus would be even larger without the trade war, it doesn’t make much sense to say that a trade surplus that is up by 11 percent over the last year is a major cause of China’s current economic problems.
Addendum:
In comments, Ibout rightly takes me to task for not putting the trade surplus figure in context. China’s 2018 GDP measured in dollars (the appropriate denominator for this issue) is a bit more than $14 trillion. This means the surplus this year, which is likely to be a bit over $400 billion, would be a bit less than 2.8 percent of China’s GDP. If this were to fall sharply it would surely be a hit to China’s economy, but the surplus fell by much more following the 2008 recession and China’s economy continued to grow rapidly.
Comments