Future of US-China Relations Martin Wolf, Chief Economics - - PowerPoint PPT Presentation

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Future of US-China Relations Martin Wolf, Chief Economics - - PowerPoint PPT Presentation

Sep 04, 2023 105 likes •364 views

Future of US-China Relations Martin Wolf, Chief Economics Commentator, Financial Times Nottingham University 2019 7 th March 2019 Nottingham Future of US-China Relations Protection will lead to great prosperity and strength. Donald

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Future of US-China Relations

Martin Wolf, Chief Economics Commentator, Financial Times

Nottingham University 2019 7th March 2019 Nottingham

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Future of US-China Relations

“Protection will lead to great prosperity and strength.”

Donald Trump, Inaugural Address, 20th January 2018.

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Future of US-China relations

  • 1. Global transformation
  • 2. Weakening globalisation
  • 3. China’s challenges
  • 4. China-US tension
  • 5. Trade war
  • 6. Perilous world

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  • 1. Global transformation
  • Road to today
  • China’s rise
  • Winners and losers

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  • 1. Transformation: China’s rise

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1992 2002 2012 2022

SHARES IN WORLD GDP AT PURCHASING POWER PARITY (IMF, WEO database)

US European Union Japan Other advanced China India Other emerging Asia Latin America Other emerging

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  • 1. Transformation: China’s rise

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  • 2. Weakening globalisation

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  • 2. Weakening globalisation

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  • 3. China’s challenges

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2000 2002 2004 2006 2008 2010 2012 2014 2016

STRUCTURE OF CHINA'S DEMAND

Household consumption Government consumption Investment Net Exports

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  • 3. China’s challenges

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0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021

CHINA: FIVE-YEAR MOVING AVERAGE OF INCREMENTAL CAPITAL-OUTPUT RATIO

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  • 3. China’s challenges

0.0 50.0 100.0 150.0 200.0 250.0 300.0 Q1 1996 Q1 1999 Q1 2002 Q1 2005 Q1 2008 Q1 2011 Q1 2014 Q1 2017

CHINA’S DEBT (per cent of GDP)

Household Non-financial corporate Financial corporate Government

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  • 4. China-US tensions

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  • 4. China-US tensions

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  • 5. China-US trade war

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  • 8
  • 6
  • 4
  • 2

2 4 6 8 10 12 14 2000-Q1 2003-Q1 2006-Q1 2009-Q1 2012-Q1 2015-Q1 2018-Q1

CURRENT ACCOUNT BALANCES (over GDP, per cent)

China US

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  • 5. China-US trade war

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0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% US EU China India

TARIFFS (WTO)

Simple average bound Simple average applied Trade-weighted average

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  • 5. China-US trade war

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  • 5. China-US trade war

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(450) (400) (350) (300) (250) (200) (150) (100) (50)

  • 1

/ 1 / 2 1 / 1 / 2 3 1 / 1 / 2 6 1 / 1 / 2 9 1 / 1 / 2 1 2 1 / 1 / 2 1 5 1 / 1 / 2 1 8

US TRADE BALANCE WITH CHINA ($bn) (Refinitiv, US Census Bureau)

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  • 5. China-US trade war

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  • 4.0%
  • 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 1998 2002 2006 2010 2014

BILATERAL TRADE BETWEEN THE US AND CHINA

Chinese exports to US/Chinese GDP Chinese bilateral surplus/Chinese GDP US exports to China/US GDP US bilateral deficit/US GDP

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  • 5. China-US trade war

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  • 5. China-US trade war

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  • 5. China-US trade war

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  • 5. China-US trade war
  • US demands that China should:
  • Reduce US-China trade imbalance by $200bn over

two years

  • Eliminate all “market-distorting subsidies”
  • Strengthen intellectual property protection and

eliminate technology requirements in joint ventures

  • Cease espionage, cyber espionage, counterfeiting

and piracy

  • Forego all retaliatory actions, including any

requests for consultations in the WTO

  • Accept US restrictions on Chinese inward FDI

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  • 5. China-US trade war
  • Afford US investors “fair, effective and non-

discriminatory market access and treatment”, including removal of foreign investment restrictions

  • Reduce tariffs in “non-critical sectors” to US levels

and open access to services and farm products

  • Accept quarterly monitoring.
  • China “will not oppose, challenge or take any form
  • f action against” any such US impositions.

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  • 5. China-US trade war
  • It is unclear whether a deal can be done on this
  • basis. But it should be noted that:
  • Concern about the bilateral balance has no

economic logic

  • China’s tariffs are actually relatively low
  • Acceptance of US demands would lead to more

entanglement of US business in China, while many Americans want less entanglement

  • All these actions are contrary to WTO rules
  • But the US is engaged in destroying the WTO.

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  • 6. Perilous world
  • The world is in profound transformation,

economically and politically

  • This is leading to a rise of populism and

protectionism in the West

  • The US is moving towards a new “cold war”

with China

  • Globalisation is under threat
  • Relations between the two superpowers are

being re-defined, worryingly

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