I am very happy to have a conversation with the University of Washington Ian Coxhead With Sandy Siegel, President Mita and Me Day On this topic Talk about trade last week Regarding trade, direct investment and competition in technological production.
Some of the hot spots depicted are now no longer particularly prominent:
figure 1: Actual trade-weighted (broad) renminbi value (brown, left logarithm), nominal (blue, left logarithm), and reported foreign exchange reserves of China’s foreign exchange reserves in the central bank, in millions of US dollars (red, right) logarithmic scale) . Source: Bank for International Settlements, International Monetary Fund.
Since the renminbi is fairly strong and the observed reserves are stable, it is more difficult to present cases of currency manipulation.
The size of the US-China trade balance is not at the forefront.
figure 2: The US-China merchandise trade balance as a share of US GDP (red), and the US overall trade balance (goods and services) as a share of US GDP (blue). The decline date defined by NBER is shaded in gray. The orange shading indicates the publication and implementation period of Article 232 and Article 301 measures. The US and China exports and imports are adjusted seasonally by the author using the X-13/X-11 procedure. Source: BEA’s trade flow through FRED, IHS-MarkIt’s nominal monthly GDP, NBER and author’s calculations.
However, it is wrong to say that the US-China trade deficit has been “fixed” (given that Failed to realize the complete document of the first phase of Trump’s negotiations)As Clark and Huang pointed out, There are many motivations for incorrectly measuring trade flows (given taxes, tariffs, etc.).
source: Clark and King (2021).
In addition, as I have pointed out many times, from a macroeconomic point of view, there is almost no difference in the bilateral trade balance. Our overall trade balance with the rest of the world has deteriorated—not surprising given the fiscal stimulus measures the United States is taking.Most of the imports originally from China have been transferred to other Asian countries, which may cost more (this is called “Trade diversion”).
Obviously, the friction points appear more in the trade of high-tech goods and foreign direct investment in the United States. For more information on these topics, see these references below.
