Words of wisdom, on China shock 2.0
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Michael Pettis frequently claims that, by running large surpluses, China is forcing “the demand-suppressing cost of their policies onto their trading partners.” The idea here is relatively straightforward: by disincentivizing consumption within China, China’s policies are reducing domestic demand, which, ceteris paribus, reduces global demand.
The problem with this logic should be fairly obvious: ceteris is not in fact paribus. It assumes other countries passively hold their own demand fixed in
The problem with this logic should be fairly obvious: ceteris is not in fact paribus. It assumes other countries passively hold their own demand fixed in
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