Adam Wolfe
@adamkwolfe.bsky.social
An economist at Absolute Strategy Research.
How might US importers be avoiding tariffs? The de minimis exemption for imports valued at less than $800 is often flagged as the main loophole. But China’s Customs says the total value of those exports to the US was $18 billion in 2023.
December 5, 2024 at 2:30 PM
How might US importers be avoiding tariffs? The de minimis exemption for imports valued at less than $800 is often flagged as the main loophole. But China’s Customs says the total value of those exports to the US was $18 billion in 2023.
To see where that error lies, I mapped the US and Chinese data to the US’s Section 301 tariffs by HS code. Both countries reported a rise in US demand for Chinese goods not subject to the tariffs. But the US recorded fewer imports of the tariffed goods, while China said its exports were flat.
December 5, 2024 at 2:28 PM
To see where that error lies, I mapped the US and Chinese data to the US’s Section 301 tariffs by HS code. Both countries reported a rise in US demand for Chinese goods not subject to the tariffs. But the US recorded fewer imports of the tariffed goods, while China said its exports were flat.
Bilateral trade data are tricky buggers, and China's VAT rebate rate also increased during the trade war. But China’s exports to the rest of the world (ex-US) still match pretty closely with what the rest of the world reports receiving from China. The error term seems to be on the US side.
December 5, 2024 at 2:26 PM
Bilateral trade data are tricky buggers, and China's VAT rebate rate also increased during the trade war. But China’s exports to the rest of the world (ex-US) still match pretty closely with what the rest of the world reports receiving from China. The error term seems to be on the US side.
Before 2018, the US recorded imports from China worth 15-20% more than China reported sending to the US. Starting in 2018, the gap reversed.
December 5, 2024 at 2:24 PM
Before 2018, the US recorded imports from China worth 15-20% more than China reported sending to the US. Starting in 2018, the gap reversed.
The flow of funds data can explain this, too. China’s gross household savings rate has held fairly steady as a percent of GDP. But household investment used to absorb 2/3 of the savings, and now it’s soaking less than 1/3.
November 29, 2024 at 12:47 PM
The flow of funds data can explain this, too. China’s gross household savings rate has held fairly steady as a percent of GDP. But household investment used to absorb 2/3 of the savings, and now it’s soaking less than 1/3.
But that’s not what’s happening in China. Corporate deleveraging kicked off Japan’s deflationary slump. Instead, in China, the problem has been a rise in the net financial surplus of households, as seen in the flow of funds here.
November 29, 2024 at 12:47 PM
But that’s not what’s happening in China. Corporate deleveraging kicked off Japan’s deflationary slump. Instead, in China, the problem has been a rise in the net financial surplus of households, as seen in the flow of funds here.
This was the classic “balance-sheet recession,” as explained by Richard Koo, which we can see in the net financial balances of the main economic sectors. When companies starting paying back debt, there was nobody left to absorb household financial savings.
November 29, 2024 at 12:46 PM
This was the classic “balance-sheet recession,” as explained by Richard Koo, which we can see in the net financial balances of the main economic sectors. When companies starting paying back debt, there was nobody left to absorb household financial savings.
China’s 30-year government bond yield has fallen below that of Japan. This, naturally, has sparked another round of stories about the “Japanification” of China. These stories are mostly nonsense though. Let me explain.
November 29, 2024 at 12:45 PM
China’s 30-year government bond yield has fallen below that of Japan. This, naturally, has sparked another round of stories about the “Japanification” of China. These stories are mostly nonsense though. Let me explain.
The PBoC's FX policy is a big question for the forthcoming round of the US-China trade war. Will it allow CNY weakness like in 2018 (protect exports)? Or prop up the CNY like it has more recently (protect financial stability)? Today's fixing rate suggests was in line with the latter.
November 13, 2024 at 9:54 AM
The PBoC's FX policy is a big question for the forthcoming round of the US-China trade war. Will it allow CNY weakness like in 2018 (protect exports)? Or prop up the CNY like it has more recently (protect financial stability)? Today's fixing rate suggests was in line with the latter.