This is from Scott Sumner:
I’d like to point out that there are many commonalities between China and 5 other East Asian economies; Japan, Taiwan, HK, Singapore and South Korea. One of those similarities is that they all have huge stocks of foreign reserves. In per capita terms China’s CA surplus is by far the smallest of any of the six East Asian powerhouse exporters. The most recent data I could find in The Economist shows China’s CA surplus as $284.4 billion whereas the other five economies combine for a $286.7 billion surplus. So if Krugman is right, those five economies actually are doing more damage to the world economy than China, which has 7 times the population and a modestly larger (PPP) GDP than other other five economies.
The entire post is worth reading. By the way, Matt Yglesias also offers comment.
Good point. My current explanation for Krugman’s wild outburst in demanding punitive tariffs on China over its forex policy is that he may be playing “bad cop” to the Obama adminsitration, who have argued for China to appreciate the yuan/rmb more rapidly than they have been in recent years. Of course, this open argument by Obama may be more a matter of domestic politics, showing that he is “doing something about jobs” and whatever role China has had in the loss of same in the US.
Is a per-capita measure really the best measure? Assuming you believe Krugman’s position to be correct, the damage is a function of size of reserves, not size of reserves controlling for population size.
Federal taxes are more painful than state taxes, though if I were to control for the relative population sizes, I’m guessing I’m taxed less by the federal government (again, on a per-capita basis) than I am by the state. That doesn’t mean the federal taxes feel less onerous.
With Sumner’s numerous irrational comments about China (cheerleading for its ascent to unparalleled and unstoppable hegemon simply so that he can be proven right and lauded for recognizing it early, and predicting the Chinese economy would overtake America’s as early as this year, just for starters), how can he possibly be viewed as a rational observer here? It may be an interesting article with facts that can be gleaned easily from the web, but why, exactly, is his post recommended reading?
This is a comment by ‘a’ from Beat The Press, it is worth considering:
From the Money Illusion:
“As you may recall, back around 2005 a number of Congressman were insisting that the Chinese revalue the yuan by 27%. In fact, they did revalue their currency by 22% over the next 3 years. But now we are told they need to do another 20% to 40%. And people wonder why the Chinese are so frustrated with the West. Does this game ring any bells? I seem to recall that back around 1970 the US government kept insisting that the Japanese trade surplus was caused by an undervalued yen. Then the yen was revalued 20%, but the “problem† continued. Then another 20%, then another 20%, then another 20%, then another 20%. The yen has now gone from 350 to 90 to the dollar. My math isn’t very good, but that sure seems like a lot of 20% revaluations. And the Japanese still run a current account surplus that is more than half the size of China’s surplus, despite having less than 1/10th China’s population. I think it’s fair to say that international economists have become increasingly skeptical of the notion that simply by manipulating nominal exchange rates you can eliminate current account imbalances that represent deep-seated disparities of saving and investing. But I guess hope springs eternal. Maybe this time it will finally work.”
China fact of the day:
http://www.elpais.com/articulo/sociedad/Primer/juicio/trasplante/ilegal/organos/China/elpepusoc/20100317elpepusoc_7/Tes
i love how people who produce more than they consume and lend you the surplus are somehow damaging you.
Hi, I’d like to introduce you to the current (or recently current) recession. Go take some time, explore the place and get back to me if you really want to conclude it wasn’t damaging.
“predicting the Chinese economy would overtake America’s as early as this year, just for starters”
Go back and reread what he wrote.
“So, just because someone says something wrong, stupid, or questionable on some occasions does”
Sumner doesn’t fit into any of these categories. He is one of the most careful economists commenting today.
how people who produce more than they consume and lend you the surplus are somehow damaging you
Go take some time, explore the place and get back to me if you really want to conclude it wasn’t damaging.
I would like to share that HK is part of China, and Taiwan is goining to be a part of China very soon. Therefore, i think the calculation shou be redo it. Although the currenies and Economy between Hong Kong, Taiwan, China seems are different. In the future, or later future, China must take overcontrol them. If China does it, I think American government will be much harder pressuring China. Therefore, I think it should be pressuring as soon as possible.
ray i love — also note that the 22% rise in the yuan generated a big increase of 3% in the US index of the price of imports from China. Of course this is just another arrow in your case that big currency changes have extremely little impact on large economies.
The appreciation by China has mostly been offeset by their improved productivity. China undermines the ability of the Fed to affect the economy.
I have no idea about the background, but safe nuclear energy is about the biggest no-brainer I can think of, so on that score alone they’d have my vote. Actually, if a party said to me “give me 4 years and ALL we will do is clear the way for safe nuclear reactors” they’d have my vote. Übersetzungsdienst Übersetzung Englisch Deutsch Übersetzung Deutsch Englisch
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