Trade War

Share this post

Trade War

dexter.substack.com

Discover more from Trade War

The latest, most vital news on China's economy and its business and political relationship with the world
Continue reading
Sign in

Trade War

Newsletter 15 - April 13, 2020

Dexter Roberts
Apr 13, 2020
Share this post

Trade War

dexter.substack.com
Share

Even as China’s reported COVID-19 infections and death numbers continue to reach new lows and its government touts its success in tamping down the virus and restarting its businesses, there are serious problems emerging in China right now. Hundreds of thousands of companies have been shut and millions of people are out of work in the aftermath of the coronavirus-induced shutdown of its economy.

Countries and companies that have been hoping China would be an engine for global growth, even as the rest of the world reels, are likely to be disappointed, as its economy shows real signs of weakness. This argument is made by yours truly in my new piece in Foreign Affairs.

China’s economy … on a course to stall

“Will China be a lone bright spot as other major economies struggle with the virus in the months ahead? And when the crisis finally ends, will China resume its role as the major driver of global growth, boosting the fortunes of multinationals once again?” asks Dexter Roberts in Don’t Count on China to Lift the Global Economy: A Vast Rural Underclass Is Dragging Down Growth, in Foreign Affairs on April 8.

“After decades of annual double-digit growth, China’s economy—and in particular, its once booming consumption sector—is on a course to stall even as it recovers from its recent coronavirus-induced collapse.” Read more to find out why I make this prediction.

Twitter avatar for @ForeignAffairs
Foreign Affairs @ForeignAffairs
As the number of new COVID-19 cases falls dramatically, cities across China are returning to something close to normal. @dtiffroberts argues that, far from resuming its high level of growth, China’s economy is in danger of stalling:
trib.alDon’t Count on China to Lift the Global EconomyChina’s vast rural underclass is dragging down growth.
12:45 PM ∙ Apr 9, 2020
12Likes8Retweets

Doomed jobs and small businesses

In China, “economists widely believe the shutdown has doomed untold numbers of jobs and small businesses,” writes Keith Bradsher for the New York Times on April 9.

Twitter avatar for @JChengWSJ
Jonathan Cheng @JChengWSJ
In China, "economists widely believe the shutdown has doomed untold numbers of jobs and small businesses." @KeithBradsher
nyti.msWhile the World Spends on Coronavirus Bailouts, China Holds BackBeijing has tried to protect jobs and spur lending, but it may have to do more to get its huge, damaged and incredibly complex economy going again.
5:31 AM ∙ Apr 10, 2020
28Likes25Retweets

247,000 Chinese companies declare bankruptcy

Putting some (alarming) numbers to it: one business writer says that 247,000 Chinese companies declared bankruptcy in just the first two months.

Twitter avatar for @supchinanews
SupChina @supchinanews
While the full economic impact of the outbreak on China’s economy is still uncertain, one business writer detailed in a recent report that 247,000 Chinese companies declared bankruptcy in the first two months of 2020:
supchina.comMore than 240,000 Chinese companies declare bankruptcy in the first two months of 2020 - SupChinaWhile the full economic impact of the coronavirus outbreak on China’s economy is still uncertain, popular business writer Wu Xiaobo detailed in a recent report that about 247,000 Chinese companies declared bankruptcy in the first two months of 2020.
4:26 AM ∙ Apr 10, 2020
3Likes4Retweets

70-80 million people lost jobs or not working

And “about 70-80 million people in services, manufacturing and construction either had lost jobs or weren’t working at the end of March because of shutdowns to contain coronavirus,” reports Bloomberg News on April 12, citing UBS economists.

“The coronavirus pandemic is expected to cause millions more people in China to lose their jobs, leaving many of them stranded without a safety net, unable to access state unemployment benefits, economists say,” reports Reuters, also on April 12.

To state the obvious: large numbers of bankruptcies and layoffs are sure to devastate China’s domestic economy even as its export sector is slammed by the collapse in GDP ahead for its trading partners, including the U.S.

In the U.S.: “a painful yoke”

As the U.S. economy goes into its own swoon with its Covid-19 lockdown, calls are growing on the Trump administration to lift its tariffs on imports from China.

“Getting rid of these tariffs will remove a painful yoke that had depressed American manufacturing and farming long before the coronavirus hit our shores,” writes Mary Lovely, a non-resident senior fellow at the Peterson Institute. “What's more, tariff rollbacks signal a desire to reduce mounting US-China trade tensions, offering a much-needed model of global cooperation at a time of shared crisis.”

Twitter avatar for @PIIE
Peterson Institute @PIIE
Tariffs on imports from China never made sense for America's factories and farmers. It's time for President Trump to lift them, so these funds could be directed to assisting American workers and meeting new health and hygiene needs. By @melovely_max:
cnn.comOpinion: What Trump can do now to rescue America’s factories and farmsGetting rid of these tariffs will remove a painful yoke that had depressed American manufacturing and farming long before the coronavirus hit our shores, writes Mary E. Lovely, a professor of economics at Syracuse University.
7:34 PM ∙ Apr 8, 2020
20Likes17Retweets

Let’s just spend more on bailouts

Trump, however, instead seems focused on shoveling more taxpayer money towards bailing out industries including U.S. agriculture; after instructing Agricultural Secretary Sonny Perdue to provide $16 billion more in relief to farmers on April 10, the total over the last three years has reached $44 billion, tweets Bloomberg New’s Shawn Donnan.

Twitter avatar for @sdonnan
Shawn Donnan @sdonnan
Taking the total in aid to farmers over past three years to $44 billion.
Twitter avatar for @arappeport
Alan Rappeport @arappeport
Trump says he has instructed Ag Sec. Sonny Perdue to provide an extra $16bn of relief to farmers.
6:06 PM ∙ Apr 10, 2020
23Likes20Retweets

”… We will always be there for our Great Farmers, Cattlemen, Ranchers, and Producers!” Trump wrote in a Tweet on April 9 reports Ag news and information source The Fencepost. “I have been helping our farmers for a couple of years because they were targeted,” Trump said at a press briefing a day later. “I think they are very grateful for what we have done.”

World Trade: “These numbers are ugly”

And of course it’s not just China and the U.S. hurting. The World Trade Organization announced in its latest forecast that global trade is expected to fall between 13 percent and 32 percent in 2020, as a result of the pandemic.

"The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself,” said WTO Director-General Roberto Azevêdo on April 8. “These numbers are ugly – there is no getting around that. But a rapid, vigorous rebound is possible.“

Twitter avatar for @wto
WTO @wto
BREAKING: World trade is expected to fall by between 13% and 32% in 2020 due to the #COVID19 pandemic according to the new #WTOForecast. Full report: bit.ly/39Sd3eV Follow us next on our virtual press conference, happening soon.
Image
1:05 PM ∙ Apr 8, 2020
281Likes381Retweets

Must-read new publication: The Wire China

There’s a new digital weekly publication focused on China that’s sure to be a must-read. It is The Wire China, launched April 12 by former New York Times China reporter and two-time Pulitzer winner David Barboza. If you aren’t subscribing yet, you should do so now.

Twitter avatar for @thewirechina
The Wire China @thewirechina
Our new website is now live, check it out at thewirechina.com!
Image
12:38 AM ∙ Apr 13, 2020
3Likes5Retweets

I’m also deeply honored that The Wire China has chosen my new book as their top choice as ‘Essential New Reading on China’. Describing it as “skillfully wrought”, books editor Alec Ash calls The Myth of Chinese Capitalism, “A splash of cold water for all the China bulls out there.”

More book reviews for “The Myth of Chinese Capitalism”

  • “The book is in some ways a disquieting read — given how much is stake for China and for the rest of the world, and the many perils that lie ahead — but it is a compelling story from which we cannot afford to look away,” writes Venky Vembu in The Hindu BusinessLine.

  • “Roberts said the myth that “China’s development path and authoritarian system will become a model for countries around the world” is unlikely to prove true,” writes Chriss Street in the Epoch Times. “What’s more likely to happen is a seriously slow, shattering of expectations of millions of Chinese, possibly leading to social unrest.”

Video

“Policies such as the “hukou” system have relegated China’s migrant workers to second-class citizens. In “The Myth of Chinese Capitalism,” @dtiffroberts writes that this large population will likely never be lifted into China’s middle class,” says ChinaFile, in a Tweet introducing their video interview on my book.

Twitter avatar for @ChinaFile
ChinaFile @ChinaFile
Policies such as the “hukou” system have relegated China’s migrant workers to second-class citizens. In “The Myth of Chinese Capitalism,” @dtiffroberts writes that this large population will likely never be lifted into China’s middle class. FULL VIDEO: bit.ly/3eaSsFS
Image
6:58 PM ∙ Apr 9, 2020
9Likes16Retweets

..

Bonus for Chinese readers (traditional characters)

  • On the challenges facing foreign journalists in China - I’m interviewed for this interesting piece by Taiwan's The Reporter (in Chinese) in the aftermath of the expulsions of NYT, Wash Post, and WSJ reporters.

Webcast: The Myth Of Chinese Capitalism

  • And if you are interested in hearing me talk about China’s economy, the trade war, as well as my new book, please sign up for this webcast on Thursday April 16, 4:00 to 5:30 pm PST at the USC U.S.-China Institute, held via Zoom.

Share this post

Trade War

dexter.substack.com
Share
Comments
Top
New
Community

No posts

Ready for more?

© 2023 Dexter Roberts
Privacy ∙ Terms ∙ Collection notice
Start WritingGet the app
Substack is the home for great writing