Brad Setser, CFR fellow, discusses China's export surge's impact with James M. Lindsay. They explore US job losses, China's industrial policies, Xi's economic philosophy, global trade dynamics, and policy coordination challenges among major players.
The surge in Chinese exports post WTO entry caused lasting job losses in US manufacturing.
China's strategic investments in manufacturing have led to a global trade response.
Deep dives
Historical Examples of Significant Political Events
Throughout history, there have been notable incidents like Huey Long's holiday invention in 1933 to prevent a bank collapse, JFK's narrow escape from a bomb attack in 1960, and the uproar over President Obama wearing a tan suit in 2014. These forgotten stories provide insights into our current political climate.
The First China Shock and Its Impact on US Manufacturing
The entry of China into the WTO in 2002 led to a surge in Chinese exports, particularly in manufacturing. This surge significantly affected US manufacturing employment, causing a decline in jobs in regions reliant on industries competing with Chinese goods. The effects of increased competition from China were long-lasting, resulting in job losses and economic challenges for many communities.
The Second China Shock: Recent Surge in Chinese Exports
China's recent growth in manufacturing exports, constituting nearly two percentage points of world GDP, signifies the second China shock. The manufacturing surplus, especially in sectors like semiconductor and electric vehicles, reflects China's strategic investments and subsidies in specific industries. This surge in exports has raised concerns globally, leading to trade responses in various regions.
Global Reactions to the Surge in Chinese Exports
The increase in Chinese exports has elicited mixed reactions worldwide. While some regions welcome affordable Chinese goods, others, like Europe, express concerns about the dominance of Chinese products in specific markets. Measures like countervailing duties are being considered to address the competitive challenges posed by China's surging exports. Countries are grappling with balancing the benefits of cheap goods with the need to protect domestic industries.
Brad Setser, the Whitney Shepardson senior fellow at CFR, sits down with James M. Lindsay to discuss the causes and consequences of China's export surge.