Macro Hive Conversations With Bilal Hafeez Ep. 330: Paul Cavey on US-China Trade War, Japan Politics and Taiwan Imbalances
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Oct 16, 2025 Paul Cavey, a seasoned China economist with 25 years of experience and founder of East Asia Econ, shares his insights on pressing regional issues. He dives into the recent escalations in the US-China trade war, evaluating China’s strategic leverage. Discussing the potential for Japanification in China, he contrasts it with Japan's past. Paul highlights China's two-speed economy, the nuanced implications of its bad debts, and the outlook for Japan's currency. He also warns about Taiwan's dependence on semiconductors and compares South Korea's risks to Japan's.
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Early China Teaching Trip Shaped Career
- Paul Cavey described going to teach in Henan in 1994 with no Chinese and little preparation, which exposed him to China's rapid 1990s changes.
- That year in inland China shaped his career path into China-focused economics and finance.
China Thinks It Has The Upper Hand
- Cavey argues China currently believes it holds the upper hand in US negotiations and is using export restrictions to extract concessions.
- He warns this could backfire by alarming other countries and harming China's own economy if overplayed.
Preparedness Masks Long-Term Export Risk
- China is better prepared for a trade confrontation today than during the 2017-18 trade war.
- Yet sustained export pressures will ultimately damage China's growth despite current leeway.
