Brad Setser has been actively scrutinizing China’s foreign accounts. For purposes of thinking about how policy makers try to capture aggregate demand across borders, the balance of trade is important.
Source: Set/CFR.
This means that as of Q2, China’s trade surplus could be 50% larger than the BoP figures indicate. Be aware that focusing on dollar targets can be misleading if export prices fall. Import prices for goods from China decreased by about 4% from April 2022 (to July 2024). This doesn’t seem like a big drop, but the core PPI rose by about 6.4% over the same period.
So, expect more pressure on global inequality…
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