It isn't easy. The big goods "deficit" regions in the global economy that absorb in aggregate China's surplus are ...
The US, the UK and India.
None is keen to be part of China's shere.
1/
The US, the UK and India.
None is keen to be part of China's shere.
1/
There will be a lot of analysis tomorrow highlighting the fall in the US bilateral deficit with China.
But the global story is a bit different. There is one big surplus (China) and one big deficit (the US). Without that deficit all surplus countries would have to adjust
2/
But the global story is a bit different. There is one big surplus (China) and one big deficit (the US). Without that deficit all surplus countries would have to adjust
2/
China's immediate neighbors all run surpluses, with the partial exception of Japan (depending on the price of oil and LNG) and Japan's isn't keen on joining a Chinese led sphere.
3/
3/
If China looks south, well, the situation doesn't change -- southeast Asian countries run goods surpluses too.
East Asia as a whole needs an outlet for its surplus
4/
East Asia as a whole needs an outlet for its surplus
4/
The deficits in the emerging world are found basically in India, which isn't keen on its existing dependence on Chinese manufactures, and Turkey, which needs to bring its current account deficit down ...
5/
5/
That's the curse of being big. China cannot run a $800b or more goods surplus unless someone globally runs an equally big deficit ...
Any candidates?
6/6
Any candidates?
6/6
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