China

China’s industrial policy is not well understood. The fiscal price tag, highlighted in the latest IMF report that Alphaville covered on Tuesday, is eye-poppingly large at around 4.4 per cent of GDP. And the Fund reckons it costs the country a further 2 per cent points of GDP each year in lost productivity. The impact of Chinese industrial policy on the world economy is so large that Donald Trump’s tariffs are, by comparison, a minor nuisance. America’s roughly 8 per cent share of world imports is less than half of China’s share of world exports. And the industrial policy-export nexus is not only aggravating China’s own domestic systemic problems, but becoming increasingly problematic for a growing number of countries. © Brad Setser/Council for Foreign RelationsThe economist Barr...

Competition in China is often far more cutthroat than in the United States. America has a handful of carmakers; China has more than 100 electric vehicle makers struggling for market share. China has so many solar panel makers that they produce 50 percent more than global demand. About 100 Chinese lithium battery producers churn out 25 percent more batteries than anyone wants to buy. This forces Chinese manufacturers to innovate, but it also leads to price wars, losses and bad debt — and that’s becoming a problem. China is heading toward deflation, the often catastrophic downward spiral of prices that sank Japan in the 1990s. Its leaders are blaming a culprit they call “involution” (“neijuan” in Mandarin), a term that has come to mean reckless domestic competition. They want to r...

Russian leader calls for reform of World Bank, International Monetary Fund ahead of talks with China’s Xi Jinping. Russian President Vladimir Putin has denounced “discriminatory” Western sanctions abetted by an unfair financial system as his country’s economy teeters on the brink of recession, wounded by trade restrictions and the cost of his war in Ukraine. Putin made the comments in an interview with China’s official Xinhua news agency published on Saturday, on the eve of his trip to hold talks with Chinese President Xi Jinping, and attend a massive parade commemorating the end of World War II after Japan’s formal surrender. “It is essential to end the use of finance as an instrument of neo-colonialism, which runs counter to the interests of the Global Majority,” Putin said...