2/2.It makes no sense, for example, for Washington to put high tariffs on Canada and India, two deficit economies that, rather than contribute to global imbalances, actually help resolve them. The US instead should be working with them to fix the global trading system.

1/2.Using trade policy for political purposes is a very bad idea. Instead of resolving the economic problems, including deindustrialization, that large, persistent trade imbalances create for the US economy, it can often make them worse. via @ft.

Yicai: "China’s top 100 property developers saw their sales shrink more than 13 percent in the first seven months of the year, according to the China Index Academy.".

5/5.For all the hype about all Beijing is doing to boost the role of consumption in driving growth, in other words, it's pretty clear that this hasn't happened yet. Chinese growth in recent year has really been about the growing role of the trade surplus in driving growth.

4/5.In the pre-COVID years, consumption typically accounted for around 60% of Chinese GDP growth. Last year it accounted for 45% of GDP growth, and so far this year it accounted for 52% of GDP growth. This compares with an average contribution globally of around 75%.

3/5.The contributions of final consumption, net exports and gross capital formation to GDP growth in H1 were 52%, 31% and 17% respectively, which shows how important net exports have been to Chinese growth, and how low the contribution of consumption.

2/5.In fact 68.8% is an extremely low number, and well below its already-low average since 2020 in which, according to another Xinhua article on the same day, domestic demand contributed 86.4%.

1/5.Xinhua: "The economic performance in the first half of the year demonstrated strong resilience, with domestic demand contributing 68.8% to GDP growth and continuing to serve as a driving force for expansion, according to NDRC official Zhou Chen.".

2/2."Previously, automakers were required to produce one locally assembled EV for each subsidized import in 2024, rising to a 1.5-to-1 ratio in 2025. The exports credit (each EV exported from Thailand will count as 1.5 units toward the automaker’s local production commitments).

1/2.Caixin: "Thailand has adjusted its electric vehicle subsidy program to encourage carmakers to export, as its domestic market is suffering from overcapacity and cutthroat price competition fueled by a surge of Chinese investment.

Yicai: "As of last December, China had nearly 2,180 government-guided funds, with a target size of about CNY12.84 trillion and a subscribed capital of around CNY7.70 trillion.". This is equal to 5.7% and 9.5%, respectively, of that year's GDP.

8/8.The irony is that "vicious" price declines have probably been the most effective way of boosting the household (and consumption) share of GDP, at the expense of businesses and, eventually, local governments, in which case "resolving" one problem may just make the other worse.

7/8.The point is that it will only be when the bulk of credit creation is directed to boosting consumption, or when Beijing is willing to tolerate much more sustainable GDP growth rates, that low consumption or excess price competition will begin to be resolved.

6/8.The fact that the debt is growing so much more quickly suggests that Beijing's solution to overinvestment in one sector of the economy has always been to shift the direction of lending in ways that create overinvestment in another sector of the economy.

5/8.The proof is in the pudding. As debt pours into various forms of investment, if this investment were economically justified, China's GDP would grow at least as quickly as the growth in the debt used to fund investment.

4/8.If Beijing cuts capacity in industries suffering from overcapacity, how can China achieve its GDP growth target except by forcing local governments to create additional excess capacity in infrastructure, or by shifting overcapacity to other manufacturing sectors?.

3/8.Each is the structural consequence of a growth model in which excessively high GDP growth targets must be met, with the main driver of this growth being transfers from the household sector to subsidize investment and manufacturing.

2/8.Like the promise to boost consumption, the promise to cut capacity in industries suffering from overcapacity is based on a failure to understand the causes of the problem. Neither weak domestic consumption nor excess capacity is caused by administrative oversight.

1/8.Reuters: "China's top leaders have pledged to support an economy that is facing various risks, by managing what is viewed as disorderly competition and beefing up capacity cuts in key industries in the second half of the year.".

RT @Brad_Setser: Hope others find this chart as helpful as I did -- the yuan has spent very little time on the strong side of the fix (the….