China’s pure exporter subsidies: Protectionism by exporting

Fabrice Defever, Alejandro Riaño 04 January 2013

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On 17 September last year, the US requested consultations with China concerning a wide range of export-contingent measures – grants, tax preferences and interest-rate subsidies, totalling at least $1 billion – in apparent violation of the WTO’s Agreement on Subsidies and Countervailing Measures, China’s accession protocol and article XVI of the GATT. The EU joined the consultations shortly after on 28 September.

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Topics:  International trade

Tags:  China, WTO, trade, welfare

Value-added exchange rates

Rudolfs Bems, Robert Johnson 06 December 2012

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Real effective exchange rates (REERs) are widely used to gauge competitiveness. Yet conventional REERs, based on gross trade flows and consumer price indexes (CPIs), are not well suited to that role when imports are used to produce exports – i.e., with vertical specialisation in trade.

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Topics:  Competition policy Global economy International trade

Tags:  competitiveness, Germany, global imbalances, China, globalisation, trade, supply chains, iPhone

The renminbi bloc is here: Asia down, the rest of the world to go?

Arvind Subramanian, Martin Kessler 27 October 2012

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The staggering economic rise of China in the last three decades leads to the question of the potential internationalisation of its currency, the renminbi (RMB). Internationalisation has different dimensions. An international currency is widely used in financial and trade transactions, and crucially it is used as a store of value. Some, like Eichengreen (2011) and Frankel (2011) see a potential global role for the RMB, provided important ancillary reforms to the domestic financial system and to the financial account first take place.

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Topics:  Global economy International trade

Tags:  China, renminbi, global currency

Global Rebalancing 2.0

Linda Lim, Ronald U Mendoza 24 September 2012

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The discussion on global rebalancing is at a crossroads, and much of what will shape policy options moving forward will have to be taken up in roundtables that include more countries than the two usual suspects, China and the US.

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Topics:  Global economy

Tags:  US, global imbalances, China

Why do Chinese households save so much?

Raman Ahmed, Heleen Mees 28 August 2012

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China’s monumental savings rate is a popular topic of for policy discussion.1  It has been blamed for the global financial crisis, currency wars (Portes 2010), and the ensuing Great Recession (Mees 2012). But what explains the high savings rate?

The growing body of work on this question has put forward many answers, ranging from the one-child policy to the role of marriage and the weak welfare state (see for example Horioka and Wan 2007, Wei and Zhang 2009, Chamon and Prasad 2010, Jin et al. 2010 and Ma and Yi 2010).

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Topics:  Global economy

Tags:  global imbalances, China, savings rate

Rising regional inequality in China: Fact or artefact?

John Gibson, Chao Li 09 August 2012

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A growing literature uses sub-national data from China to measure trends in regional inequality and to test models of economic growth and convergence. Most published studies use provincial-level data although finer spatial scales, such as prefectures (Roberts et al. 2012) and counties (Banerjee et al. 2012), are starting to be used. But regardless of scale, most authors ignore that China’s local GDP per capita data cannot be interpreted in the way that economists would expect, of measuring value-added or output per resident.

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Topics:  Development Poverty and income inequality

Tags:  China, Inequality, Poverty

China’s strong domestic demand has reduced its trade surplus

Françoise Lemoine, Deniz Ünal 19 July 2012

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Between 2005 and 2007 China’s accumulated huge trade surpluses and played a major part in the rise of global imbalances. The US and China have repeatedly come in conflict over the imbalance in bilateral trade.

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Topics:  Global economy International trade

Tags:  global imbalances, China, current account

Deep integration in free trade agreements in China and India

Ganeshan Wignaraja 04 July 2012

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Since the 2000s, creeping protectionism and the stalled WTO Doha Round trade talks have prompted China and India to pursue a variety of bilateral and regional free trade agreements (FTAs). Before 2000, the sole FTA involving China and India was the Asia-Pacific Trade Agreement. By February 2012, the Asian giants were among the region’s leaders in trade agreements with 12 FTAs in effect in China and 13 in India. These figures are likely to rise as both giants are presently negotiating increasingly ambitious FTAs.

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Topics:  International trade

Tags:  China, India, free trade agreements

A region-wide free trade agreement in Asia

Pradumna B. Rana 25 June 2012

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The Trilateral Summit last month announced that negotiations would begin later this year on a China/Japan/South Korea FTA or the C/J/K FTA (Joint Declaration 2012). This suggests that two pathways to a region-wide FTA are starting to evolve in Asia. One is the ASEAN-led East Asian FTA and the Comprehensive Economic Partnership for East Asia (CEPEA) comprising the ASEAN+6 including India. The alternative pathway is the US-led Trans-Pacific Partnership, which is already under negotiation.

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Topics:  International trade

Tags:  China, Japan, free trade agreement, ASEAN, South Korea

International rules for capital controls

John Williamson, Olivier Jeanne, Arvind Subramanian 11 June 2012

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Although economists generally agree that countries can derive substantial gains from international economic integration, the extent to which they should open themselves to international capital flows remains a controversial issue. There is still, 20 years after the rise of emerging markets finance, a wide diversity of approaches to capital account policies. Some emerging market economies maintain a completely open capital account. Others, most notably Brazil, have experimented more actively with market-based prudential capital controls since the crisis.

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Topics:  Global governance International trade

Tags:  China, capital controls, Brazil

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