Syndicate content

Add new comment

Professor Lieber, thanks for your comments. What I tried to do--but I am not sure it worked--was to write what has happened so far and to make the point that, at least in my view, the question is not whether China's exports and imports will grow--they will--but what will on balance happen to the current account. I argue that this will depend on China's policies in the coming years. You think I am too optimistic. I set out not to be. I tried to write that only with a set of rebalancing oriented policies will China's current account surplus remain contained. But that does not seem to have come over well. Thanks for pointing that out. You write that the bilateral US-China (im)balance is "the centerpiece of China's surplus. I actually do not agree. Bilateral (im)balances don't necessarily mean much, especially not if they are affected by multinational production networks. Also, the US nowadays buys only 1/6th to 1/5th of China's exports. Macroeconomically it is the total (im)balances that matters. I think China and the US both need to look at their external (im)balance with the rest of the world and to ensure these remain contained. We seem to agree that China will only see this happen if substantial policy adjustments are made. Like you I sense this is not easy, including because of political and political economy reasons. By the way, similarly, political and political economy reasons also may end up holding up progress with needed reforms in the US.