1/7 Very good FT article on how China achieved its dominance in manufacturing, along with the cost both to China and to its trading partners: "Using a unique combination of industrial policy, subsidies and other state-support coupled with private sector... https://www.ft.com/content/724...
2/7 entrepreneurialism and ferocious competition in China’s vast market, the country was able to sharply increase the share of Chinese producers domestically and internationally in many of the sectors, in some cases matching or exceeding foreign competitors’ technology."
3/7 Because the subsidies and other state support mostly came in the form of direct and indirect transfers from the household sector, the huge expansion in China's manufacturing sector was also the flip side of the huge contraction in the consumption share of GDP.
4/7 This matters, because the result—China's share of global manufacturing grew much more quickly than its share of global GDP, while its share of consumption grew much more slowly—had to be mirrored in the economies of its trade partners.
5/7 They collective saw their share of global manufacturing grow more slowly than their share of global GDP, while their share of consumption grew more quickly. This outcome was necessary as long as China controlled of its external account and some of its trade partners didn't.
6/7 This article reinforces the idea that not only did Chinese industrial policy massively restructure its own economy but also, through its impact on its external account and that of its trade partners, it effectively restructured the economies of its trade partners.
7/7 In a hyperglobalized world, in other words, countries that maintain open trade and capital accounts must absorb the reverse industrial policies of those implemented in countries that do control their trade and capital accounts. https://carnegieendowment.org/...