lundi 12 janvier 2015
The Global Chessboard Reconsidered
Posted on 10:52 by nice news
The two main knocks against the US from global investors have been largely addressed. The US budget deficit has been reduced from 10% of GDP to less than 3%. The current account deficit has been halved. Nevertheless, many observers, including some Americans themselves still think that the US is in an irreversible decline that affects all great powers.
China is often touted as the US successor. Some media reports claim that when adjusted for purchasing power parity, China's economy is poised to surpass the size of the US as early as this year. This is an improper use of purchasing power parity (PPP).
In the world of athletics, the equivalent to PPP is evaluating in terms of pound-for-pound. A man who weighs 80 kilos and can lift 160 kilos is said to be stronger pound-for-pound that a man who weighs 120 kilos and can lift 200 kilos. The smaller man cannot lift more than the larger man. He is not stronger in that sense. He is stronger only in a particular and narrow sense. It seems that only a few observers and journalists say that China is bigger than the US because of PPP. Chinese officials do not tread down this path.
China is often portrayed as a revisionist power in the sense that it is challenging the status quo. However, there are some important exceptions. Perhaps unnoticed by many distracted by the recent holiday, but not only did China lose a case before the World Trade Organization, but it announced intentions on complying with the decision.
The US had filed a case challenging China's export quotas of rare earths. The case was later joined by Europe and Japan. China had argued that is quotas were necessary on environmental grounds, but the WTO recognized that the restrictions were really an attempt to boost its domestic electronic manufacturers. There is some evidence that this worked as some foreign electronics manufacturers did relocate to China. Moreover, some
China is often touted as the US successor. Some media reports claim that when adjusted for purchasing power parity, China's economy is poised to surpass the size of the US as early as this year. This is an improper use of purchasing power parity (PPP).
In the world of athletics, the equivalent to PPP is evaluating in terms of pound-for-pound. A man who weighs 80 kilos and can lift 160 kilos is said to be stronger pound-for-pound that a man who weighs 120 kilos and can lift 200 kilos. The smaller man cannot lift more than the larger man. He is not stronger in that sense. He is stronger only in a particular and narrow sense. It seems that only a few observers and journalists say that China is bigger than the US because of PPP. Chinese officials do not tread down this path.
China is often portrayed as a revisionist power in the sense that it is challenging the status quo. However, there are some important exceptions. Perhaps unnoticed by many distracted by the recent holiday, but not only did China lose a case before the World Trade Organization, but it announced intentions on complying with the decision.
The US had filed a case challenging China's export quotas of rare earths. The case was later joined by Europe and Japan. China had argued that is quotas were necessary on environmental grounds, but the WTO recognized that the restrictions were really an attempt to boost its domestic electronic manufacturers. There is some evidence that this worked as some foreign electronics manufacturers did relocate to China. Moreover, some
The Global Chessboard Reconsidered
Categories: The Global Chessboard Reconsidered
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