Source: C-SPAN
After seeing growth slow during the Great Recession, China has revived its economy through a very effective stimulus program, explains Pieter Bottelier. The rise in unemployment was quickly reversed, and real wages are now rising rapidly across China. China is not without problems, however. Inflation, particularly in real estate, is rising and overheating is becoming a serious concern.
Bottelier notes that the flare-up between U.S. and Chinese leaders over the value of China’s currency is problematic. Seeking an “adversarial relationship with China on trade is unwarranted and dangerous,” he warns. Tariffs on Chinese goods would make imports from China more expensive and create almost no jobs in the United States, since importers would simply look for new sources of goods rather than moving production to the United States. In short, Bottelier says, “by punishing China, there is very little that the United States can do without punishing itself.”
Rather than blame Beijing, the United States should see China as an opportunity. China and other large emerging markets could become extremely important sources for consumption of U.S. goods. This process will take time, however, as consumption is currently “too low in China, but this only indicates that there is an enormous potential for growth,” concludes Bottelier.