70Received 10.07.2024. Revised 14.08.2024. Accepted 02.09.2024.
Acknowledgments. This article was prepared with the support of a grant from the Ministry of Science and Higher Education of the Russian Federation for major scientific projects in priority areas of scientific and technological development no. 075-15-2024-551 “Global and regional centers of power in the emerging world order”.
Abstract. “Trade wars” have become a persistent phenomenon in the escalating geo-economic competition between the United States and China. Simulations of several “trade war” scenarios using the GTAP computable general equilibrium model show that increased protectionism will have a negative impact on the economies of not only the United States, but also China, although for both countries the decline in economic growth rates will be limited. The fewer countries are involved in “trade wars” on the side of the United States, the smaller the economic losses for China will be. The unique structural feature of the Chinese economy is the phenomenally high rate of investment and the low ratio of consumer spending to GDP. The growing gap between investment and consumption is covered by a growing positive foreign merchandized trade balance. During the 2000s, Chinese exports largely displaced American manufacturing in labor-intensive, low-tech industries. This process was called the “Chinese shock”. We are currently witnessing a China shock 2.0, as Chinese companies rapidly increase export of not only labor-intensive but also medium and high-tech industrial products. At the same time, China is rapidly expanding exports to new markets. The continuation of the mercantilist course by the economy, whose share in world GDP reached 17% in 2023, is turning into what Joan Robinson in 1936, observing the collapse of the first format of globalization, defined as the “beggar-my-neighbor” policy. China continues to strengthen its position as a global industrial powerhouse. Most countries cannot compete with an increasingly mercantilist China, and their international specialization is obviously limited to raw materials. The problem of foreign trade imbalance, which the US used as a pretext for initiating a policy of protectionism, is not being solved, but is being spread more widely throughout the world economy. China is absorbing effective demand generated in other countries. In 2023, China maintained a trade surplus in goods with 174 countries and territories. 81 countries had a negative trade balance with China exceeding 3% of their GDP. For many developing countries, the growing negative trade balance with China increasingly threatens the maintenance of macroeconomic balance in the national economy.
Keywords: China, US, protectionism, mercantilism, private consumption, investment rate, manufacturing, world misbalance
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