Words of wisdom, on China shock 2.0

Michael Pettis frequently claims that, by running large surpluses, China is forcing “the demand-suppressing cost of their policies onto their trading partners.” The idea here is relatively straightforward: by disincentivizing consumption within China, China’s policies are reducing domestic demand, which, ceteris paribus, reduces global demand. The problem with this logic should be fairly obvious: ceteris is not in fact paribus. It assumes other countries […] The post Words of wisdom, on China...