From Cato Institute’s website:
Internal and external pressures are placing China in a precarious position. Domestic imbalances are reflected in a record current account surplus that could exceed 12 percent of GDP this year, an overheated stock market that has seen the Shanghai Composite Index advance by 240 percent during the past two years, and foreign reserves that could reach $1.6 trillion by year–end. The U.S. Congress, meanwhile, is growing increasingly impatient with the slow pace of yuan appreciation against the dollar, the growing U.S. bilateral trade deficit with China, and the lack of progress on disputes over subsidies, piracy, and market access.
Stephen Green, senior economist at Standard Chartered Bank in Hong Kong, predicts, “Before too long, the unstoppable force of PRC exports is going to hit the immovable object that is U.S. politics.” The lack of any significant results from the latest Strategic Economic Dialogue in Washington means that Congress will move forward with more than a dozen bills aimed at China’s so‚Äìcalled unfair trade practices. [Full Text]
James A. Dorn is a China specialist at the Cato Institute and vice president for academic affairs.
