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Begin New Search Political Geography China Content Type Policy Brief Publishing Institution Peterson Institute for International Economics Publication Year within 10 Years

11. Developing Countries Can Help Restore the WTO's Dispute Settlement System

Author:
Ana González and Euijin Jung
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
By refusing to fill vacancies in the World Trade Organization’s (WTO) Appellate Body—the top body that hears appeals and rules on trade disputes—the Trump administration has paralyzed the key component of the dispute settlement system. No nation or group of nations has more at stake in salvaging this system than the world’s big emerging-market economies: Brazil, China, India, Indonesia, Korea, Mexico, and Thailand, among others. These countries have actively and successfully used the dispute settlement system to defend their commercial interests abroad and resolve inevitable trade conflicts. The authors suggest that even though the developing countries did not create the Appellate Body crisis, they may hold a key to unlock it. The Trump administration has also focused its ire on a longstanding WTO practice of giving these economies latitude to seek “special and differential treatment” in trade negotiations because of their developing-country status. The largest developing economies, which have a significant stake in preserving a two-step, rules-based mechanism for resolving trade disputes, could play a role in driving a potential bargain to save the appeals mechanism. They could unite to give up that special status in return for a US commitment to end its boycott of the nomination of Appellate Body members.
Topic:
Development, Government, World Trade Organization, Developing World, and Donald Trump
Political Geography:
China, Indonesia, India, South Korea, Brazil, North America, Mexico, Thailand, and United States of America

12. Using purchasing power parities to compare countries: Strengths and shortcomings

Author:
Patrick Honohan
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Good international economic policy requires good comparative data on national economic performance. In May 2020, the World Bank published the latest comprehensive update of purchasing power parities (PPPs), as part of the International Comparison Program. Produced for 176 countries, these PPPs are used to convert data (especially GDP and other quantities based on national income accounts) from national currencies to a common basis in a way that is meaningful for economic analysis. PPP-adjusted data are essential because the distortions caused by sharp exchange rate movements are significant, especially for times of macroeconomic turbulence. The newly released PPP data contain fewer surprises than those published in previous updates and are an invaluable tool, but Honohan explains why PPPs should be used with caution and an understanding of their limitations. Apart from removing distortions caused by market exchange rate movements, PPPs remove the impact of other factors affecting relative prices, especially productivity differences, which Honohan argues should not be removed if one wishes to compare the overall economic size or strength of a country or region. Adjusting for productivity, he finds that the United States retains its position as the world’s largest economy for the time being, and the European Union (even without the United Kingdom) is just ahead of China.
Topic:
World Bank, Economic Growth, Currency, Data, and Productivity
Political Geography:
China, Europe, and United States of America

13. China's Financial Opening Accelerates

Author:
Nicholas R. Lardy and Tianlei Huang
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Despite predictions by some observers that the United States and China are headed for a “decoupling,” China’s integration into global financial markets is accelerating. Regulatory reform has opened China’s financial market to many US and other foreign financial institutions. Foreign ownership of onshore Chinese stocks and bonds is growing rapidly and is likely to continue to expand in 2021. And inbound foreign direct investment (FDI) is on track to hit a new record in 2020. This integration is very asymmetric, however. China retains relatively tight control over both outbound direct investment and outflows of portfolio capital. US efforts to roll back the trend of deepening financial integration by threatening to delist Chinese companies traded on US markets and prohibiting any US investment in 35 Chinese companies that the Department of Defense alleges to be linked to the Chinese military appear to be largely symbolic.
Topic:
Financial Markets, Investment, and COVID-19
Political Geography:
China, Asia, and United States of America

14. Global E-Commerce Talks Stumble on Data Issues, Privacy, and More

Author:
Gary Clyde Hufbauer and Zhiyaou (Lucy) Lu
Publication Date:
10-2019
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
In early 2019, several important members of the World Trade Organization (WTO) submitted noteworthy proposals in a realm of international commerce that has evolved faster than rules to govern it: e-commerce or digital trade. While countries agree on less controversial subjects like banning unsolicited commercial electronic messages, the three leading WTO members—China, the European Union, and the United States—have big differences in their approaches to more challenging issues: data flows, data localization, privacy invasions by data collectors, transfer of source code, imposition of customs duties and internet taxes, and internet censorship. Their differing viewpoints lead Hufbauer and Lu to conclude that the prospect of reaching a high-level WTO e-commerce agreement is not promising. To reach an agreement, either most of the contentious issues must be dropped or the number of participating countries must be sharply reduced. A WTO accord, even of low ambition, would have value if only to establish basic digital norms on matters such as banning unsolicited commercial messages and protecting online consumers from fraudulent practices. A more ambitious accord covering the controversial issues should be negotiated in bilateral and/or plurilateral/regional pacts rather than in the WTO.
Topic:
Economics, World Trade Organization, Finance, Privacy, and Data
Political Geography:
China, Europe, Asia, North America, United States of America, and European Union

15. US-China Trade War: Both Countries Lose, World Markets Adjust, Others Gain

Author:
Sherman Robinson and Karen Thierfelder
Publication Date:
11-2019
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The terms of the US-China trade war change often, but the tariff escalations have inflicted documented economic damage on both countries. Expanding the conflict will only increase the damage and reverberate across the world economy. This Policy Brief uses a computable general equilibrium model of the global economy to analyze three scenarios that could unfold in coming months. The first scenario is the current situation (as of June 2019). Two additional scenarios assume implementation of proposed US tariffs and Chinese responses. The models project the situation after the two countries and the rest of the world adjust across a time horizon of three to five years. For the United States, higher tariffs raise prices and reduce demand for consumers and producers. For China, the tariffs raise the prices of consumer goods but have less direct impact on producers, because the Chinese have exempted some intermediate inputs. US exports and imports decline under all three scenarios. But China can successfully divert its exports away from the United States and escape maximum economic damage.
Topic:
Economics, Global Markets, Finance, Trade Wars, and Trade
Political Geography:
China, Asia, North America, and United States of America

16. China, Like the US, Faces Challenges in Achieving Inclusive Growth Through Manufacturing

Author:
Robert Z. Lawrence
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
For more than three decades the goal of becoming “the factory of the world” has been at the core of China’s development strategy. This strategy, in combination with high rates of domestic investment and low rates of consumption, made Chinese production the most manufacturing intensive in the world. But as its wages have risen, China’s competitiveness in the most labor-intensive manufacturing industries has eroded. Its ability to assemble products remains a major source of its exports, but it has also tried to shift toward more sophisticated value-added production domestically. Chinese domestic spending has shifted away from investment toward more consumption as citizens’ incomes have grown. Like Americans, Chinese people are also spending more on services than on manufactured goods. All these changes are fundamentally altering the structure of China’s production, reducing the role of manufacturing, and increasing the skill levels of workers in manufacturing. This Policy Brief reviews the challenges posed by these developments for China’s long-term goal of achieving more inclusive growth. It presents evidence that commonly held perceptions that Chinese manufacturing employment growth is robust are wrong. In fact, such growth has peaked and China is now following the pattern of structural change that is typical of a more mature emerging economy, in which the share of employment in manufacturing declines as workers are increasingly employed in services.
Topic:
Bilateral Relations, Economic Growth, and Manufacturing
Political Geography:
China, Asia, North America, and United States of America

17. Chinese Investments in the US and EU Are Declining—for Similar Reasons

Author:
Jacob Funk Kirkegaard
Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
For years China has been one of the world’s most rapidly growing sources of outward foreign direct investment. Since peaking in 2016, however, Chinese outward investments, primarily to the United States but also the European Union, have declined dramatically, especially in response to changes in China’s domestic rules on capital outflows and in the face of rising nationalism in the United States. Concerns about growing Chinese influence in other economies, the ascendant role of an authoritarian government in Beijing, and the possible security implications of Chinese dominance in the high-technology sector have put Chinese outward investments under intense international scrutiny. This Policy Brief analyzes the most recent trends in Chinese investments in the United States and the European Union and reviews recent political and regulatory changes both have adopted toward Chinese inward investments. It also explores the emerging transatlantic difference in the regulatory response to the Chinese information technology firm Huawei. Concerned about national security and as part of the ongoing broader trade friction with China, the United States has cracked down far harder on the company than the European Union.
Topic:
Economics, International Trade and Finance, National Security, Foreign Direct Investment, and Investment
Political Geography:
China, Europe, Asia, North America, and United States of America

18. China, Like the US, Faces Challenges in Achieving Inclusive Growth Through Manufacturing

Author:
Robert Z. Lawrence
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
For more than three decades the goal of becoming “the factory of the world” has been at the core of China’s development strategy. This strategy, in combination with high rates of domestic investment and low rates of consumption, made Chinese production the most manufacturing intensive in the world. But as its wages have risen, China’s competitiveness in the most labor-intensive manufacturing industries has eroded. Its ability to assemble products remains a major source of its exports, but it has also tried to shift toward more sophisticated value-added production domestically. Chinese domestic spending has shifted away from investment toward more consumption as citizens’ incomes have grown. Like Americans, Chinese people are also spending more on services than on manufactured goods. All these changes are fundamentally altering the structure of China’s production, reducing the role of manufacturing, and increasing the skill levels of workers in manufacturing. This Policy Brief reviews the challenges posed by these developments for China’s long-term goal of achieving more inclusive growth. It presents evidence that commonly held perceptions that Chinese manufacturing employment growth is robust are wrong. In fact, such growth has peaked and China is now following the pattern of structural change that is typical of a more mature emerging economy, in which the share of employment in manufacturing declines as workers are increasingly employed in services.
Topic:
Economic Growth, Manufacturing, and Trade
Political Geography:
China, Asia, North America, and United States of America

19. Service Sector Reform in China

Author:
Ryan Rutkowski
Publication Date:
01-2015
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Faced with slowing economic growth, Chinese policymakers now recognize that the service sector of the economy—transportation, communications, finance, and health care—could spur economic activity and employment. The catch is that China must reform these and other areas to accomplish this goal. Chinese leaders have outlined an ambitious agenda for reform, but myriad vested interests could slow or block their plans. This Policy Brief evaluates the steps taken so far and the difficulties that lie ahead in implementing them. If policymakers fail to reform and open up the service sector, they run the risk of seriously impairing China's growth prospects.
Topic:
Economics, International Trade and Finance, Labor Issues, Financial Crisis, and Reform
Political Geography:
China

20. An Assessment of the Korea-China Free Trade Agreement

Author:
Jeffrey Schott, Eujiin Jung, and Cathleen Cimino-Isaacs
Publication Date:
12-2015
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Of all the free trade agreements (FTAs) concluded by Korea with its major trading partners since the turn of the century, the Korea-China FTA may be the largest in trade terms. It is, however, far from the best in terms of the depth of liberalization and the scope of obligations on trade and investment policies. Korea and China agreed to liberalize a large share of bilateral trade within 20 years, but both sides incorporated extensive exceptions to basic tariff reforms and deferred important market access negotiations on services and investment for several years. Political interests trumped economic objectives, and the negotiated outcome cut too many corners to achieve such a comprehensive result. The limited outcome in the Korea-China talks has two clear implications for economic integration among the northeast Asian countries. First, prospects for the ongoing China-Japan-Korea talks will be limited and unlikely to exceed the Korea-China outcome. Second, Korea and Japan need to strengthen their bilateral leg of the northeast Asian trilateral and the best way is by negotiating a deal in the context of the Trans-Pacific Partnership.
Topic:
Economics, International Trade and Finance, Politics, and Bilateral Relations
Political Geography:
United States, China, Asia, and Korea