Hi.

it is year Enter the administration of President Joe Biden. How is he? Well it may not matter to voters as inflation and growth and the pandemic are more important to them but from a trade standpoint he is definitely on the interventionist side but expedient Slightly softened.

Biden retains parts of Trump’s legacy that he considers politically critical (China tariffs), jury lays out some interim solutions for those parts he doesn’t (Airbus Boeing, Section 232 tariffs) , most worryingly, kicking off a bunch of processes (buying American, EV domestic content tax breaks, supply chain resiliency) could—repeatedly—could eventually lead to some serious protectionism. He has been out of the CPTPP and has done almost nothing except in the stands at the World Trade Organization. Well, he did say that trade would not be a priority.

Today’s main content is about Biden continuing Trump’s erroneous policies that still haven’t worked, namely the “phase one” deal with China. Chartered Waters Evaluate how 3D printing and “reflow” provide only limited protection for the supply chain.

Biden insists in vain on Trump’s China deal

When China hit a record trade surplus, the whole of Washington panicked: stern disapproval from the Treasury Department, grief cries from rusted members of Congress, calls from more impatient think tanks for anti-intervention in currency markets, the kind of thing.

Well, China did it exactly that While no one was particularly happy 10 days ago, it wasn’t the biggest event in American politics so far this year. I won’t speculate on the exact reasons for Washington’s reaction to events, any more than I can predict what our kids will do when told bedtime. But it’s worth noting that while the U.S. analysis of its deficits is still wrong, at least it doesn’t cite trade and current account deficits as the main reason for further fueling the trade war.

Current account balances are one of the best things to call on macroeconomists, who put the saving-investment relationship within a country in perspective, not foreign trade policy. You could argue that China has been running a surplus for years because the government subsidizes and promotes exports, while restricting imports through intensive regulation, but the same goes for India, which has run structural deficits for decades.

To be sure, China’s overseas sales in 2020 and 2021 have benefited from being a large exporter of manufacturing — all personal protective equipment and all consumer durables. It turns out that China’s draconian lockdown measures have had a greater impact on domestic consumption of services than on exports of goods, despite numerous reports of factory closures and ports shutting down in China.

If the epidemic eases, The International Monetary Fund believes that Global imbalances that may have widened in 2020 or even in 2021 will shrink over the next few years. As the great Michael Pettis pointed out (in the Financial Times, of course), the current account deficit reflects a longer-term and more worrying trend in China’s failure to transfer growth in the form of higher wages to households and thus to domestic consumption.Trade surplus is a symptom of domestic problems – broader argument in excellent Trade wars are class wars Pettis and Matthew Klein. If we are interested in global imbalances, we need to continue to focus on China’s domestic policies and outcomes, and nothing else.

Clearly, this will not stop U.S. trade policy from trying to eliminate the deficit, although its efforts may be futile. One good thing is that the US no longer holds the notion that currency is a big problem. There is a perfectly plausible argument that China’s intervention to depress the yuan’s exchange rate contributed, at least in part, to the surpluses of the 2000s.But Trump continues to have a intermittent obsession in Chinese currency manipulate Despite the fact that when he appeared, Beijing was propping up the yuan rather than depressing it.International Monetary Fund think As far as it knows, China’s real exchange rate is almost fair.

However, Trump has simply moved from an outdated monetary solution to a false trade solution. He slammed tariffs on imports from China and signed a phase one deal that was supposed to reduce the bilateral deficit through direct purchases of U.S. exports, including soybeans. The Biden administration, without any other good ideas, continues to try to get Beijing to live up to its obligations.As we have pointed out many times, they are still there very short The goal.

Either way, even ignoring domestic imbalances, the first phase is clearly not the solution to China’s overall current account situation. It just moves the surplus elsewhere, so it’s meaningless than the currency flexibility movement of the 2000s.True, the U.S.-China bilateral imbalance has narrowed in 2020 and 2021, but it is almost certainly a false positive grossly exaggerated that action.

In theory, other parts of the phase one deal, including the entry of U.S. companies into the Chinese economy in various sectors, could help the transition process if they relax the market for their services for domestic consumers. But even if the assumptions are implemented, the main lever for change remains in the hands of the Chinese authorities. There is little trade or even international macro policy can do about it.Although there are some restrictions on the excesses of corporate overinvestment, such as Evergrande, China is still a long way from correcting the internal imbalances that lead to external imbalances.

Trade policy does not really address the current account deficit. This is annoying to trade policymakers, but it is. Pretending it can, as in the first phase of the deal, will only create unrealistic expectations and divert attention from the real issue.

Chartered Waters

High-profile disruptions to global supply chains — including temporary blockages in the Suez Canal, floods and fires in Texas and Japan, and ongoing semiconductor production bottlenecks — have sparked forecasts for mass production and use of technology closer to home markets , for example, as 3D printing to manufacture hard-to-procure components.

Last year, a Research by Lux Research The 3D printed parts market is estimated to be worth $12 billion by 2020 and will grow to over $50 billion by the end of the century.

However, the recovery of the global supply chain market has provide evidence Such activity may be a niche activity at best, as the efficiency of international trade trumps domestic manufacturing efforts.

An EY survey of European companies during the lockdown in early spring 2020 found that more than four-fifths Considering bringing their supply chain closer to home.However, when the same survey was conducted last April, this view was Only 20% of respondents.

trade link

America in talks With Qatar and other countries supplying gas to Europe in the event of Russia’s invasion of Ukraine.

EU continues move slowly Create legal ‘due diligence’ requirements that require companies to eliminate human rights and environmental standards violations in their supply chains – we have written About this time.

China has appointment Its first special political envoy for the Horn of Africa suggests it is taking a more aggressive diplomatic effort to protect its investments from conflict in the region.

France want to do Agricultural imports are subject to the same production standards that EU farmers must follow.If it passes, it will spark a lot of WTO litigation – we wrote about the idea here.

European Commission President Ursula von der Leyen want europe Double its share of semiconductor production to 20% by 2030.