How to understand what’s happening in China, why it matters, and what to do about it
By Jon LeibowitzThe Economist|Published Mar 07, 2019|1:06pmAmerica’s economy has been growing at an average of about 2% a year for the past two decades, and has been doing so as rapidly as it can.
Its stock market is valued at more than $400 trillion, while the economy’s total value is around $4 trillion.
The government’s finances are sound, and the government’s borrowing costs are well below the cost of borrowing in most advanced economies.
It is also the world’s second-largest economy, after China, and is projected to grow at a solid 2% per year until 2021.
But in the past year, the economy has experienced an extraordinary surge in manufacturing output, as well as the sudden fall in commodity prices.
The rise in manufacturing has not been a smooth ride, however.
Some factories in China have closed and others have been laid off.
And some factories are now being replaced by robots, which are taking jobs away from Americans.
In response, the president has issued a series of orders to try to slow the flow of capital out of the country.
Last week, the Federal Reserve cut interest rates to near zero, and raised interest rates for some borrowers, including banks and corporations.
It also announced new rules to help banks with the risk of default.
But China’s economy is still expanding at an almost ungodly rate.
Manufacturing is up almost 5% this year, according to the International Federation of Industrialists, and China’s stock market has risen by 30% in the last two years.
And this is just a fraction of the gains the economy is making.
But the economic expansion has also raised questions about how much it is really helping the American middle class.
Inflation, which is the difference between what people are spending and what they earn, has soared to nearly 20% this month, the highest rate in at least four years.
The president is also seeking to boost the value of U.S. government debt.
That would increase the amount of money the government can borrow and would help offset some of the growth in the stock market, which has surged more than 80% since the start of the year.
The President’s efforts to help the middle class have sparked some debate.
Economists are divided about whether these efforts are worth the risks.
In a recent paper, I wrote that the American economy is at risk of being hit by a “Great Moderation,” which would lead to a rise in unemployment, a slowing of the economy and the collapse of the dollar.
I am also skeptical that the measures that the president is proposing would be enough to reduce the severity of the slowdown.
One problem is that these policies could also exacerbate the economic problems of the past decade.
For example, China is now a net exporter of raw materials, such as iron ore and steel.
It imports most of its steel from overseas, but it also makes its own steel, and it has also built up an enormous stockpile of coal and other energy products, including natural gas.
As a result, China has a huge surplus of raw material.
That could help to offset some parts of the downturn in the economy.
But there are many risks associated with the President’s policies.
They would be costly in the long run, and they would likely worsen the problem.
For example, if China’s manufacturing sector continues to shrink, as it has done recently, that would have a profound impact on the United States.
The economic impact of these policies, and other changes that the President is making, could become even more severe in the future.
And that could put more pressure on the Fed to raise interest rates sooner rather than later.
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