Pettis:
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NYT: "Through August, China exported $141 billion to Africa, while importing $81 billion. The widening trade imbalance with Africa stems from surging exports of Chinese-made batteries, solar panels, electric vehicles and industrial equipment.""The swell in exports to Africa," it continues, "along with record volumes of goods sold to Southeast Asia and Latin America, underscores the resilience of Chinese manufacturers in finding new markets for the products they continue to churn out in enormous quantities."Meanwhile, as Chinese trade surpluses surge, so do American trade deficits. This is not mainly because of transshipments, as many assume. It is because countries with expanding trade surpluses with the US use their higher revenues to fund deficits with the rest of the world.We are indeed seeing a major shift in global trade patterns, but the newer trade pattern is no more stable than the old one because it relies as much as the old one (even more, in fact) on extremely high US trade deficits to resolve savings imbalances in countries like China.Given the bipartisan support to reduce the US trade deficit and revive US manufacturing, Washington will eventually figure out – for better of for worse – how to address the problem. Once that happens, we will begin to see the real shift in global trade.For now, most mainstream academic American economists will continue to insist that global trade imbalances underpinned by massive US trade deficits, along with the de-industrialization of the US economy, are actually good things, but they will do so with less and less conviction until they finally discover, perhaps in a year or two, that trade models based on unrealistic premises do not actually explain trade patterns. Meanwhile analysts, investors, businesspeople and policymakers will watch the trade imbalances very carefully.