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The Road To Mutual Assured Economic Destruction
When taken together, Xi Jinping's ill-conceived economic nationalism and Western efforts to de-risk supply chains and otherwise rethink two decades spent perpetuating economic interdependence with China, look like a road to mutual assured destruction.
A hodgepodge of cautious commentary, analysis and color published and discussed over the past several days underscored the point.
In an interim outlook published Tuesday, the OECD devoted a special section to the possibility of another demand sho
Reducing a year’s GDP growth by 100bp is not exactly destruction, though. Nor is GDP an infallible measure of economic goodness. For example, if a China domestic demand shock caused global commodity prices to fall, the benefits to consumers, whether of rice in Pakistan or gasoline in Los Angeles, might rival the detriments to agribusiness in Texas and MBS in Saudi, if not in GDP then in some other measure. Even if it were, a 3:1 ratio of GDP “destruction” might be viewed as a win in a competitive sense. To carry on with my increasingly far-fetched musing, given enough consecutive years of trading -3% domestic declines in China and -0.6% negative contributions in the US, we might see “regime disassembly”, and it might not be in the US.