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Party the Root Cause of the Trade War
Chinese President Xi Jinping enters the Great Hall of the People to deliver a speech. (Andrea Verdelli/Getty Images)
(Getty Images)

Party the Root Cause of the Trade War

John Lee

There is increased appreciation by Prime Minister Scott Morrison and others that the economic tensions between the US and China were not simply driven by an irrational US President. The tariffs may be Donald Trump’s, but they have brought the real cause of tensions into the open: structural imbalances in the world economy and rising intolerance of China systematically breaking World Trade Organisation and other trading rules over an extended period.

For example, these pages ran a piece yesterday by a former director of the OECD arguing that enormous global economic imbalances have resulted from a Chinese model which artificially prioritises savings and investment over consumption. This causes Chinese firms to flood global markets with excess goods, destroying the prospect of reciprocity with most of its trading partners.

Read the full article in the Australian Financial Review.

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