Increase your savings rate (anything that isn’t consumed is saved by definition) by suppressing your household consumption through policies to “increase labour flexibility” (reduce the worker share of income)(1), have a relatively weak currency (this is a fundamental problem with the Euro where it is overvalued for countries like Greece and undervalued for countries like Germany), cut taxes on the rich (the rich tend to save far more), etc.
(1) If you look at a graph of German wages vs GDP growth, it decoupled after the “Hartz” reforms.
This results in weak domestic demand and trade surpluses that must be absorbed by other countries.
Many countries have done this in the past (United States included)
This is insane, USA has a 100% tariff on Chinese cars, nobody has higher barrier to entry than USA.
Germany has very low barrier, with EU only recently introducing a 15-35% import tax.
Until then there was next to no barrier in EU.
If you look at a graph of German wages vs GDP growth,
Looks pretty decent to me. Only disrupted by the energy crisis and following inflation because Russia invaded Ukraine.
Obviously that was an outside event. I don’t see that supporting your claim at all.
This results in weak domestic demand and trade surpluses that must be absorbed by other countries.
Oh please, Germany has stimulated trade of Electric cars tremendously for years, but is slowing down now, because the need for subsidies isn’t as big anymore. And when Germany did that, it was equal and nondiscriminatory for all, no matter which country the car was made, the sale of it was subsidized by government.
You have selectively chosen parts of my post and declared victory.
This is insane, USA has a 100% tariff on Chinese cars, nobody has higher barrier to entry than USA.
Germany has very low barrier, with EU only recently introducing a 15-35% import tax.
It’s true, United States has a 100% tariff on electric cars. This is a relatively recent development.
China has capital controls (which btw, Western countries could do with), a controlled exchange rate, requirements for technology transfer, etc. for decades. This is a barrier to entry for foreign competition.
I don’t have a particular issue with this given many other countries have done exactly the same thing to industrialise quickly.
You deliberately excluded all my points about indirect transfers like a controlled exchange rate, weak labour laws, preferential lending to industrial enterprises, etc.
You only have to look at the household share of national income for China compared to other countries to see how low it is and the impact of these policies (which sits at 50.7%)
This entire article appears to be focusing on the impacts of COVID-19 and the impacts of the war in Ukraine.
In reality, Germany wages decoupled (like the United States) from GDP growth years ago.
German wage share of GDP plummeted from ~60% in 2001 to 50-52% in 2018.
Oh please, Germany has stimulated trade of Electric cars tremendously for years, but is slowing down now, because the need for subsidies isn’t as big anymore. And when Germany did that, it was equal and nondiscriminatory for all, no matter which country the car was made, the sale of it was subsidized by government.
This has no relevance to what I’m saying. Countries that run persistent trade surpluses do it by decreasing their household share of national income by direct and indirect transfers to their manufacturing industries. As a result, the household sector cannot consume what is being produced and the surplus must be exported.
While production in China has grown rapidly, it didn’t just start producing an extra 15 - 20 million cars for export. It’s own domestic demand couldn’t absorb that level of production.
You are not even debating based on reality.
You are not debating on what is even being argued.
Funny then that China is now the biggest market for VW.
Germany follows the same model.
It isn’t unique to China.
Increase your savings rate (anything that isn’t consumed is saved by definition) by suppressing your household consumption through policies to “increase labour flexibility” (reduce the worker share of income)(1), have a relatively weak currency (this is a fundamental problem with the Euro where it is overvalued for countries like Greece and undervalued for countries like Germany), cut taxes on the rich (the rich tend to save far more), etc.
(1) If you look at a graph of German wages vs GDP growth, it decoupled after the “Hartz” reforms.
This results in weak domestic demand and trade surpluses that must be absorbed by other countries.
This is insane, USA has a 100% tariff on Chinese cars, nobody has higher barrier to entry than USA.
Germany has very low barrier, with EU only recently introducing a 15-35% import tax.
Until then there was next to no barrier in EU.
OK where? This one?: https://publikationen.bundesbank.de/publikationen-en/reports-studies/monthly-reports/monthly-report-october-2024-938956?article=wage-developments-in-germany-current-situation-comparison-with-the-euro-area-and-outlook-939710
Looks pretty decent to me. Only disrupted by the energy crisis and following inflation because Russia invaded Ukraine.
Obviously that was an outside event. I don’t see that supporting your claim at all.
Oh please, Germany has stimulated trade of Electric cars tremendously for years, but is slowing down now, because the need for subsidies isn’t as big anymore. And when Germany did that, it was equal and nondiscriminatory for all, no matter which country the car was made, the sale of it was subsidized by government.
You are not even debating based on reality.
You have selectively chosen parts of my post and declared victory.
It’s true, United States has a 100% tariff on electric cars. This is a relatively recent development.
China has capital controls (which btw, Western countries could do with), a controlled exchange rate, requirements for technology transfer, etc. for decades. This is a barrier to entry for foreign competition.
I don’t have a particular issue with this given many other countries have done exactly the same thing to industrialise quickly.
You deliberately excluded all my points about indirect transfers like a controlled exchange rate, weak labour laws, preferential lending to industrial enterprises, etc.
You only have to look at the household share of national income for China compared to other countries to see how low it is and the impact of these policies (which sits at 50.7%)
This entire article appears to be focusing on the impacts of COVID-19 and the impacts of the war in Ukraine.
In reality, Germany wages decoupled (like the United States) from GDP growth years ago.
German wage share of GDP plummeted from ~60% in 2001 to 50-52% in 2018.
This has no relevance to what I’m saying. Countries that run persistent trade surpluses do it by decreasing their household share of national income by direct and indirect transfers to their manufacturing industries. As a result, the household sector cannot consume what is being produced and the surplus must be exported.
While production in China has grown rapidly, it didn’t just start producing an extra 15 - 20 million cars for export. It’s own domestic demand couldn’t absorb that level of production.
You are not debating on what is even being argued.