L’Illusion des Exportations: Pourquoi Elles Ne Garantissent Pas la Croissance!

L’Illusion des Exportations: Pourquoi Elles Ne Garantissent Pas la Croissance!

Like many, you perhaps think that every country should do everything possible to boost its exports, right? This is a widespread, almost instinctive idea in the world of the globalized economy where exports are often seen as the engine of growth and national wealth.

But what if I told you that this truth is not universal? Today, I invite you to dive with me into the heart of a reflection that goes beyond appearances and preconceived ideas. Together, let’s explore the example of China, an economic giant that has long relied on exports to support its growth.

However, behind the flattering figures and commercial records lie complex realities and unexpected challenges. Is it possible that this strategy, considered a magic formula for economic prosperity , is not the panacea we imagine? Prepare to challenge some conventional wisdom and discover the subtle nuances that define truly sustainable and balanced economic growth.

The Chinese economy is in the grip of a notable slowdown that GDP figures do not fully reveal. Although indicating growth, these figures may mask less rosy underlying realities . This situation is aggravated by a government strategy focused on increasing investments, regardless of their profitability or economic efficiency.

It is important to understand that measuring GDP does not distinguish between activity that increases the wealth of a country and that which does not. The orientation of loans towards specific sectors, favored by the government, contributes to an artificial inflation of GDP statistics, without necessarily generating real and sustainable economic growth.

We then end up with a situation where debt increases faster than GDP. This phenomenon is illustrated by the Chinese real estate sector, which, after having stimulated the national economy for a long time, is today a source of difficulties. The collapse of this sector has not only slowed construction activity, but

Also eroded household wealth and weakened consumer confidence, thereby exacerbating the economic downturn. The situation is all the more worrying as China faces significant deflation, with consumer prices recording their biggest fall in 15 years, signaling a contraction in domestic demand. In order to revive growth, Chinese policymakers are now directing investments

Towards manufacturing and exports rather than real estate and infrastructure. This strategic shift, while it may temporarily support GDP growth , risks causing increased trade frictions. Dumping and overproduction practices have already sparked concerns and reactive measures from various trading partners, including the United States, the European Union, India, Vietnam and Turkey.

These tensions highlight the growing complexities of international trade and the challenges inherent in an export-led growth strategy. It should be noted that reliance on exports to drive economic growth is not a phenomenon unique to China. Other major economies, such as Japan, Germany, and South Korea, have also adopted similar strategies, characterized by a

Disproportionate manufacturing share of their GDP and relatively low domestic consumption. However, this approach presents a fundamental paradox: not all countries can simultaneously increase their exports while reducing their imports. If each country attempts to increase its exports while limiting its imports to maintain

A trade surplus, this creates a situation where the overall supply of goods and services for export exceeds global demand. In other words, for a country to export, there must be another country willing to import these products. If all countries seek to export more than they import, the result is inconsistency,

Because there cannot be an export without a corresponding import somewhere else in the world. The current situation reveals a watershed moment for economic policies globally . On the one hand, surplus economies like China seek to maintain growth through an increased focus on exports.

On the other hand, traditionally deficit economies, such as the United States and the United Kingdom, are adopting industrial policies aimed at reducing their trade deficits, potentially through protectionist means. This situation calls into question the sustainability of economic models focused on exports. It also prompts reflection on the strategies that nations can adopt

To navigate a global context that is both complex and interdependent. The objective is to avoid imbalances likely to cause trade tensions and economic instability on an international scale. The economic growth model followed by China, characterized by rapid initial expansion followed by a less healthy acceleration due to increasing debt

And ultimately leading to a difficult adjustment phase, is not unique to this country. Several nations have taken this path in the past with a recurring pattern where initial strong growth is inevitably followed by complications from excessive debt. The economic model in question is based on the strategic intervention of the

Central bank and the government to promote production and exports by keeping the national currency at an artificially low level. This practice functions as an indirect tax on imports and a subsidy for exports, redirecting wealth from consumers, who are penalized by higher prices on foreign goods, to exporting companies, which benefit

From more favorable market conditions. At the same time, wage growth is intentionally kept below productivity growth. This policy has the effect of transferring wealth from workers to employers, allowing the latter to benefit from reduced labor costs while increasing their profit margin and competitiveness in international markets.

This dynamic strengthens the export sector but can also contribute to stagnation in household purchasing power and growing inequality within the economy. Financial repression is another facet of this model, characterized by interest rates kept below their natural or equilibrium level by the central bank. This measure favors borrowers, particularly businesses and the government, by

Offering them access to low-cost capital, to the detriment of savers who see the return on their savings decline. In practice, this means a transfer of wealth from the traditionally saving household sector to the borrowing sectors of the economy, thus promoting investment and the expansion of production capacities.

These economic interventions are designed to maximize production while suppressing domestic consumption, resulting in overproduction that must be absorbed by foreign markets, and thus increasing dependence on exports. The production surplus makes a trade surplus necessary to sell goods not consumed locally due to the suppression of domestic demand.

Imports actually become less attractive and more expensive for local consumers, not because of a direct increase in their prices, but because the purchasing power of households is reduced by wealth transfers favoring production and ‘export. These policies may also involve cross-subsidies between sectors,

Where certain industries, such as energy, may be forced to sell to below-market prices to support competitiveness in other parts of the economy. These internal transfers complicate the analysis of the commercial and economic impacts of these policies. The case of China vividly illustrates these dynamics, with an economy characterized

By modest domestic consumption in relation to its GDP, reflecting an imbalance between production and consumption which is not attributable to cultural differences but rather to political choices and deliberate economic. This model, while beneficial for short-term economic growth, raises questions about its long-term sustainability. The imbalances it generates, both nationally and internationally, require

Adjustments that can be difficult to achieve, especially if the old model created institutions and constituents that benefit from the existing situation and resist change. The transition to a new economic model, necessary when the old one becomes obsolete, is often hampered by these forces, making the necessary economic adjustments particularly difficult to implement.

The economic strategy adopted by China, focused on stimulating production and exports at the expense of domestic consumption, is not a unique case in world economic history. This approach has also been observed in various countries at different times, notably in the United States during the 1920s, in the Soviet Union in the 1960s

, in Brazil in the 1970s, and in Japan in the 1980s, each with its own particularities. and historical contexts. Contemporary Germany offers a notable example of this strategy, with an economy that has long benefited from a highly skilled workforce, harmonious labor relations, and above all moderate wage growth.

The latter has been a key factor supporting the competitiveness of German exports. In the 1990s, Germany was often seen as a struggling economy with frequent current account deficits. However, with the advent of the euro in 1999 and a political will to tackle high unemployment, a national consensus formed around wage moderation

In exchange for employment. This policy has made it possible to keep unit labor costs at a low level, even negative in certain years, in stark contrast to other developed economies where these costs have soared. This dynamic was a contributing factor to the European sovereign debt crisis

Of 2011, exacerbating economic imbalances within the EU. However, the German model faces major challenges which could call into question its sustainability. The shortage of skilled labor, inflation, and an increasingly assertive union posture threaten to end the era of low and stable wages. Pandemic-related supply chain disruptions and a halt in the supply

Of cheap gas from Russia, coupled with the closure of nuclear power plants, could erode Germany’s competitive advantage as a exporting power. The export-led growth model is increasingly being called into question in a global context where countries seek to protect their domestic markets. The United States, under the Trump and Biden administrations, has shown

Increasing interest in trade imbalances, adopting protectionist policies that may strengthen in the future. Similarly, policy discussions in Europe and the United States now discuss economic and national security strategies that move away from the ideals of free and open global markets, privileging instead national economic strength. The challenge of absorbing global manufacturing overproduction remains.

While it has been suggested that the economies of Latin America and Africa could play this role, the lack of foreign investment needed to support such Long-term trade deficits make this option unviable. Surplus economies, often proud of their frugality and work ethic, must recognize that trade imbalances are not only the result

Of national virtues but also of targeted economic policies. The national stereotypes that emerge in discussions of trade imbalances often mask the true economic dynamics at play. In a world of constrained demand, a country’s ability to import becomes crucial for exporting countries that rely heavily on importing markets. to sell their products.

Thus, the ability of countries to maintain or increase their imports is essential to support export-oriented economies. Importing countries are therefore a key driver of global demand, particularly for nations seeking to sell their goods and services abroad. History shows that in trade conflicts, large exporters are often the most vulnerable.

Thus, while subsidies, exchange rate manipulation, and wage compression can serve as offensive weapons in a trade war, tariffs and other trade barriers serve as defenses, underscoring the importance of regulation and balance in international trade relations. Tariffs, often seen as a simple way to protect

Local industries by increasing the cost of imported goods, actually have much more complex and nuanced economic effects. Michael Pettis, in his book “The Great Rebalancing”, explores in depth how tariffs influence the economy not simply by changing consumption habits but by affecting real household income and the dynamics of savings and investment. investment

On a national scale. When taxes are applied to goods that cannot be substituted by local production nor avoided due to their necessity, this leads to a reduction in the purchasing power of households. This decrease in real income can lead to a decline in domestic consumption,

Which, paradoxically, can reduce a country’s trade deficit if the government uses tax revenue in specific ways, for example to pay down public debt instead to increase government spending. The paradoxical effect arises from the fact that, although customs taxes increase the cost

Of imports, they do not directly lead to substitution by local goods or an improvement in the competitiveness of local industries, as one might expect. . Instead, these taxes reduce household purchasing power and decrease domestic consumption, which can indirectly reduce the trade deficit not by strengthening

Local sectors, but by decreasing overall demand for goods, including goods . imports. In the current context, countries with a trade deficit may feel pressured to adopt restrictive policies which may require significant adjustments from surplus countries. Indeed, surplus countries, which are used to relying on their trade surpluses

To stimulate their economic growth, may have to reorient their economies towards stronger domestic consumption or develop other export markets. These adjustments are often difficult and can lead to economic and political tensions . These adjustments often involve rethinking income distribution within national borders or dealing with the contracting consequences of protectionist policies.

The contemporary era, marked by a growing call for protectionism among economies running trade deficits and an increased wariness of reliance on essential goods produced by authoritarian regimes, poses serious challenges to the economic growth strategy based on export. China’s criticism of EU policies, which it sees as protectionism,

Is indicative of broader tensions, where Western countries express concerns about access to the Chinese market and trade practices perceived as unfair . These tensions highlight a complex reality where protectionist and interventionist policies, although they can be presented as national safeguard measures, often have bilateral effects and can exacerbate internal and external trade imbalances.

In this context, it is essential to understand that taxes and other trade instruments such as subsidies and currency manipulation are not limited to sectoral adjustments but have profound impacts on the entire economy. They influence savings and investment rates and, by extension, a country’s overall trade balance.

Thus, any policy, whether explicitly designed as a trade intervention or not, that changes the relationship between production, consumption, and total investment has the potential to affect the trade balance. The 2000 German union agreement is an example, illustrating how seemingly internal decisions can have broad commercial implications.

This 2000 agreement, often mentioned in the context of labor market reforms and economic policies in Germany, refers to a series of measures and agreements that were put in place to increase the competitiveness of the German economy. This included reforms aimed at moderating wage costs, increasing

Labor market flexibility and encouraging investment in productive sectors. This was done with the aim of keeping production costs low and improving the competitiveness of German exports. As a result, Germany was able to maintain a strong manufacturing sector and achieve large trade surpluses. However, although these measures strengthened Germany’s trade position, they

Also had implications for the global economy. By maintaining moderate wages and focusing on exports, Germany increased its trade surpluses at the expense of domestic demand and consumption, which contributed to trade imbalances with its main partners. These imbalances have become a concern because they reflect differences

In savings and investment rates between countries, leading to economic and political tensions. Thus, the 2000 German union agreement serves as an example of how domestic policies, even those not explicitly designed as trade interventions, can have a significant impact on the overall trade balance and contribute to dynamic global trade imbalances.

Pettis concludes that the global trade and capital system, in its current state of imbalance and distortion, requires a profound reassessment of economic policies to foster a more balanced and less protectionist environment beneficial to the global economy as a whole. Shrinking international trade poses significant risks to

Global economic growth and overall GDP, an understanding that dates back to hard-learned lessons during the Great Depression of the 1930s. At that time, despite knowledge of the harmful effects of protectionist policies, nations pursued autarkic trade strategies in an attempt to safeguard their national interests, which ultimately exacerbated the global economic crisis.

A 2009 study by Barry Eichengreen and Douglas Irwin on the roots of the Great Depression highlights the tendency of countries to adopt protectionist policies in the context of contracting global demand. These countries sought not only to stimulate domestic demand but also to capture a larger share of foreign net demand.

The analysis reveals that adherence to the gold standard played a key role in countries’ decisions to adopt protectionist measures, with countries on the gold standard more likely to impose trade restrictions due to lack of be able to devalue their currency. Conversely, countries that abandoned the gold standard and devalued their currencies experienced

Significant improvements in their trade balances, suffering less from the global economic contraction. The countries that remained faithful to the gold standard, unable to adjust their currencies, suffered the full brunt of the effects of economic adjustment, their imports becoming more competitive in relation to national production.

This historical situation highlights the complexity of trade wars and their potential to harm all economies involved. Deficit countries often underestimate the difficulty of rebalancing for surplus countries, while the latter fail to recognize their vulnerability to trade restrictions imposed by deficit countries and their limited ability to counterattack.

In this context, economies heavily dependent on exports, such as China, Japan and Germany, are particularly exposed to risks in the event of a trade conflict, with their dependence on international trade rendering a large part of their workforce vulnerable work . When these economies encounter obstacles to international trade, such as

High tariffs, quotas, sanctions or other forms of trade barriers, the demand for their exports can decrease significantly. This drop in demand may lead to reduced production, layoffs or factory closures in sectors dependent on export markets. The “vulnerability” of the workforce in this context arises from the fact that, in a

Highly export-oriented economy, a large number of jobs are directly or indirectly linked to the success of these exports. If export markets contract or become less accessible, this can lead to loss of jobs, increased unemployment and lower incomes for workers in these sectors, thereby affecting the general economic well-being

Of the population in those countries. This situation can also have a cascading effect on the domestic economy, as reduced income and employment in exporting sectors can lead to a decline in domestic consumption, affecting other sectors not directly linked to international trade. Thus, excessive reliance on international trade for maintaining employment

And economic growth makes these economies particularly sensitive to global trade fluctuations and policies. Faced with decreasing global demand, China has realized the importance of stimulating domestic consumption to support its economic growth. Government initiatives aim to increase household incomes, improve the business environment for private companies and stabilize youth employment.

These measures, by redirecting wealth from local governments to households, could offset the contraction in net exports and, if accompanied by a shift towards more labor-intensive industries, could avoid a significant rise in unemployment . In the long term, a rebalancing of global trade is in the interests of all participants.

For deficit countries to repay their debts to surplus countries like China, they must become net exporters of capital, which involves generating trade surpluses to acquire the foreign exchange needed to repay the debts. Nevertheless, history suggests that such adjustments are unlikely to result

From deliberate decisions by policy makers, but rather from an economic crisis, either brief and intense, as in the United States in the 1930s, or long and gradual, like Japan which continues to fight against the after-effects of its past excess investment. These reflections highlight the complexity of international business interactions

And the need for thoughtful policies to navigate today’s interconnected global economic landscape .

Dans cette vidéo, nous explorons les nuances complexes des exportations et leur impact sur la croissance du PIB, remettant en question les idées reçues. La focalisation sur l’économie chinoise révèle les limites d’une stratégie purement exportatrice. Des investissements gouvernementaux mal orientés et une interprétation simpliste du PIB peuvent dissimuler des réalités économiques plus profondes. Le secteur immobilier chinois, autrefois moteur de croissance, soulève aujourd’hui des défis significatifs, exacerbés par une déflation record. Face aux tensions commerciales, la Chine réoriente ses investissements vers le manufacturier, illustrant les frictions inhérentes aux stratégies axées sur l’exportation. Les économies exportatrices comme le Japon, l’Allemagne et la Corée du Sud rencontrent des paradoxes similaires, défiant l’idée d’une croissance propulsée uniquement par les exportations. Le protectionnisme croissant et la nécessité d’un rééquilibrage global posent des défis aux modèles économiques traditionnels. Cette vidéo offre un regard approfondi sur les dynamiques complexes du commerce international et les stratégies pour une croissance économique durable.

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