The Second China Shock - Why Europe is the Front Line with Brad Setser | Markus Academy | Ep. 165-2

Follow the link for the full summary: https://markusacademy.substack.com/p/... Link to sign up for the webinar series: https://markusacademy.substack.com/ Link to Part 1 of the talk:    • The Second China Shock - How This Time Is ...   Read the Financial Times' discussion of Part 1: https://www.ft.com/content/a5e9dfe7-6... For our latest episode, Brad Setser joined Markus’ Academy for a two-part conversation on the second China shock and the second coming of global imbalances. This video is the second part. Setser is a Senior Fellow at the Council on Foreign Relations and a former official at the US Treasury and the Office of the US Trade Representative. A summary in three bullets: ● Germany is hit hardest: with its industrial production down ~15%, its export mix overlaps with China’s the most ● Autos as the key example: In 2021 China used to import and export 1 million cars. Today it imports 400k and exports 10 million ● Without policy change the imbalance will not self-correct, while only China can correct its exchange rate. Setser argues Europe must take the initiative, including through tariffs, to achieve currency adjustment Timestamps: [0:00] Europe sandwiched, Germany in the crosshairs [17:52] China’s imbalance will not fix itself [22:20] How Europe should act [39:00] Implications for the rest of Asia