On July 27 negotiators reached a compromise settlement in the world’s largest anti-dumping dispute, regarding Chinese exports of solar panels to the European Union. China agreed to constrain its exports to a minimum price and a maximum quantity. The solution is restrictive relative to the six-year trend of rapidly rising Chinese market share (which had reached 80% in Europe), and plummeting prices. But it is less severe than what had been the imminent alternative: EU tariffs on Chinese solar panels had been set to rise sharply on August 6, to 47.6%, as the result of a “finding” by the EU Trade Commissioner that China had been “dumping.” The threat of likely retaliation by China helped persuade the Europeans to back off from their determination to impose such high protective walls around their own solar panel industry.
A survey of economists is published in the November 2012 issue of Foreign Policy. One question was whether we thought that the US unemployment rate would dip below 8.0% before the election. When the FP conducted the poll at the end of the summer, unemployment was 8.1-8.2%. Now it’s 7.8%. Only 8% of the respondents said “yes.” (I was one. I basically just extrapolated the trend of the last two years.)
My fellow economists choose defense spending and agricultural subsidies as the two categories of US federal budget that they think the best to cut. They rate the euro crisis as the greatest threat to the world economy now and are particularly worried about Spain.read more
All of a sudden, the renminbi is being touted as the next big international currency. Just in the last year or two, the Chinese currency has begun to internationalize along a number of dimensions. RMB bank desposits are now available in Hong Kong. A RMB bond market has grown rapidly there as well, with the issuers including major multinationals such as McDonald’s. Some of China’s international trade is now invoiced in the currency. Foreign central banks have been able to hold RMB since August 2010, with Malaysia going first.read more