Twitter tourist slop.
I'm not in the mood to be polite today. If you truly believe all this trash, you shouldn't be teaching; you need to be taking classes instead.
Let's break it down: 🧵
The Chinese can’t slow down their exports because their weak internal demand simply can’t absorb the massive production, which relies on exports by design. When the tariffs hit, the Chinese redirected the flows and began dumping cheap goods anywhere and everywhere, with some places serving as conduits for reexports of laundered goods to the West. Beijing can’t risk a deflation at home because a serious drop in production would mean unemployment and very many unhappy people.
But… with the chokehold on the rare earths processing, Beijing can force the US to back down on the tariffs simply because it will take longer for the world to get saturated with Chinese goods to the point they stop buying them than for the US ton start hurting real bad from the restrictions on rate earths China imposed.
This means the US is in a weaker bargaining position in the short- and medium- term, and it cannot take advantage of China’s long-term structural weakness that makes its “perpetual export growth” model unsustainable (they have to increase domestic demand).
And that’s what we saw from Trump’s meeting with Xi. Washington jumped the gun with the insanely high tariffs and was not ready to handle the response. The tariffs should have been ratcheted up to where we could begin to rebuild the strategic supply chain, and then gradually increased over time if necessary. Not as splashy and it would enable China to keep selling to us but it would not have triggered this row, which exposed the temporal asymmetry.
Many of the things this administration does have good reasons behind them but the incompetents seem to always choose the worst possible way of doing them, with the end result sometimes leaving us in a worse position than before.
1. "...the massive production, which relies on exports by design".
Meaningless. How would you prove any industry relies on exports "by design"? Unless you've got a recent planning document that says "we will develop this industry with exports in mind", how could you determine production is "designed" for exports? Words have meaning. Use them with intention.
But more importantly than whether export reliance is "by design" or not, the bigger question is: is there actually reliance? Reliance that means something - that is usable for leverage? Since this is something we can asesss quantitatively, we should be very careful about making such claims without data.
The answer is: no. In 2025, very few Chinese industrial segments rely on export demand to ANY foreign country (not just the US) to any considerable degree, expressed in terms of revenue. The major exception is consumer electronics, with a honorable mention to electrical equipment (e.g. solar panels). It wasn't always like this. In decades past, production in many segments indeed was stimulated mostly by export demand. But that's the past. The main driver of this shift is growth in Chinese consumer demand growth- they are now consuming much, much more of Chinese production than their international counterparts.
Of course Chinese policymakers would like consumer demand growth to be even higher. We see lots of signs consumption demand will be a big focus in the 15th FYP. But the longer you go on believing it's *weak*, the longer you will miscalculate re: trade and exports - sometimes catastrophically.
2.
"Beijing can’t risk a deflation at home because a serious drop in production would mean unemployment and very many unhappy people."
Reality is more nuanced than this boring old trope. Employment is important, but so is sector health. Multiple times before, China has shown itself willing to restructure entire industries, creating unemployment, for the improvement of sector health overall.
In 2015/16, the Supply-Side Structural Reform program was expected to lead to 1.8 million job losses in the steel and coal sectors. This was forecasted and planned for. It was pursued nonetheless, because it was deemed to be necessary and healthy for the sector.
Since 2021, the Three Red Lines policy aimed at curbing bad debt in the real estate sector has contributed to a real estate downturn that has trimmed probably a third of the 30M jobs that existed in real estate construction back in 2020. Many were likely absorbed by green infrastructure. This was surely expected in advance. It went ahead anyway.
China worries about unemployment as much as other countries do, but is still able to made hard choices when they are seen as necessary. The idea that China is uniquely vulnerable or susceptible on exports because it can't risk shuttering production over fear of unemployment is a naive one. It's also a non sequitur in this conversation, since Chinese productive employment is less reliant on export demand anyway.
reuters.com/article/business…
3.
"it will take longer for the world to get saturated with Chinese goods to the point they stop buying them than for the US ton start hurting real bad from the restrictions on rate earths China imposed."
This is true, but not for the reason OP thinks. Rare earth export controls bite instantly, yes, but the reason it would take a long time for the world to get saturated with Chinese goods is because the flow of Chinese goods to RoW is still relatively small compared to how big it COULD be - and certainly small compared to the flow of Chinese goods to Chinese consumers.
It's a big ol' world out there, and Chinese producers have now been inspired in 2025 to build nascent sales channels to markets that weren't even on their radar back in 2016. Many of them are small, or micro markets, but there are decent-sized ones too, and as we can see from the export numbers, it's clearly enough in aggregate to keep growth numbers strong. The idea pursued by Brooks et al that rising Chinese exports to new destinations is a sign of weakness is a funny backwards-thinking cope mechanism. Exports in aggregate are up. Exporters have more money in their bank accounts than they did before and their revenue sources are more diversified too. Any risk manager can tell you their vulnerabilities have decreased.
And for industries that aren't consumer electronics, exports are still just the "cherry on top" of their domestic revenue (which is the actual ice cream sundae).
Nov 2, 2025 · 4:21 AM UTC
4.
"This means the US is in a weaker bargaining position in the short- and medium- term, and it cannot take advantage of China’s long-term structural weakness that makes its “perpetual export growth” model unsustainable (they have to increase domestic demand)."
In other words: "I'm actually stronger; the other guy happened to win on a technicality". 🤔
This allows for no introspection about the failures. The United States walked into a trade war assuming it had leverage on trade that it didn't have. It assumed China had reliance on exports that it didn't have. It assumed China couldn't adopt responses it turned out to be totally capable of taking. And all this was so knowable in advance. In other words, it went bady because some in the USG seemingly forgot how to use Google. Pretending China won on a technicality is loser cope.
By the way, China doesn't have a perpetual export growth model. No one is even bothering to debate this because it's quantitatively false. If you aren't a tourist and have paid attention to the China econ debate sometime over the last 15 years, you'll know the core debate is whether China has an unsustainable investment-led growth model...not a export-led one.
5.
"Many of the things this administration does have good reasons behind them but the incompetents seem to always choose the worst possible way of doing them, with the end result sometimes leaving us in a worse position than before."
This is a tangent now. But I would blame the overall breakdown of instutitional standards rather than individual incompetence. We have always had incompetent people in the system, but the prevailing institutions were generally sucessful in marginalizing them so their potential for causing real damage was limited. But something changed in the enabling environment, and now the incompetent people are increasingly elevated to positions of ultimate authority, and the systems to check them are enfeebled beyond relevance.
These days, there's no accountability - on social media or otherwise - for blown forecasts or predictions. Bald illiteracy and innumeracy are no longer disqualifying. There was a time when displaying public ignorance would incur real political or professional damage. Those days are gone. We're in the post-facts era, and I'm not sure we're going back.
