Advanced Economies and Emerging Markets

CHAPTER 6

The Rebalance of Global Trade

Overview

That global trade imbalance matter has been made abundantly clear by the ongoing global economic malaise. The likely path to more sustainable levels of trade deficits, nevertheless, remains far less clear. Consider the potential global impact of populist cries for protectionist trade policies ostensibly aimed at easing the difficult transition to more sustainable trade and debt balances. In the event of a trade war, which we discussed in Chapter 5 and is already happening, we will all lose. Perhaps even more unsettling, however, is how these consequences would most likely manifest across nations. The evidence presented in this chapter suggests that countries like China, which depend heavily on ...