Orlik: President-elect Donald Trump's talk of tariffs and the rise of populist nationalism evident in the Brexit vote are warning signs of a coming storm. At this point, though, there's no way of knowing how severe the storm will be. The history of U.S.-China relations shows tough talk on the campaign trail rarely translates into action in office.
Trump has already backed away from other pledges. It's possible tariffs won't materialize. Indeed, a fiscal stimulus that puts more money into American shoppers' pockets could actually boost demand for China's exports. In Europe, anger is focused more on immigrants than trade. Absent sweeping tariffs, our forecast is for exports to grow about 5 percent in 2017, reversing the contraction in 2016.
Pettis: You may be right, Tom, but the global economy continues to be distorted by huge trade imbalances. The worst offender is Germany, whose record-breaking surpluses just keep growing. Meanwhile, Japan is running large surpluses again after five years of deficits. These and other large surpluses are driven not by rising productivity, but rather by structurally weak domestic demand, and in most cases, this weak demand isn't being addressed except by being exported. China is one of the few surplus countries that has actually improved domestic demand, driving its current account surplus down from 10.1 percent of GDP in 2007 to under 3 percent today. In absolute terms, however, China's surplus is barely 10 percent below its previous peak.The problem is not China as a US competitor, but rather US "partners" Germany and Japan.
Debate: Can China Survive Trump?
Michael Pettis and Tom Orlick