this post was submitted on 18 Dec 2024
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Countries like China, Germany, Taiwan, etc. have competitive exports because they have direct and indirect subsidies to their manufacturing sectors at the expense of their household sector.
Some of these subsidies include a weak currency relative to their economy, weakened labour laws, preferential interest rates, capital controls, labour movement restrictions, etc.
China uses all of these. Germany primarily used the Hartz "reforms" which basically decoupled wage growth from productivity and GDP growth.
The reduces the household share of national income and they cannot afford to consume the production of their manufacturing sector and therefore the excess production must be exported.