Trade Policy Isn't Driving China’s Trade Surplus | Matthew Klein

Matthew Klein, founder of The Overshoot and UN/BALANCED and co-author of Trade Wars Are Class Wars with Michael Pettis joins Monetary Matters to discuss what factors really lead to major trade and capital flow imbalances between countries. He argues that factors like income inequality, domestic economic policy and decisions being made at the corporate level can have far more impact than country level trade policy. He also discusses why even though extreme trade and capital flow imbalances may be dangerous, implementing improper solutions can exacerbate the damage. Follow Matthew Klein on Twitter: https://x.com/M_C_Klein Follow Jack Farley on Twitter https://x.com/JackFarley96 Read Matthews Substack The Overshoot here: https://theovershoot.co/ Follow Monetary Matters on: Apple Podcast https://rb.gy/s5qfyh Spotify https://rb.gy/x56dx5 YouTube https://rb.gy/dpwxez Timestamps: 00:00 Intro 00:52 Why Trade Wars Are Class Wars 12:13 Trade Surpluses vs Trade Deficits 18:51 Income Distribution Drives Capital Flows 28:28 China's Shifting Income Distribution 33:41 The Problem With China's Growing Trade and Current Account Surplus 41:51 Who is Winning in China? 44:04 How to Combat China's "Cheating on Trade" 49:25 Who Has the Upper Hand in Trade Negotiations? 54:05 Will Tariffs Drive Reshoring? 59:53 How Can the US Restore Balance of Trade? 01:08:29 Conclusions