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Who Has the World’s Largest Economy? (Project Syndicate, 7 min read) The World Bank has published the results of the International Comparison Program (ICP), which calculates price levels and GDP for 176 countries. China’s total real income surpassed the US on a PPP basis for the first time in 2017 according to ICP data, but lags the global average in terms of income per capita. This suggests China hasn’t surpassed the US as an economic powerhouse just yet.
Hong Kong Security Law: China Weighs Risk the US Will Go for ‘Nuclear Option’ and Cut Beijing from the Dollar Payment System (South China Morning Post, 2 min read) Risk exists that the US can impose financial sanctions like those placed on Iran and Russia. It’s a ‘low probability event’ for the following reasons: it can turn the ‘cold war’ into a hot one, China holds 4.4% of total US national debt, and this will increase the internationalization of the Yuan (which the US doesn’t want).
Why Europe is Irrelevant to Challenging China (Balding’s World, 6 min read) The EU will not prioritize or interfere with China-affiliated geopolitics. First, Europe is not a political entity with autonomous decision making. Instead, each state has a different kind of relationship with China without any united voice. Second, Europe’s institutions and international alliances (i.e. NATO) has been broadly to solve Eurocentric problems (i.e. the threat of the USSR).
Trump’s latest move on Hong Kong is bluster (PIIE, 2 min read) Nicholas Lardy points out that even if Hong Kong’s special trade status is revoked the economic impact on China and Hong Kong would be marginal. Re-exports account for 95% of Hong Kong’s exports, with the majority produced in China and therefore already subjected to higher tariffs.