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A meeting of the two largest economic powers

Published Tue, Sep 22, 2015 · 09:50 PM
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CHINESE President Xi Jinping is visiting the US and meeting US President Barack Obama in the White House this week. They met in Beijing last November when they agreed on stronger voluntary efforts against atmospheric pollution - hopes again run high for new agreements to be made. Of course there will be a public agenda, but their many aides will hold wide discussions, some will focus on trade and on the Trans-Pacific Trade Agreement.

World trade volumes faltered after the financial crash of seven years ago but there are signs of renewed optimism as earlier initiatives come into operation. The expansion of the Suez and the Panama canals are virtually complete and will allow the largest of ships to pass through. And, well-timed, more ships carrying up to 19,000 containers are being deployed, as well as massive bulk ships and car carriers like the Hoegh Autoliner that can carry 8,500 cars. They epitomise high economies of scale and a belief in the future of global trade.

Up to the 1970s the world was generally in balance with respect to trade and its monetary implications, and then gradually there was massive change. The US achieved a large deficit of US$820 billion in 1990 which has now been reduced to US$700 billion. In Europe, Germany was long its economic powerhouse and has a national trade surplus of US$50 billion. And China, which was roughly in balance until the 1990s, now has a US$90 billion surplus.

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