I found the linked article hard to follow. I think he was trying to write in a very colloquial manner but still using some terms of art in a way that is specific to his field. Maybe someone could help me figure out a couple passages?
"Chinese savers did not want even more Chinese factories. One of many reasons for this saving (more later, but it helps to make the story) is that China is aging and has little safety net, so its middle age workers want to put money aside, to withdraw when they get old. So, those savers chose to invest in the US."
"From the US side, we are investing more than we are saving. China, in effect, wants to send us factories. But China doesn’t make portable factories. It’s great at making consumer goods. So China sends us consumer goods so that we can build our own factories without lowering consumption."
First, I'm finding it hard to believe that Chinese "middle age workers" are driving a significant portion of the investment in the US. Is this possibly true? Maybe he means that they put their yuan-denominated savings in local banks, and then the banks convert this to invest in US securities?
And I thought that economists usually distinguished between "saving" (capital preservation) and "investing" (capital growth) but at least in the first quote he seems to be using them as synonyms. But in the first sentence of the second quote, he is definitely distinguishing the two.
But what does "China, in effect, wants to send us factories" mean? Is he equating buying US stocks with "send us factories"? This would be a strange usage if the majority of the investment is in big existing tech companies selling software and services. Or is this just a confusing and complicated way of saying they "want" a strong dollar?
Can anyone help me parse these passages as they were intended?
"Chinese savers did not want even more Chinese factories. One of many reasons for this saving (more later, but it helps to make the story) is that China is aging and has little safety net, so its middle age workers want to put money aside, to withdraw when they get old. So, those savers chose to invest in the US."
"From the US side, we are investing more than we are saving. China, in effect, wants to send us factories. But China doesn’t make portable factories. It’s great at making consumer goods. So China sends us consumer goods so that we can build our own factories without lowering consumption."
First, I'm finding it hard to believe that Chinese "middle age workers" are driving a significant portion of the investment in the US. Is this possibly true? Maybe he means that they put their yuan-denominated savings in local banks, and then the banks convert this to invest in US securities?
And I thought that economists usually distinguished between "saving" (capital preservation) and "investing" (capital growth) but at least in the first quote he seems to be using them as synonyms. But in the first sentence of the second quote, he is definitely distinguishing the two.
But what does "China, in effect, wants to send us factories" mean? Is he equating buying US stocks with "send us factories"? This would be a strange usage if the majority of the investment is in big existing tech companies selling software and services. Or is this just a confusing and complicated way of saying they "want" a strong dollar?
Can anyone help me parse these passages as they were intended?