EconPol Opinions

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The Third Type of Inter-System Competition: Europe and the Rise of China

Clemens Fuest

China’s economy continues to grow apace, creating a worrying new form of economic and political competition for Europe and the US. While private entrepreneurship and free pricing play a growing role in China, the state continues to control economic developments in many sectors and owns almost all of the banking system. Is Chinese state capitalism about to outperform market economies in science and technology? Will its role in developing and emerging economies reduce the influence of the West?

Clemens Fuest, president of the ifo Institute and director of the Center for Economic Studies at the University of Munich, examines Europe’s ability to compete with this third type of inter-system competition.

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Tragedies Like Greece Must Not Be Repeated

Clemens Fuest

The third bail-out programme for Greece ended in August, but the crisis isn’t over. Nine years after the crisis broke, public debt still amounts to 180 percent of gross domestic product, a level incompatible with stable economic development. There have been improvements: the increase in public debt has been brought to a halt, exports of goods and services almost match the level of imports, and unemployment fell below 20 percent in June 2018, the lowest rate since September 2011. But the country can only recover if it implements further reforms, and it must do so independently of further bail-outs. And, if we are to avoid a similar tragedy in Greece or elsewhere, the Eurozone must change too.

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How to exit the euro in a nutshell – ‘Il Piano Savona’

Daniel Gros

Paolo Savona will now become Minister for EU affairs in the new Lega/5 stars government. He has been the main author of a plan for Italy’s exit from the euro. This Plan, which has now been made public, is briefly analysed here to shed some light on the strategy that has apparently been adopted by the Lega Party which has insisted on his participation in the government.

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Trade Wars in a ‘Winner-takes-all’ Economy

Daniel Gros

Trump’s trade follies have attracted the attention of policy makers and markets across the world. This is only natural given that the US has switched from being a major underwriter of the global multilateral trading system to its number one enemy. But dramatic changes like this rarely happen without some deeper undercurrent that enables erratic politicians to overturn long-established structures and mechanisms. A closer look at the key issue between the US and China reveals that today’s ‘trade war’ is taking place in a different economic framework than in the past.

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A Trumpian Turn in EU Trade Politics and the Silence of Germany

Gabriel Felbermayr

On December 5, 2017, the European institutions - Commission, Council, and Parliament - reached political agreement on reforming the EU’s trade defense instruments. This “modernization” of anti-dumping legislation is, in fact, an attempt to provide the EU with stronger tools to tackle the allegedly “unfair” practices of its trade partners. On its website, the Commission advertises that the deal will enable the EU to impose higher duties on dumped products. Does Germany’s position signal a new and worrying stance toward free trade?

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