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Why China Can't Lead the Global South
With protectionism and populist sentiment on the rise in the US and Europe, China is promoting itself as the new champion of free trade and, by implication, the de facto leader of the global South.
The reality, however, is the opposite. China's raging domestic monetary imbalances have pushed it into an increasingly mercantilist position - one that forces the mainland to run external merchandise trade surpluses and prevents it from opening its markets to industrial imports from lower-income economies.
As a result, China is fundamentally incapable of assuming the same "growth leadership" role for the rest of EM that the West played for China and other tiger economies in previous decades, allowing them to industrialize and develop rapidly by selling huge volumes of manufactured goods into developed markets. Instead, China restricts itself to buying primary commodities while using the South as a vent for its own industrial surplus - a profoundly different proposition that puts money in the hands of concentrated, rent-seeking resource interests while minimizing opportunities for broad labor-intensive growth.
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