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China’s ‘Economic’ Losses Aren’t Because of US Trade Success

China’s economic growth has been slowing down, but it was slowing down before President Donald Trump entered the White House, and it will continue to slow down, regardless of whether the U.S.-China trade dispute continues or not.

Supporters of the administration’s trade policy often cite the decline in China’s largest stock market, the Shanghai Stock Exchange, as a measure of China’s “economic” weakness.

This weakness is presumably one reason why the U.S. could win a trade war with China, but it’s important to remember that stock markets are not the economy.

Recently, Trump himself made such an allusion, noting, “Our country has done very well, and China, as you know, has not done very well. They’ve been down 30 percent, 32 percent. They’ve been down very substantially.”

Using the stock market as a measure of economic failure or success can be misleading. Stock markets don’t capture the economic activity of companies not listed on an exchange, let alone all the economic activity in a country—less so in China than in the U.S.

The Shanghai Stock Exchange is roughly valued at more than $4.1 trillion. China’s gross domestic product is measured at more than $12.2 trillion.

Moreover, comparing the stock markets in China and the U.S. is like comparing apples to oranges. The New York Stock Exchange is valued at more than $28 trillion and U.S. GDP at $19 trillion.

Read the full story from The Daily Signal

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