Worth noting the Trump admin has succeeded in reducing the trade deficit vs GDP - US trade deficit for 2026 is tracking at 2.5% the lowest it’s been for a while- Huge success to be able to reduce this to 2% by the end of the presidency? Exports / particularly AI led will increase materially

For those wondering why Setser strips gold imports out of China’s trade data, the reason is that gold can be purchased for two very different purposes. You can buy it for jewelry or manufacturing, or you can buy it as a store of value, much like buying a gold ETF, government bonds or property. The former is clearly a current-account transaction; the latter, when the asset is foreign, is a financial-account transaction. The official balance-of-payments rules, however, do not make this distinction for physical gold. Nonmonetary gold is recorded as a good whether it is used for jewelry or held as a store of value. A foreign gold ETF is unambiguously an acquisition of a foreign financial asset, but an imported gold bar can be an almost perfect economic substitute and is nonetheless recorded as an import of goods. This matters for China, especially in recent years. Chinese jewelry demand has collapsed relative to investment demand: in the first half of 2026, bar-and-coin demand reached a record 314 tons, more than twice the 136 tons of jewelry demand. So Setser is making an analytical adjustment. Much of the recent surge in Chinese gold imports appears to reflect a shift in household and investor portfolios toward gold rather than a comparable increase in demand for goods and services. That is why stripping gold out of the trade balance can give us a better picture of the underlying goods imbalance.

Exclusive: The German government will most likely not nominate @bundesbank President Nagel as @ecb chief. Instead, a German personnel reshuffle is being discussed: Nagel could swap jobs with @Isabel_Schnabel. All the details 👇

Blast from the past from me, writing 15 years ago in 2011 together with @ianbremmer in @HarvardBiz. Called it. “Conventional wisdom says that [in] U.S.-China relations, commerce plays a stabilizing role ... But in the next few years, commercial ties between the two countries will almost certainly become more competitive and could even disrupt the relationship. That’s because China wants to become a leader in just the kinds of technology sectors that have traditionally given the U.S. a global edge. The result will be increased competition between the two countries—within China and globally—and a deepening unease on both sides. China has made no secret of its goals ... China is set on developing higher-value-added and technology-intensive industries. And its huge capacity to mobilize domestic capital gives it the power to do so. For many U.S. firms, the first battleground will be within China, where there is already significant competition between foreign and local companies for market share ... And it’s a sentiment that extends beyond technology companies ... into the manufacturing sector. But the next battleground will be the global marketplace for sophisticated technologies. In some sectors, such as high-speed rail, China is already a leader, largely because it demanded technology as the price for domestic market access. These trends have had political consequences in both countries. The once-solid coalition of U.S. businesses and officials that helped to achieve permanent normal trading status for China is stressed and fraying. Multinationals are adapting quickly to changes in the landscape. ... Such collaboration may help to redefine at least some U.S.-Chinese corporate partnerships. But the overall trend will be one of increased tension in the superpowers’ commercial relationship, now that China is aiming squarely at the heart of U.S. advantage.”

1/3 SCMP: "HSBC estimated that lowering the high precautionary savings rate of migrant workers from 54% to 45% – closing half the gap with registered urban residents – could unlock 637 billion yuan in additional spending a year, equivalent to roughly 0.5% of annual GDP."

China's construction machinery sector posted some of the strongest international revenue numbers in years. Zoomlion, Sany, XCMG, LGMG — all up sharply in H1 2026, driven almost entirely by overseas demand. The profit story is different. The yuan has strengthened ~5.5% since late 2025. For companies earning in dollars and euros but reporting in RMB, that's not a footnote — it's a first-order earnings variable. Revenue goes up. Profits go down. The headline looks like momentum. The underlying picture is margin compression. Power Construction Corporation of China makes this concrete: international revenue +30.63%. Net profit -29.56%. Same story at China Yuchai's MTU joint venture: premium diesel segment growing 40%+, margins still contracting. Here's the structural problem: these manufacturers pivoted overseas because domestic construction demand collapsed. They needed international markets. Now the same yuan strength that reflects China's current account surplus is taxing every dollar of foreign revenue they bring home. And the PBOC isn't going to fix it. "Basic stability" is the doctrine. Managed depreciation to relieve export margins isn't on the table. The cost-arbitrage advantage that built this sector's global position is narrowing — faster than management commentary suggests. Strong revenues. Weakening margins. Watch the gap.