Five challenges for Biden that could trigger a Trump comeback

Globalization Bites Back

One way to understand Trumpism is as a reaction against the globalization of the U.S. economy. A team of economists found a significant correlation between the impact of imports from China on a county’s economy and its swing to Trump in 2016. Trump promised to isolate the U.S. economy, to put America first.

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Five years later, the economies of the United States and China remain closely bound, presenting another hazard for the president’s party. One of China’s largest property developers hovers on the edge of default on its enormous debts. This is only the most recent in a sequence of crises that have buffeted China’s massively indebted real-estate sector since 2018.

Real estate is a huge share of the Chinese economy, a major employer, kept aloft by easy lending from state-owned banks. Even if the Chinese government can afford to eat the lending losses, what happens to the jobs? And if Chinese workers lose their jobs, what happens to the other countries that export to the world’s second-largest economy? The United States ranks only fifth as an exporter to China. But it is the second-largest exporter to China’s top supplier, South Korea, as well as the second-largest exporter to China’s next top supplier, Japan. A shock to the Chinese economy will be felt not only in the Pacific, but in Peoria.

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