Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, August 24, 2023

AI Summary. The authors estimate that a 1% increase in the working-age share of the population raises income per capita by about 1%, with an added 0.1–0.4% boost to growth in later periods. They project population aging will slow annual income per capita growth in advanced economies by 0.4–0.8 percentage points through 2050, while spurring growth in less developed countries.

Rainer Kotschy and David Bloom National Bureau of Economic Research
Date Posted:

.@nberpubs analysis finds that a 1% increase in the working age share of population raises per capita income by ~ 1% and forecasts a 0.4-0.8pp drop in growth of income per capita from population aging.

How much will population aging slow income growth in advanced economies?

Core argument: A 1% increase in a country's working-age population share is estimated to raise income per capita by about 1% and to amplify growth by a further 0.1–0.4% in subsequent periods, with patterns stable across OECD and non-OECD countries.

The results document that shifts in population age structure significantly affect economic growth. A 1% increase in the working-age share raises income per capita by about 1%. A 1% greater working-age share amplifies growth by 0.1–0.4% in subsequent periods. These patterns are stable for both OECD and non-OECD countries. We combine the empirical estimates with demographic predictions and project economic growth in 2020–2050. Without population aging, income per capita in OECD countries is projected to grow on average by 2.5% annually between 2020 and 2050. With population aging, growth is projected to slow by 0.8 pp if we measure working ages retrospectively but only by 0.4 pp if we measure [changes in age patterns of health]. In contrast, population aging is projected to spur average growth of income per capita in non-OECD countries.

Takeaways by Macro Roundup® AI

  1. A 1% increase in a country's working-age population share is estimated to raise income per capita by about 1% and to amplify growth by a further 0.1–0.4% in subsequent periods, with patterns stable across OECD and non-OECD countries.
  2. Absent population aging, OECD income per capita is projected to grow 2.5% annually between 2020 and 2050, while aging is projected to slow that pace by 0.8 percentage points using retrospective working-age measures and by 0.4 points using health-based age measures.
  3. Population aging is projected to spur average growth of income per capita in non-OECD countries, in contrast to its projected slowing of OECD growth.

Related Articles:

  • Labor Market Indicators Are Historically Strong After Adjusting for Population Aging — After adjusting for population aging and gender composition, the U.S. employment-to-population ratio has returned to its pre-pandemic trend and the age-adjusted labor force participation rate matches rates last seen in 2001. The authors argue that on this basis the labor market is historically strong, with elevated and even record participation and employment measures.
  • How a Vast Demographic Shift Will Reshape the World — In East Asia and Europe, growing numbers of retirees will depend on a shrinking working-age population, and some Asian countries are aging before becoming rich — China hit its peak working-age population at 20% of US income levels at the same point, Vietnam at 14%.
  • The Forever Labour Shortage — Research from the Bank for International Settlements finds that the young and the old are inflationary while the working-age population is disinflationary, because prime-age workers produce more supply than demand and dependents do the opposite. On this view, an ageing population and rising dependency will constrain supply and add to inflation.

AI Summary. Higher interest rates raise cash flows to fixed income holders, but the Federal Reserve and foreign investors hold 50% of outstanding Treasuries and foreigners hold 28% of outstanding corporate credit, so much of that added income does not boost US growth. The author argues higher rates are a net negative for the US economy.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk @apolloglobal notes higher interest payments aren’t flowing back into the American economy as foreigners and the Fed own 50% of Treasuries.

Do higher interest rates hurt the US economy overall?

Core argument: The Federal Reserve and foreign investors hold 50% of outstanding Treasuries, so much of the additional cash flow from higher US yields does not boost US GDP growth.

When interest rates increase, holders of fixed income get a higher cash flow. The problem is that the Fed and foreigners own 50% of Treasuries outstanding, and foreigners own 28% of [investment grade and high-yield corporate] credit outstanding, so a lot of the additional cash flow created by higher US yields is not boosting US GDP growth. The bottom line is that higher interest rates are a net negative for the US economy.

Takeaways by Macro Roundup® AI

  1. The Federal Reserve and foreign investors hold 50% of outstanding Treasuries, so much of the additional cash flow from higher US yields does not boost US GDP growth.
  2. Foreign investors own 28% of outstanding US investment-grade and high-yield corporate credit, leaving part of the higher interest income from rising yields outside the US economy.
  3. Higher interest rates are, on balance, a net negative for the US economy, even though holders of fixed income receive higher cash flow when rates increase.

Related Articles:

  • Why the Era of Historically Low Interest Rates Could Be Over — Federal Reserve officials' median longer-run projection implies a real neutral interest rate of 0.5%, matching a widely followed New York Fed model, while a Richmond Fed model puts it at 2%. Some economists argue neutral has risen because of larger budget deficits and investment to transition to a lower-carbon economy.
  • Rising Rates Slowing Growth Through Higher Debt Servicing Costs — US government annual debt servicing costs are close to $1tn, with net interest expense as a share of total government revenues near all-time highs. Higher interest rates act as a drag on growth through debt servicing costs for the government as well as for consumers and corporations, making it harder for elevated rates to persist when government debt is high.
  • Interest Rates Hit 16-Year Record — Interest rates across the Treasury yield curve stand roughly 75 basis points above Congressional Budget Office baseline projections, with the ten-year note at 4.30%, its highest in 16 years. If that gap persists, the authors estimate it would add $2.3tn (6% of GDP) to the debt over ten years.

AI Summary. Inventors who move to incumbent large firms and those who move to young small firms show indistinguishable patenting and earnings paths beforehand, then diverge afterward. The authors suggest large firms pay inventors more but assign them projects less likely to yield patents, including innovations less likely to threaten existing product lines.

Matt Clancy and Arnaud Dyèvre What's New Under the Sun
Date Posted:

.@mattsclancy @ArnaudDyevre argue large firms have different incentive structures for innovation than small firms, causing large firms to emphasize high-volume process innovation vs. patent applications and new product development.

Do large firms pay inventors more to produce fewer patents?

Core argument: Patent applications and earnings of inventors who later join incumbents versus entrants are indistinguishable before the job change and diverge only after they begin working in different types of firms.

In the figure above, the gap in patent applications and earnings between inventors who go to incumbents and entrants are indistinguishable before the job change, and then begin to diverge after they start working in different types of firms. Two equally productive inventors, one working for a young/small firm and another working for an incumbent/large firm, will be told to work on problems that are different. The inventor in the large firm might be asked to work on innovations that are less likely to threaten the firm’s existing product lines, and therefore less likely to lead to patents (let alone high-impact patents). Akcigit and Goldschlag (2023) suggest that’s because large firms are paying their inventors better but asking them to work on projects less likely to lead to new patents and products.

Takeaways by Macro Roundup® AI

  1. Patent applications and earnings of inventors who later join incumbents versus entrants are indistinguishable before the job change and diverge only after they begin working in different types of firms.
  2. Akcigit and Goldschlag (2023) suggest large firms pay their inventors better while assigning them projects less likely to lead to new patents and products.
  3. Two equally productive inventors are directed to different problems depending on employer type, with the inventor at a large incumbent possibly asked to work on innovations less likely to threaten existing product lines and less likely to yield patents.

Related Articles:

  • The Size of Firms and the Nature of Innovation — Corporate research and development spending scales proportionately with sales, but evidence indicates firms produce fewer inventions per research dollar as they grow. Larger firms' innovation is more likely to improve existing products than create new ones, and patent evidence shows bigger firms engage in more incremental innovation and cite their own patents more often.
  • America’s Corporate Giants Are Getting Harder To Topple — Only 52 of the Fortune 500 largest US companies were founded after 1990 and just seven after 2007, while 280 predate America's entry into World War II; the group's average age has risen from 75 to 90 years since 1990.
  • Where Have All the “Creative Talents” Gone? Employment Dynamics of US Inventors — Data on over 760,000 US inventors show they are increasingly concentrated in large incumbent firms and less likely to work for young firms or become entrepreneurs; inventors hired by incumbents rather than young firms see earnings rise 12.6% while innovative output falls 6–11% over four years.

AI Summary. Among roughly 900 US sectors, the number where the four largest firms hold over two-thirds of the market rose from 65 in 1997 to 97 in 2017. An estimate of "excess" profits for the world's 3,000 largest listed non-financial companies — returns on invested capital above a 10% hurdle rate — puts them at $4tn, nearly 4% of global GDP.

Economist Staff The Economist
Date Posted:

.@TheEconomist notes that American firms collect 41% of “excess profits” globally as measured by firms’ return on invested capital above a hurdle rate of 10%.

Are markets becoming more concentrated and profits rising above competitive levels?

Core argument: The Economist estimates that "excess" profits — returns on invested capital above a 10% hurdle rate — for the world's 3,000 largest listed non-financial companies by market value reached $4trn over the past year, or nearly 4% of global GDP.

Out of some 900 sectors in America the number where the four biggest firms have a market share above two-thirds grew from 65 in 1997 to 97 by 2017. The Economist has come up with a crude estimate of “excess” profits for the world’s 3,000 largest listed companies by market value (excluding financial firms). Using reported figures from Bloomberg we calculate a firm’s return on invested capital above a hurdle rate of 10% (excluding goodwill and treating research and development, R&D, as an asset with a ten-year lifespan). This is the rate of return one might expect in a competitive market. In the past year excess profits reached $4trn, or nearly 4% of global GDP. American firms collect 41% of the total, with European ones taking 21%. The energy, technology and, in America, health-care industries stand out as excess-profit pools relative to their size.

Takeaways by Macro Roundup® AI

  1. The Economist estimates that "excess" profits — returns on invested capital above a 10% hurdle rate — for the world's 3,000 largest listed non-financial companies by market value reached $4trn over the past year, or nearly 4% of global GDP.
  2. American firms collect 41% of the estimated excess profits and European firms 21%, with energy, technology and, in America, health care standing out as excess-profit pools relative to their size.
  3. Among roughly 900 American sectors, the number where the four largest firms hold a market share above two-thirds rose from 65 in 1997 to 97 in 2017.

Related Articles:

  • The Economics of Inequality in High-Wage Economies — United States Income, Wealth, Consumption, and Inequality Diana Furchtgott-Roth
  • America’s Corporate Giants Are Getting Harder To Topple — Only 52 of the Fortune 500 largest US companies were founded after 1990 and just seven after 2007, while 280 predate America's entry into World War II; the group's average age has risen from 75 to 90 years since 1990.
  • Birth, Death, and Wealth Creation — The median age at which US companies went public rose from 7.9 years in 1976–2000 to 9.5 years in 2001–2022, implying that more wealth creation now occurs in private markets. Research on more than 28,000 US-listed companies since 1926 finds that just under 60% destroyed $9.1tn of wealth while about 2% created $50tn.

AI Summary. An analysis network estimates that between 817,000 and 922,000 people have left Russia since the start of the war in Ukraine, roughly 1% of the country's workforce, worsening an acute labour shortage. A Moscow think-tank reported that 35% of manufacturing businesses lacked enough workers, the highest share since 1996.

Economist Staff The Economist
Date Posted:

Since Russia invaded Ukraine in February 2022 approximately 1% of the Russian labor force has emigrated, exacerbating an acute labor shortage. @TheEconomist

Is wartime emigration deepening Russia's labor shortage?

Core argument: Re: Russia estimates that 817,000–922,000 people have left Russia since February 2022, roughly 1% of the country's workforce, exacerbating an acute labour shortage.

Re: Russia, an analysis and policy network, has examined various estimates and available data from countries that have accepted large numbers of Russian émigrés. They found that between 817,000 and 922,000 people have left Russia since February 2022. Re: Russia reckons that the wartime emigrants account for roughly 1% of Russia’s workforce, exacerbating an acute labour shortage. The Gaidar Institute, a think-tank in Moscow, said that 35% of manufacturing businesses did not have enough workers in April, the highest figure since 1996. Shortages of specialists are especially severe: according to one Kremlin official, at least 100,000 IT professionals left the country in 2022.

Takeaways by Macro Roundup® AI

  1. Re: Russia estimates that 817,000–922,000 people have left Russia since February 2022, roughly 1% of the country's workforce, exacerbating an acute labour shortage.
  2. The Gaidar Institute, a Moscow think-tank, reported that 35% of Russian manufacturing businesses lacked enough workers in April, the highest figure since 1996.
  3. At least 100,000 IT professionals left Russia in 2022, according to one Kremlin official, with shortages of specialists especially severe.

Related Articles:

  • Russian Power in Decline — World Health Organization estimates put remaining life expectancy for 15-year-old Russian males in 2019 at 53.7 years, the same as in Haiti and worse than in 23 of the 46 countries the United Nations classifies as least developed. Projecting from those survival patterns, more than one in four 20-year-old Russian males would die before age 60, twice the European risk.
  • Russia’s Population Nightmare is Going to Get Even Worse — Russia lost an estimated 1.9m–2.8m people beyond its normal demographic decline over a roughly three-year span, combining pandemic deaths, war casualties and emigration. Life expectancy for Russian males aged 15 fell by nearly five years, and women now outnumber men by at least 10m.
  • Pollution Reveals What Russian Statistics Obscure: Industrial Decline — Satellite measurements of nitrogen dioxide and other pollutants over Russia's industrial regions show emissions down 6.2% over the past year, exceeding declines seen during the worst of the coronavirus pandemic, while Russia's official statistics reported industrial production rising 1.2% year-over-year.

AI Summary. Huawei has entered chip production, acquiring at least two existing plants and building at least three more, part of at least 23 fabrication facilities underway in China with planned investments of more than $100bn by 2030, according to the Semiconductor Industry Association. China is on track to hold more than half of global capacity in older-generation semiconductors by around 2030.

Ian King and Debby Wu Bloomberg
Date Posted:

Huawei has received $30B in state funding to build secret semiconductor fabrication facilities across China in an effort to evade US semiconductor sanctions. @markets

Huawei has received $30B in state funding to build secret semiconductor fabrication facilities across China in an effort to...

Is China on track to control most legacy chipmaking capacity?

Core argument: The Semiconductor Industry Association estimates at least 23 chip fabrication facilities are in the works in China, with planned investments of more than $100 billion by 2030.

Huawei moved into chip production last year and acquired at least two existing plants and is building at least three others. The Semiconductor Industry Association estimates there are at least 23 fabrication facilities in the works in the country with planned investments of more than $100 billion by 2030. By 2029 or 2030, China is on track to have more than half the industry’s global capacity in older-generation semiconductors. “China is roughly spending as much in subsidies as the rest of the world combined,” said Chris Miller, author of “Chip War.”

Takeaways by Macro Roundup® AI

  1. The Semiconductor Industry Association estimates at least 23 chip fabrication facilities are in the works in China, with planned investments of more than $100 billion by 2030.
  2. China is on track to hold more than half of the industry's global capacity in older-generation semiconductors by 2029 or 2030.
  3. Huawei has moved into chip production, acquiring at least two existing plants and building at least three others, while Chris Miller, author of "Chip War," says China is spending roughly as much in subsidies as the rest of the world combined.

Related Articles:

  • China’s ‘Two Sessions’ 2023: Xi Jinping Directly Accuses US of Leading Western Suppression of China — China's leadership has accused the United States of leading Western countries in all-round containment and suppression of China's development, calling it a severe challenge. China's central government proposed raising science and technology spending by 2% to 328bn yuan ($47bn) and overhauling how government research funds are allocated, giving scientists greater say over technological road maps.
  • US Adds 36 Chinese Companies to Trade Blacklist — The US Commerce Department added 36 Chinese companies to its "entity list" trade blacklist, requiring American firms to obtain hard-to-get licenses to export critical technologies to them. The move extends US efforts to slow China's development of advanced chips and military technologies such as hypersonic weapons.

Friday, August 25, 2023

AI Summary. Decomposing U.S. debt-to-GDP movements, the authors find the post-World War II decline from 106% to a trough of 23% was explained mostly by primary budget surpluses and interest-rate distortions from surprise inflation and pegged nominal rates; absent those, the ratio would have fallen only to 74%.

Julien Acalin and Laurence Ball National Bureau of Economic Research
Date Posted:

Improvement in the US debt-GDP ratio from 1946-1974 was driven primarily by primary government surpluses and distortions of real interest rates from surprise inflation and from pegged nominal rates, not overall economic growth. @AcalinJulien

Did economic growth alone shrink postwar U.S. debt-to-GDP?

Core argument: Absent primary surpluses and interest-rate distortions, with the path set entirely by r⋆ − g, the U.S. debt/GDP ratio would have fallen only from 106% in 1946 to 74% in 1974, rather than the actual trough of 23%.

We decompose the movements of debt/GDP into the effects of primary surpluses and deficits; distortions of real interest rates from surprise inflation and from pegged nominal rates; and the difference between the undistorted real interest rate and the growth rate of output (r⋆ − g). For the period up to 1974, we find that the fall in the debt-GDP ratio is explained mostly by primary surpluse and interest-rate distortions. Absent those factors, with the path of the ratio determined entirely by r⋆ − g, the ratio of 106% in 1946 would have fallen only to 74% in 1974 rather than the actual trough of 23%. As of the end of fiscal year 2022, the actual debt/GDP ratio stands at 102%, close to its peak of 106% in 1946. Over the last 76 years, however, g > r⋆ has contributed only modestly to debt reduction. History should not make us optimistic that the U.S. will grow out of its debt.

Takeaways by Macro Roundup® AI

  1. Absent primary surpluses and interest-rate distortions, with the path set entirely by r⋆ − g, the U.S. debt/GDP ratio would have fallen only from 106% in 1946 to 74% in 1974, rather than the actual trough of 23%.
  2. The decomposition attributes the fall in U.S. debt/GDP through 1974 mostly to primary surpluses and to real-interest-rate distortions from surprise inflation and pegged nominal rates, with g exceeding r⋆ contributing only modestly over 76 years.
  3. U.S. debt stood at 102% of GDP at the end of fiscal year 2022, close to its 1946 peak of 106%, and the authors argue history gives little reason for optimism that the U.S. will grow out of its debt.

Related Articles:

  • Is a U.S. Debt Crisis Looming? Is it Even Possible? — A debt spiral requires the interest rate on government debt to exceed the economy's growth rate; with inflation-protected 10-year U.S. bond yields near 1.83%, close to most estimates of sustainable growth, any spiral would be slow-moving. Stabilizing debt at 100% of GDP would require a 2% primary surplus.
  • Interest Costs Will Grow the Fastest Over the Next 30 Years — The Congressional Budget Office projects federal spending will reach 29.1% of GDP over three decades, with net interest on the national debt rising from 1.9% of GDP to 6.7%, or $5.4tn. Under that projection, interest becomes the largest single federal budget line item, surpassing Social Security, Medicare, and Medicaid.
  • American Gothic — US tax increases since 1950 of 2% of GDP or more occurred when overall tax receipts were a much smaller share of GDP than today. Restoring the ratio of entitlement to non-defense discretionary spending to its earlier level of 2.2x would require tax increases larger than those historical precedents.

AI Summary. New motorway bridges in the UK cost more than 3x as much per lane mile as in France, Denmark, or Norway, and adding lanes to existing British roads costs twice as much as in Germany. In both comparisons, only the US has higher costs.

John Burn-Murdoch Financial Times
Date Posted:

.@jburnmurdoch notes that American and British infrastructure costs are far higher than other advanced economies. He cites research that attributes this to “Nimbyism” such as environmental reviews.

Do Britain and America pay far more to build roads?

Core argument: New motorway bridges in the UK cost more than three times as much per lane mile as in France, Denmark, or Norway.

New motorway bridges in the UK cost more than three times as much per lane mile than in France, Denmark, or Norway, and additional lanes on existing British roads are twice as expensive as in Germany. In both cases, only the US faces even higher costs.

Takeaways by Macro Roundup® AI

  1. New motorway bridges in the UK cost more than three times as much per lane mile as in France, Denmark, or Norway.
  2. Adding lanes to existing British roads costs twice as much as in Germany, with the United States the only country facing higher costs than the UK on both bridges and road widening.

Related Articles:

AI Summary. A survey of house builders found that 31% in Florida and 29% in Southern California said buyers' home insurance concerns were somewhat slowing sales, versus 9% nationally. Researchers estimate that pricing in flood risk would reduce U.S. residential property values by at least $121bn, including over $50bn of overvaluation in Florida flood zones.

Jean Eaglesham Wall Street Journal
Date Posted:

The average home insurance cost for Floridians has tripled in the past five years. Homebuilders in California and Florida are reporting insurance costs are “somewhat slowing sales.”

Are rising home insurance costs slowing home sales in disaster-prone states?

Core argument: Almost a third of Florida house builders and 29% in Southern California said buyers' home insurance concerns were "somewhat slowing sales," versus 9% of builders nationally, according to a survey by John Burns Research & Consulting.

Almost a third of house builders in Florida said buyers’ concerns about home insurance were “somewhat slowing sales.” The proportion in Southern California was very similar, at 29%, the survey by John Burns Research & Consulting found. That is much higher than the national figure of 9% of builders reporting sales affected by insurance concerns. The risks of disasters haven’t been fully priced into property markets, partly because of flaws in the way federal flood insurance was priced, researchers say. If flood risks were taken into account, U.S. residential properties would be worth at least $121 billion less, according to a study earlier this year by nonprofit the First Street Foundation, the Federal Reserve and others. In Florida alone, properties in flood zones are overvalued by more than $50 billion.

Takeaways by Macro Roundup® AI

  1. Almost a third of Florida house builders and 29% in Southern California said buyers' home insurance concerns were "somewhat slowing sales," versus 9% of builders nationally, according to a survey by John Burns Research & Consulting.
  2. A study by the nonprofit First Street Foundation, the Federal Reserve and others estimated that U.S. residential properties would be worth at least $121 billion less if flood risks were taken into account, with Florida flood-zone properties overvalued by more than $50 billion.
  3. Researchers say disaster risks have not been fully priced into property markets, partly because of flaws in the way federal flood insurance was priced.

Related Articles:

  • Your Homeowners’ Insurance Bill Is the Canary in the Climate Coal Mine — Average annual homeowners insurance costs about $1,900 nationwide but roughly $4,000 in New Orleans and $5,000 in Miami, with US premiums up 12% in a year and expected to keep rising. Insurers, facing about 20 billion-dollar disasters a year, are adopting pricing models that incorporate warming-climate costs and withdrawing from risky areas, shifting exposure to state-backed plans.
  • Why California and Florida Have Become Almost Uninsurable — Wildfires in California and hurricanes in Florida have generated large volumes of insurance claims, while higher housing prices and construction and repair costs have made each claim more expensive. Insurers have also faced costlier reinsurance, with worldwide average reinsurance rates up about a quarter in one year and another third the next, according to reinsurance broker Howden Tiger.
  • How a Small Group of Firms Changed the Math for Insuring Against Natural Disasters — Reinsurance prices rose as much as 40% year over year, according to a report by brokerage Gallagher Re, prompting insurers to change where and what they cover. State Farm and Allstate cited reinsurance market conditions and costs in curtailing some California business, and agricultural reinsurers announced exits from Iowa.

AI Summary. Chinese customs data show semiconductor production tool imports reached nearly $5bn over two months, up 70% from $2.9bn a year earlier, a record high. Most of the equipment came from the Netherlands and Japan, which have imposed export restrictions on chipmaking equipment alongside the US.

Andy Lin and Qianer Liu Financial Times
Date Posted:

Chinese imports of chipmaking equipment in June and July were up 70% vs. 2022, potentially in anticipation of additional export controls by Japan and the Netherlands.

Is China stockpiling chipmaking equipment ahead of export restrictions?

Core argument: China's imports of chip production tools totaled nearly $5bn in June and July, up 70% from $2.9bn in the same period a year earlier, according to Chinese customs data.

China’s imports of semiconductor equipment have surged to record highs ahead of the implementation of export curbs by US allies. Chinese customs data shows the country’s chip production tool imports in June and July totalled nearly $5bn, up 70% from $2.9bn in the same period last year. Most of the imports came from the Netherlands and Japan, two countries that have imposed export restrictions on chipmaking equipment as they work with the US to slow China’s technological advancement.

Takeaways by Macro Roundup® AI

  1. China's imports of chip production tools totaled nearly $5bn in June and July, up 70% from $2.9bn in the same period a year earlier, according to Chinese customs data.
  2. Most of China's semiconductor equipment imports came from the Netherlands and Japan, two countries that have imposed export restrictions on chipmaking equipment while working with the US to slow China's technological advancement.
  3. China's semiconductor equipment imports surged to record highs ahead of the implementation of export curbs by US allies.

Related Articles:

  • China Fears Japan’s Chipmaking Curbs Go Further Than US Restrictions — Japan has said it intends to restrict exports of 23 types of chipmaking equipment, aligning with US and Dutch export controls that could limit China's access to cutting-edge chips. Chinese industry executives who reviewed the draft rules say they could restrict China's semiconductor manufacturing more than US measures do.
  • Huawei Building Secret Network for Chips, Trade Group Warns — Huawei has entered chip production, acquiring at least two existing plants and building at least three more, part of at least 23 fabrication facilities underway in China with planned investments of more than $100bn by 2030, according to the Semiconductor Industry Association. China is on track to hold more than half of global capacity in older-generation semiconductors by around 2030.