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Let us not lose sight of the biggest and potentially most problematic of them all: China.China's domestic imbalances point to another economic law that it has managed to break.China has had a different experience.Another common explanation for China's resilience is political.After the 2008 financial crisis, China shifted its economic model away from exports and toward internal sources of growth.Only about $50 billion worth of Chinese exports have been affected by U.S. President Donald Trump administration's tariffs. But in July, Trump announced a new round of tariffs targeting an additional $200 billion worth of Chinese goods, representing about 15 percent of total exports to the U.S. Reflecting its growing vulnerability, China's reactions to Trump's continued threats have been notably accommodative.As U.S. rates exceed Chinese rates, capital will flow out of China, as it has from other emerging markets this year. China's leaders will thus be faced with the classic emerging-market dilemma.
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