China and G7 in the Current Context of the World Trading

ArXiv ID: 2503.17225 “View on arXiv”

Authors: Unknown

Abstract

The paper analyses trade between the most developed economies of the world. The analysis is based on the previously proposed model of international trade. This model of international trade is based on the theory of general economic equilibrium. The demand for goods in this model is built on the import of goods by each of the countries participating in the trade. The structure of supply of goods in this model is determined by the structure of exports of each country. It is proved that in such a model, given a certain structure of supply and demand, there exists a so-called ideal equilibrium state in which the trade balance of each country is zero. Under certain conditions on the structure of supply and demand, there is an equilibrium state in which each country have a strictly positive trade balance. Among the equilibrium states under a certain structure of supply and demand, there are some that differ from the ones described above. Such states are characterized by the fact that there is an inequitable distribution of income between the participants in the trade. Such states are called degenerate. In this paper, based on the previously proposed model of international trade, an analysis of the dynamics of international trade of 8 of the world’s most developed economies is made. It is shown that trade between these countries was not in a state of economic equilibrium. The found relative equilibrium price vector turned out to be very degenerate, which indicates the unequal exchange of goods on the market of the 8 studied countries. An analysis of the dynamics of supply to the market of the world’s most developed economies showed an increase in China’s share. The same applies to the share of demand.

Keywords: General Economic Equilibrium, International Trade Model, Trade Balance, Supply-Demand Structure, Equilibrium Price Vector, Commodities/International Trade

Complexity vs Empirical Score

• Math Complexity: 8.0/10
• Empirical Rigor: 3.0/10
• Quadrant: Lab Rats
• Why: The paper is mathematically dense, using general equilibrium theory, linear algebra with vectors and matrices, and concepts like degenerate equilibrium states, but the empirical analysis is weak, relying on basic share summaries from cited data without backtests, code, or implementation details.

  flowchart TD
    A["Research Goal:<br>Analyze trade dynamics of China & G7"] --> B["Methodology:<br>General Equilibrium Trade Model"]
    B --> C["Data Inputs:<br>Trade data of 8 developed economies"]
    C --> D{"Computation:<br>Search for Equilibrium Price Vector"}
    D -- Found --> E{"Equilibrium State Check"}
    E -- Zero Trade Balance --> F["Ideal Equilibrium"]
    E -- Positive Trade Balance --> G["Biased Equilibrium"]
    E -- Inequitable Income Distribution --> H["D"]<br><b>Degenerate Equilibrium</b>
    F & G & H --> I["Key Outcomes:<br>1. Trade is NOT in equilibrium<br>2. Found vector is highly degenerate<br>3. Unequal exchange exists<br>4. China's market share rising"]