The authors found that there is a 95 to 99 percent chance that US-China trade deficit shocks lead to a sharp rise in bad news about China reported in the US. The authors' index is based on the number of news items filed in Dow Jones Factiva per month between January of 1990 and December of 2008 containing "China," and one or more of the following five indicators of bad news: "human rights," "Tibet," "child labor," "democracy," and "repression."
The data shows that bad news about China is a lot less proportionally frequent and less volatile than it was before December 2001:
A glance at the figure reveals that the index is very volatile, especially during the early part of the period, but the volatility declines significantly starting when China joins the World Trade Organization (WTO) in December 2001. This decline in volatility makes intuitive sense. Before China joined the WTO, the United States periodically extended Most Favored Nation (MFN) status to China, but shortly before each extension was approved, one or more of the grievance keywords invariably gained prominence in the media as Congress debated the renewal.There has been a shock to the US-China trade deficit, but it is no traditional shock. Rather, the latest trade data shows a continued narrowing of the deficit. According to Ramirez and Rong's research, we shouldn't be seeing any large proportionate uptick in bad news in China as a result. There might be no news like bad news, but dang, I hope they're right. Their data is good.
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