Michael Pettis
@michaelpettis.bsky.social
Senior Fellow at Carnegie China. For speaking engagements, please write to [email protected]
Michael Pettis is an American professor of finance at Guanghua School of Management at Peking University in Beijing and a nonresident senior fellow at the Carnegie Endowment for International Peace. He was founder and co-owner of punk-rock nightclub D22 in Beijing, which closed in January 2012. .. more
Economics
76%
Political science
11%
Top Sovereign Lending Official at Exim Bank Under Investigation
Zhu Ying, a key figure in African debt restructuring, is at the center of a corruption investigation
www.caixinglobal.com
Caixin: "Exim Bank is under growing financial strain. Its 2024 annual report showed assets of 6.4 trillion yuan, but revenue fell 55.8% year-on-year to 10.3 billion yuan, and net profit plunged 66.9% to 2.9 billion yuan," (i.e an ROA of 0.05%).
www.caixinglobal.com/2025-11-25/t...
www.caixinglobal.com/2025-11-25/t...
5/5
But if it isn't, the experience of other countries that have experienced rising overinvestment tied to even faster rising debt suggests that it is better to go through the difficult adjustment process with the cleanest possible central-government balance sheet.
But if it isn't, the experience of other countries that have experienced rising overinvestment tied to even faster rising debt suggests that it is better to go through the difficult adjustment process with the cleanest possible central-government balance sheet.
4/5
Most of local government spending has gone to boost production and infrastructure. If this spending is productive, then they should keep doing it, and if local governments are having trouble raising the funding, the central government should certainly fund it.
Most of local government spending has gone to boost production and infrastructure. If this spending is productive, then they should keep doing it, and if local governments are having trouble raising the funding, the central government should certainly fund it.
3/5
As it gets harder for local governments to raise the funding needed to pay for their very high investment and subsidy bills, it may seem to make sense to shift a greater share of this borrowing onto the only clean balance sheet left, that of the central government.
As it gets harder for local governments to raise the funding needed to pay for their very high investment and subsidy bills, it may seem to make sense to shift a greater share of this borrowing onto the only clean balance sheet left, that of the central government.
2/5
around 14% of China's general public budget expenditure over the past decade, while local governments shoulder the rest". The article cites a researcher at CAFS as suggesting that China's central government share will rise to 30-40% by 2030.
around 14% of China's general public budget expenditure over the past decade, while local governments shoulder the rest". The article cites a researcher at CAFS as suggesting that China's central government share will rise to 30-40% by 2030.
China to Lift Share of Central Gov't Spending During 15th Five-Year Plan
www.yicaiglobal.com
1/5
Yicai: "China plans to increase the proportion of central government spending in the general public budget expenditure and strengthen its decision-making authority during the country's 15th Five-Year Plan. Central government spending accounted for...
www.yicaiglobal.com/news/china-t...
Yicai: "China plans to increase the proportion of central government spending in the general public budget expenditure and strengthen its decision-making authority during the country's 15th Five-Year Plan. Central government spending accounted for...
www.yicaiglobal.com/news/china-t...
EU to tighten investment rules to stand up to China
Commission wants greater benefits for local workers and technology transfers when foreign companies set up in bloc
www.ft.com
FT: "The EU's industry commissioner, Stéphane Séjourné, has said the revised rules would probably stipulate that foreign investors had to recruit local workers and in “certain sectors like batteries” transfer technological knowhow."
www.ft.com/content/a719...
www.ft.com/content/a719...
2/2
"The phrase," Caixin notes, "immediately sparked heated online debate and various interpretations. This wording is unusual, which raises the question: Is a “large-scale return” already happening, or are there warning signs?"
"The phrase," Caixin notes, "immediately sparked heated online debate and various interpretations. This wording is unusual, which raises the question: Is a “large-scale return” already happening, or are there warning signs?"
Commentary: Why China Is Worried About Migrants Returning Home
A wave of returning and idle workers would threaten not just employment but China’s efforts to consolidate poverty alleviation gains, making early monitoring and targeted support essential
www.caixinglobal.com
1/2
Caixin: "An official from China’s Ministry of Agriculture and Rural Affairs recently stated at a national conference on rural employment that the government must “prevent a large-scale return and idling of migrant workers in their hometowns.”"
www.caixinglobal.com/2025-11-21/c...
Caixin: "An official from China’s Ministry of Agriculture and Rural Affairs recently stated at a national conference on rural employment that the government must “prevent a large-scale return and idling of migrant workers in their hometowns.”"
www.caixinglobal.com/2025-11-21/c...
5/5
I expect production will increase in these sectors to make up for reduced production in those sectors most badly hit by involution (e.g. EVs, batteries, solar panels). This might suggest that foreign producers in these sectors will face more competition and lower prices.
I expect production will increase in these sectors to make up for reduced production in those sectors most badly hit by involution (e.g. EVs, batteries, solar panels). This might suggest that foreign producers in these sectors will face more competition and lower prices.
China Unveils New Measures to Steady Growth Across 10 Key Industries
www.yicaiglobal.com
4/5
This won't change soon. Last month Beijing announced support for steel, nonferrous metals, petrochemical, chemicals, building material, machinery, automobile, electrical equipment, light industry, and electronic information manufacturing industries.
www.yicaiglobal.com/news/china-i...
This won't change soon. Last month Beijing announced support for steel, nonferrous metals, petrochemical, chemicals, building material, machinery, automobile, electrical equipment, light industry, and electronic information manufacturing industries.
www.yicaiglobal.com/news/china-i...
3/5
Caixin goes on to note that the average price of Chinese steel exports dropped 19.3% in 2024, and another 9.5% so far this year. It cites a steel producer as saying: “Domestic demand is weak, foreign markets are better, so we’re all focused on expanding abroad.”
Caixin goes on to note that the average price of Chinese steel exports dropped 19.3% in 2024, and another 9.5% so far this year. It cites a steel producer as saying: “Domestic demand is weak, foreign markets are better, so we’re all focused on expanding abroad.”
2/5
Caixin continues: "The imbalance sent a clear message: the core problem isn’t output. It’s overcapacity, with too few buyers at home to absorb what’s being produced. To fill the widening gap, Chinese steelmakers are aggressively pivoting to export markets."
Caixin continues: "The imbalance sent a clear message: the core problem isn’t output. It’s overcapacity, with too few buyers at home to absorb what’s being produced. To fill the widening gap, Chinese steelmakers are aggressively pivoting to export markets."
In Depth: China’s Steelmakers Look Abroad as Domestic Pressures Mount
Facing a dearth of demand at home, Chinese producers pursue growth from Guinea to the Gulf
www.caixinglobal.com
1/5
Caixin: "By the end of September, Chinese mills had produced 746 million tons of crude steel, down 2.9% from a year earlier. But domestic consumption slumped 5.7% to just under 649 million tons, a much steeper decline."
www.caixinglobal.com/2025-11-21/i...
Caixin: "By the end of September, Chinese mills had produced 746 million tons of crude steel, down 2.9% from a year earlier. But domestic consumption slumped 5.7% to just under 649 million tons, a much steeper decline."
www.caixinglobal.com/2025-11-21/i...
More likely the cold weather.
China's power use up 10.4 pct in October
english.news.cn
Xinhua: "China's electricity consumption, a key barometer of economic activity, registered 10.4% expansion last month, driven mainly by household electricity consumption (up 23.9%). From January to October, China's total power use climbed 5.1% percent."
english.news.cn/20251121/d6c...
english.news.cn/20251121/d6c...
Did globalisation kill neoliberalism? With Branko Milanović
A new, less co-operative global era has begun
www.ft.com
Very interesting Financial Times interview of Branko Milanović, although I think that rather than globalization having killed neoliberalism, as the title implies, it is neoliberalism that may killed globalization.
www.ft.com/content/b3a9...
www.ft.com/content/b3a9...
6/6
a double-edged sword in a country heavily reliant on manufacturing exports to resolve domestic demand imbalances. It undermines its manufacturing competitiveness in a world already suffering from rising trade barriers.
a double-edged sword in a country heavily reliant on manufacturing exports to resolve domestic demand imbalances. It undermines its manufacturing competitiveness in a world already suffering from rising trade barriers.
5/6
As households see their purchasing power increase, they spend more on services, which replaces the jobs lost to productivity-enhancing technologies.
The problem China has today, as the US had in the 1930s, is that increasing wages is...
As households see their purchasing power increase, they spend more on services, which replaces the jobs lost to productivity-enhancing technologies.
The problem China has today, as the US had in the 1930s, is that increasing wages is...
4/6
In the case of an economy suffering from weak demand, as fed chairman Marriner Eccles explained in the 1930s, the only sustainable solution to unemployment pressures is to increase domestic demand by directly or indirectly increasing household income.
In the case of an economy suffering from weak demand, as fed chairman Marriner Eccles explained in the 1930s, the only sustainable solution to unemployment pressures is to increase domestic demand by directly or indirectly increasing household income.
3/6
But its not really technological progress that reduces the number of jobs in an economy. It is when average wages fail to keep up with the growth in productivity. It is only in that case that overall purchasing power lags behind production.
But its not really technological progress that reduces the number of jobs in an economy. It is when average wages fail to keep up with the growth in productivity. It is only in that case that overall purchasing power lags behind production.
2/6
the article cites Liu Yuanchun as warning that “On the one hand, the supply of university graduates is increasing. On the other, technological progress is reducing the job-absorption capacity of corresponding high-end industries.”
the article cites Liu Yuanchun as warning that “On the one hand, the supply of university graduates is increasing. On the other, technological progress is reducing the job-absorption capacity of corresponding high-end industries.”
‘Unpredictable risks’: China to see record graduates next year amid jobs crunch
Employment pressures facing graduates will reach unprecedented levels over next decade, top economist warns.
sc.mp
1/6
SCMP: "China is preparing for an unprecedented wave of new university graduates next summer – a record 12.7 million outgoing students – intensifying pressure on an already strained job market and a slowing economy."
sc.mp/o7wwf?utm_so... via @scmpnews
SCMP: "China is preparing for an unprecedented wave of new university graduates next summer – a record 12.7 million outgoing students – intensifying pressure on an already strained job market and a slowing economy."
sc.mp/o7wwf?utm_so... via @scmpnews