2/2
absorb it. If China does not act, we will see more barriers.”"

It seems that even the WTO is beginning to understand that a world of free trade is not one of large, persistent imbalances, and that, as Joan Robinson warned, these ultimately must set off counter-protection.

5/5
choosing (i.e. out of manufacturing and into services).

The global economy, after all, must balance. If my share of global manufacturing expands, yours must contract. That's not ideology. That's just arithmetic.
engelsbergideas.com/notebook/eur...

4/5
in order to revive industrial policy objectives, either the EU must do the same, or it must accept the role of accommodating changes in the domestic economies of China and the US by allowing its own domestic economy to change in directions not necessarily of its own...

3/5
The policy options for the EU are simple. If China and a few other large economies have been intervening extensively for years in their external accounts to support domestic industrial policy goals, and the US is increasingly intervening in its own external accounts...

2/5
"Shifting trade and political relations with the world's biggest powers," Reuters adds, "have been squeezing Europe for years, and leaders met yet again on Thursday to brainstorm ways to survive aggressive economic rivalry from the U.S. and China."

4/4
I would add that if this infrastructure were indeed net productive for the economy, i.e. if it generated more economic value than it absorbed, funding more infrastructure spending with long-term debt would actually make debt management easier, not harder.

3/4
If local governments do prioritize debt control over rapid expansion in infrastructure investment, as Fitch reasonably suggests, then either GDP growth must be lower or the locus of spending must shift to some other entity, for example the central government.

2/4
Fitch adds: “We believe local governments will prioritise debt control rather than pursue rapid expansion in infrastructure investment to prop up growth,” citing data from 23 Chinese provinces, regions and municipalities.

3/3
Large manufacturers, many of which have been having trouble making payments out of cashflow earnings, have paid their suppliers instead with (mostly six-month) IOUs, which has created additional debt and has passed on liquidity pressures down the line.

2/3
This has "put strain on the financial health of China’s industrial backbone".

As of November, outstanding IOUs were worth RMB 2.57 trillion (1.8% of GDP), although "that’s just from what the state-backed association has managed to tally from platforms that have reported."

5/5
This leaves China's debt-to-GDP ratio, using aggregate finance as the proxy for total debt, at a very high 319%. While this seems a big jump over the 314% at the end of 2025, debt usually rises most quickly at the beginning of the calendar year in China.

4/5
Caixin adds that corporate loans fell by 330 billion yuan year-on-year, with medium- and long-term loans, a key indicator of business investment appetite, dropping by 280 billion yuan. In contrast, household loans saw a modest recovery, ending three months of contraction.

3/5
the private sector despite policy efforts. While government spending is providing support, weak corporate and household confidence — reflected in sluggish demand for medium- and long-term loans — remains a key challenge for China’s economic recovery."

2/5
Caiixin notes that the increase in debt was propped up by front-loaded government borrowing, while new bank loans fell short of forecasts in a sign of weak credit demand from the private sector: "The mixed data highlights the ongoing struggle to boost credit demand in...

2/2
despite signs that the stimulus effect of subsidies is fading. In the fourth quarter alone, tablet shipments in China increased 7.2 percent from a year earlier, suggesting that as the national subsidy policy tightens in some regions, its boost to demand has weakened."

An effort to neutralize protectionist policies abroad.