@michaelpettis.bsky.social
Senior Fellow at Carnegie China. For speaking engagements, please write to [email protected]
@michaelpettis.bsky.socialMy tennis-mad friends in Beijing are ecstatic: "Olympic champion Zheng Qinwen became the first Chinese player to win the China Open, beating French Open winner Mirra Andreeva 7-5 6-4 on Sunday."
www.reuters.com/sports/tenni...
@michaelpettis.bsky.socialReuters: "Passenger vehicle sales fell 28.1% from a year earlier to 1.63 million units in September, worsening from a 23.7% decline in August. Car exports jumped 73.2% on year to 923,000 vehicles last month, versus a 77.5% rise in August."
www.reuters.com/business/aut...
@michaelpettis.bsky.socialVery positive move: "China’s labor ministry released draft rules that would set nationwide protections for workers in the fast-growing gig economy, including minimum-pay safeguards and stronger obligations for internet platforms."
www.caixinglobal.com/2026-10-09/c...
@michaelpettis.bsky.socialVery good piece.
@michaelpettis.bsky.socialCaixin: "China’s Ministry of Finance announced Friday that it will allow local governments to tap 550 billion yuan ($82 billion) in unused debt quotas to plug budget gaps and fund infrastructure projects as policymakers intensify efforts to bolster the economy."
www.caixinglobal.com/2026-10-09/b...
@michaelpettis.bsky.social2/2 Although you probably wouldn't know this from reading the Chinese or foreign press, China probably has the worst debt dynamics of any major economy today. Its debt-to-GDP ratio is the second highest (after Japan) and is the fastest growing in history.
@michaelpettis.bsky.social1/2
FT: "China’s growing debt pile is constraining the government’s fiscal capacity for sweeping new stimulus to revive flagging domestic demand and strengthen economic growth, studies of state finances show."
www.ft.com/content/a0ff...
@michaelpettis.bsky.social6/6 GDP (which would be politically disruptive as well as bad for the global economy) or to intervene in its external accounts in such a way that it reverses the competitive impact of China's low household share of GDP.
@michaelpettis.bsky.social5/6 rather because of its deep consumption imbalance and the very low household income share of GDP. As long as that happens, the only recourse for the EU, if it does not want to accept deindustrialization, is either to reduce its own household share of...
@michaelpettis.bsky.social4/6 For historical reasons, trade discussions are usually held on a product-by-product basis, but while that may make sense in a world of broadly balanced trade, it makes no sense in a world of deep, persistent imbalances. China runs huge surpluses not because it produces too many hybrids but...
@michaelpettis.bsky.social3/6 All that will happen is a shift in the locus of net manufacturing imports from China, so that EU producers of hybrids will be better off, but at the expense of other EU manufacturers.
@michaelpettis.bsky.social2/6 This may seem like a victory, but the problem is a systemic one, and not sectoral. Because this agreement does not in any way address either China's demand imbalance or the overall role of the EU in absorbing that imbalance, it won't have much effect on overall EU manufacturing.
@michaelpettis.bsky.social1/6
NYT: "Maros Sefcovic, the trade commissioner of the 27-nation bloc, said that the understanding could lead to China’s halving the number of hybrid gasoline-electric cars that it sends to the European Union in the next four years."
@michaelpettis.bsky.socialBloomberg: "“We want to enable the European Commission to act quickly when necessary,” Merz told reporters in Berlin. “The drawback of European trade policy in recent years has always been that decision-making took too long.”"
www.bloomberg.com/news/article...
@michaelpettis.bsky.socialAn interesting new paper by the Institut Jacques Delors argues that China's export surge is the result of a systemic domestic model that suppresses consumption and channels saving into subsidized investment and manufacturing capacity.
institutdelors.eu/en/publicati...
@michaelpettis.bsky.socialChina News Update: "There is an awkward question lurking beneath this enormous restructuring: if a struggling bank disappears into a bigger bank, where does its bad debt go?"
chinanewsupdate.com/chinas-banki...
@manota.bsky.socialReposted by @michaelpettis.bsky.social"Les accords du Plaza n'ont pas été la cause des décennies perdues du Japon. Leur objectif était de contribuer à corriger un déséquilibre international"
Ma traduction
👉 annotationsbis.blogspot.com/2026/10/les-...
@michaelpettis.bsky.socialBloomberg: "China’s mutual funds are closing at the fastest pace in eight years because of weak returns."
Since 2023 Beijing has hoped that a strong stock market would replace a weak property market as a source of consumption-boosting confidence.
www.bloomberg.com/news/article...
@michaelpettis.bsky.social6/6 This is why Joan Robinson warned that the inevitable result of beggar-thy-neighbor policies, once deficit countries are no longer able politically to bear the costs, is a breakdown in trade. Rising debt and suppressed wages can only go on for so long.
@michaelpettis.bsky.social5/6 It is of course a good thing if businesses and governments around the world invest to expand productivity growth, but it is not a good thing if workers' wages don't rise in line with the growth in productivity. There's no point in making more stuff if people can't afford to buy it.
