Avoiding the Fall: China’s Economic Restructuring

Michael Pettis Book September 24, 2013 Carnegie Endowment for International Peace
Beijing has no choice but to take significant steps to restructure its economy. The only question is how to proceed.
Financial Times: A 2013 Book of the Year
The days of rapid economic growth in China are over. Mounting debt and rising internal distortions mean that rebalancing is inevitable. Beijing has no choice but to take significant steps to restructure its economy. The only question is how to proceed.

Michael Pettis debunks the lingering bullish expectations for China’s economic rise and details Beijing’s options. The urgent task of shifting toward greater domestic consumption will come with political costs, but Beijing must increase household income and reduce its reliance on investment to avoid a fall.

Reviews for this publication

“Michael Pettis combines deep personal knowledge of China with a remarkably broad perspective on economic and financial history generally. This lets him embed the China story in a larger framework of global imbalances, so the reader can see the U.S. subprime crisis, the European sovereign crisis, and the current stresses in China as all part of one massive, global rebalancing.”
—David Beim, Professor of Professional Practice, Columbia Business School

“Pettis probes deeply into the widening cracks in China’s ‘miracle’ economy and lays bare the tough choices that Beijing faces if it is to repair them, demolishing some popular myths and misconceptions about both China and economics. Insightful and compellingly argued, this well-timed book is a valuable key to understanding why the engine that has propelled China’s thirty-year ascent is now threatened with power failure.”
—Guy de Jonquières, Senior Fellow, European Centre for International Political Economy

“Over the past several years, Pettis has been a rare level-headed China observer who has kept his focus on accounting identities and hard economic constraints. Long before it became mainstream, he maintained that China’s economic growth model was unsustainable. In this highly insightful and forward-looking book, Pettis argues that the major uncertainty regarding the rebalancing of China’s economy is not whether but how it will unfold. He applies his characteristic logic and analytical rigor to delineate the range of realistic economic scenarios. It’s a fascinating and provocative read for anyone interested in China’s economy.”
—JC de Swaan, Lecturer in Economics, Princeton University and Principal, Cornwall Capital

“Can China make it past the middle-income trap? Having lived and taught in Beijing for more than a decade, Pettis is uniquely qualified to address this and many other key issues. Don't miss this book.”
—Arminio Fraga Neto, Former President, Central Bank of Brazil

End of document

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Source http://carnegieendowment.org/2013/09/03/avoiding-fall-china-s-economic-restructuring/gl9v

In Fact



of the Chinese general public

believe their country should share a global leadership role.


of Indian parliamentarians

have criminal cases pending against them.


charter schools in the United States

are linked to Turkey’s Gülen movement.


thousand tons of chemical weapons

are in North Korea’s possession.


of import tariffs

among Chile, Colombia, Mexico, and Peru have been eliminated.


trillion a year

is unaccounted for in official Chinese income statistics.


of GDP in oil-exporting Arab countries

comes from the mining sector.


of Europeans and Turks

are opposed to intervention in Syria.


of Russian exports to China

are hydrocarbons; machinery accounts for less than 1%.


of undiscovered oil

is in the Arctic.


U.S. government shutdowns

occurred between 1976 and 1996.


of Ukrainians

want an “international economic union” with the EU.


million electric bicycles

are used in Chinese cities.


of the world’s energy supply

is consumed by cities.


of today’s oils

require unconventional extraction techniques.


of the world's population

will reside in cities by 2050.


of Syria’s population

is expected to be displaced by the end of 2013.


of the U.S. economy

is consumed by healthcare.


of Brazilian protesters

learned about a massive rally via Facebook or Twitter.


million cases pending

in India’s judicial system.

1 in 3


now needs urgent assistance.


political parties

contested India’s last national elections.


of Egypt's labor force

works in the private sector.


of oil consumed in the United States

is for the transportation sector.


of Chechnya’s pre-1994 population

has fled to different parts of the world.


of oil consumed in China

was from foreign sources in 2012.


billion in goods and services

traded between the United States and China in 2012.


billion in foreign investment and oil revenue

have been lost by Iran because of its nuclear program.


increase in China’s GDP per capita

between 1972 and today.


billion have been spent

to complete the Bushehr nuclear reactor in Iran.


of Iran’s electricity needs

is all the Bushehr nuclear reactor provides.



were imprisoned in Turkey as of August 2012 according to the OSCE.

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