On the Mechanics of Trade and the Chinese Economy

{
  "authors": [
    "Michael Pettis"
  ],
  "type": "legacyinthemedia",
  "centerAffiliationAll": "dc",
  "centers": [
    "Carnegie Endowment for International Peace"
  ],
  "collections": [],
  "englishNewsletterAll": "asia",
  "nonEnglishNewsletterAll": "",
  "primaryCenter": "Carnegie Endowment for International Peace",
  "programAffiliation": "AP",
  "programs": [
    "Asia"
  ],
  "projects": [],
  "regions": [
    "East Asia",
    "China"
  ],
  "topics": [
    "Economy",
    "Trade",
    "Foreign Policy"
  ]
}

In The Media

On the Mechanics of Trade and the Chinese Economy

Very large persistent surpluses and deficits are almost always the result of distorted policies in one or more countries.

By Michael Pettis

Published on Jul 28, 2017

Source: Financial Times

In this two part-part episode, the Financial Times’ Alphachat speaks with Carnegie’s Michael Pettis, the first-ever guest on Alphachat back in 2011. They discuss the analytical framework in Pettis’ book The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy and the recent history of the Chinese economy.

Listen to the broadcast

This interview was originally broadcast by the Financial Times.

About the Author

Michael Pettis

Nonresident Senior Fellow, Carnegie China

Michael Pettis is a nonresident senior fellow at the Carnegie Endowment for International Peace. An expert on China’s economy, Pettis is professor of finance at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets.

Recent Work

Commentary
Is China’s High-Quality Investment Output Economically Viable?
- Michael Pettis
Commentary
What GDP Means in a Soft Budget Economy Like China
- Michael Pettis

Economy Trade Foreign Policy East Asia China

Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

More Work from Carnegie China

Commentary
Caught in the Middle: Chinese Biotech Firms’ Divergent Responses to U.S. Sanctions
Chinese biotech companies have been on the receiving end of U.S. economic coercion. Yet their responses have differed significantly because firm and state interests are not uniformly aligned. For Washington, treating all Chinese tech firms the same, irrespective of their actual interests, risks pushing them farther into Beijing’s corner.
Xue Gong
Commentary
Are Data Centers the Solution to China’s Renewables Excess Capacity?
China’s latest energy plan explicitly calls for integrating data centers into the electricity system, particularly connecting them to green energy. It appears Beijing wants to use compute as a source of domestic demand to absorb renewables excess capacity.
Damien Ma
Commentary
Emissary
Trump and Xi Are Angling for Three Years of Stability
But their "principal to principal" model will only be as effective as the political strength of each leader back home.
Damien Ma
Commentary
China Sells Stability Amid American Volatility
U.S. unpredictability has allowed China to capitalize on its positioning as the “responsible great power”. Paradoxically, the more China wins the perception game, the more likely expectations will rise for Beijing to deliver not just words but to demonstrate with its deeds.
Chong Ja Ian
Commentary
Why Vietnam Is Swinging in China’s Direction
Hanoi and Beijing have long treated each other as distant cousins rather than comrades in arms. That might be changing as both sides draw closer to hedge against uncertainty and America’s erratic behavior.
Nguyễn Khắc Giang

More Work from Carnegie China

Robot arm with disposable test tube virus sampling in laboratory

Commentary

Caught in the Middle: Chinese Biotech Firms’ Divergent Responses to U.S. Sanctions

Chinese biotech companies have been on the receiving end of U.S. economic coercion. Yet their responses have differed significantly because firm and state interests are not uniformly aligned. For Washington, treating all Chinese tech firms the same, irrespective of their actual interests, risks pushing them farther into Beijing’s corner.

Xue Gong

An aerial drone photo taken on June 4, 2026 shows a wind-photovoltaic power storage station of Huadian Inner Mongolia New Energy Co., Ltd. as part of the Horinger data center cluster green energy supply demonstration project, in Hohhot, north China's Inner Mongolia Autonomous Region.

Commentary

Are Data Centers the Solution to China’s Renewables Excess Capacity?

China’s latest energy plan explicitly calls for integrating data centers into the electricity system, particularly connecting them to green energy. It appears Beijing wants to use compute as a source of domestic demand to absorb renewables excess capacity.

Damien Ma

Commentary

Emissary

Trump and Xi Are Angling for Three Years of Stability

But their "principal to principal" model will only be as effective as the political strength of each leader back home.

Damien Ma

Commentary

China Sells Stability Amid American Volatility

U.S. unpredictability has allowed China to capitalize on its positioning as the “responsible great power”. Paradoxically, the more China wins the perception game, the more likely expectations will rise for Beijing to deliver not just words but to demonstrate with its deeds.

Chong Ja Ian

Vietnam's Top Leader To Lam meets with young representatives from China and Vietnam participating in the "Red Study Tours" at the Great Hall of the People on April 15, 2026 in Beijing, China. T

Commentary

Why Vietnam Is Swinging in China’s Direction

Hanoi and Beijing have long treated each other as distant cousins rather than comrades in arms. That might be changing as both sides draw closer to hedge against uncertainty and America’s erratic behavior.

Nguyễn Khắc Giang