Michael Pettis

Nonresident Senior Fellow
Carnegie China
Pettis, an expert on China’s economy, is professor of finance at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets.
Education

MBA, Finance, Columbia University
MIA, Development Economics, Columbia University

Resources

China Financial Markets

    • China Financial Markets

    What’s in Store for China’s Mortgage Market?

    • August 12, 2022

    The Chinese economy has been wracked by rural bank defaults and boycotts over mortgage payments. In the first half of this two-part blog post, I will explain these events and what they reveal about the health of Chinese markets. In the second part, I will discuss some of the crisis’s systemic implications.

    • China Financial Markets

    The Only Five Paths China’s Economy Can Follow

    • April 27, 2022

    There is increasingly a consensus in Beijing that China’s excessive reliance on surging debt in recent years has made the country’s growth model unsustainable. Aside from the economy’s current path, there are only four other paths China can follow, each with its own requirements and constraints.

    • China Financial Markets

    Changing the Top Global Currency Means Changing the Patterns of Global Trade

    • April 12, 2022

    Giving up use of the U.S. dollar for global trade and reserve accumulation would be very difficult for U.S. adversaries and would require major economic adjustments, though it would be in the best long-term interests of the United States for the global use of the dollar to be more constrained.

    • China Financial Markets

    How Does Excessive Debt Hurt an Economy?

    • February 08, 2022

    Most economists have trouble understanding why too much debt may harm an economy, let alone how much debt counts as too much. To make matters worse, the common practice of comparing vastly different countries’ debt-to-GDP levels is not a useful tool for gauging how a particular economy is likely to manage its debt burden.

    • China Financial Markets

    Will China’s Common Prosperity Upgrade Dual Circulation?

    • October 15, 2021

    Chinese leaders know that they want to discontinue the country’s existing growth model, but they haven’t yet landed on what the sustainable alternatives are. Beijing’s new common prosperity policy will only help shift domestic demand at the margins, but a full-fledged rebalancing will require a more radical transformation.

    • China Financial Markets

    What Does Evergrande Meltdown Mean for China?

    • September 20, 2021

    The impact of Evergrande has caused financial distress to spread faster and more forcefully than Beijing’s financial regulators expected, putting pressure on them to move quickly to stop the contagion. But they cannot rescue Evergrande’s creditors without also undermining their fight against bad debt.

    • China Financial Markets

    Why the Bezzle Matters to the Economy

    • August 23, 2021

    The bezzle, a word coined in the 1950s by a Canadian-American economist, is the temporary gap between the perceived value of a portfolio of assets and its long-term economic value. Economies at times systematically create bezzle, unleashing substantial economic consequences that economists have rarely understood or discussed.

    • China Financial Markets

    How Trump’s Tariffs Really Affected the U.S. Job Market

    • January 28, 2021

    A recent study on U.S.-China trade concludes that Trump’s trade policies cost the U.S. economy nearly a quarter million jobs. But its obsolete understanding of trade flows ends up pointing trade policymakers in the wrong direction.

    • China Financial Markets

    Foreign Saving Gluts and American Financial Imbalances

    • December 01, 2020

    The idea that trade imbalances are more likely to be the result of credit imbalances than of savings imbalances ignores the role of savings imbalances in creating credit imbalances. When a surplus country demands to be paid for its trade surplus with claims on American assets, the U.S. economy must adjust to create these assets—and one of the most common ways it does so is by expanding credit.

    • China Financial Markets

    Why Foreign Debt Forgiveness Would Cost Americans Very Little

    • October 19, 2020

    It is easy to assume that sovereign debt forgiveness involves a collective transfer of wealth from the creditor country to the debt-owing country, but this is only true under specific—and unrealistic—conditions. In today’s environment, sovereign debt forgiveness mainly represents a transfer within the creditor country. It benefits farmers and manufacturers in the creditor country at the expense of the country’s nonproductive savers.

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