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.

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


China Financial Markets

    • China Financial Markets

    Why Does It Matter If Interest Rates Are Below the GDP Growth Rate?

    • August 31, 2020

    There is a widespread belief that a country’s national debt burden is sustainable if the interest rate on its debt is less than its expected GDP growth rate. But, in fact, the relationship between interest rates and the GDP growth rate reveals more about the distribution of income in a country than about the sustainability of its debt.

    • China Financial Markets

    China’s Economy Needs Institutional Reform Rather Than Additional Capital Deepening

    • July 24, 2020

    It is a mistake to assume that there is a global capital and technology frontier toward which every country must strive to acquire development. Economic development requires, above all, the right set of formal and informal institutions.

    • China Financial Markets

    Why Higher U.S. Savings Won’t Save the Pandemic-Hit Economy

    • May 21, 2020

    U.S. households will likely respond to the shocks of the pandemic by increasing their savings rates, as will foreign households. If the U.S. government does not decisively increase spending, higher American household savings will force either American debt or unemployment to rise even more.

    • China Financial Markets

    Why It Won’t Matter Who Pays for Trade Protection

    • December 17, 2019

    The debate about whether it is U.S. consumers or Chinese businesses that pay for American tariffs on Chinese-produced goods reveals absolutely nothing about whether the tariffs harm or benefit the U.S. economy.

    • China Financial Markets

    MMT Heaven and MMT Hell for Chinese Investment and U.S. Fiscal Spending

    • October 11, 2019

    There are conditions under which governments can create money—or debt—without fear of inflation or excessive debt burdens. There are other conditions under which debt or money creation can lead to inflation and balance sheet problems.

    • China Financial Markets

    Washington Should Tax Capital Inflows

    • August 06, 2019

    Taxing capital inflows is a far better way to balance trade than imposing tariffs. This would address the root causes of trade imbalances, improve the productive investment process, and shift most of the adjustment costs onto banks and speculators.

    • China Financial Markets

    Facebook’s Libra: Does the World Need Frictionless Money?

    • June 27, 2019

    Facebook seems to think its new digital currency Libra will be used mainly for purchasing goods and services and for current account transactions. But it will probably be used mainly for capital account transactions. Do we really want to eliminate frictional costs on the capital account?

    • China Financial Markets

    Wealth Should Trickle Up, Not Down

    • June 19, 2019

    Income inequality in the United States hampers growth and forces up debt. In advanced economies in which investment is not constrained by scarce savings, high levels of income inequality lead automatically to either more unemployment or more debt. Such inequality undermines not only the health of the economy, but eventually also the rich.

    • China Financial Markets

    Does the UK Benefit From Chinese Investment?

    • June 05, 2019

    While foreign investment usually benefits developing economies and creates local economic benefits in advanced economies, it generally does not benefit advanced economies on the whole except in very limited cases. On the contrary, foreign investment in advanced economies is more likely to lead to higher unemployment or rising debt.

    • China Financial Markets

    China Cannot Weaponize Its U.S. Treasury Bonds

    • May 28, 2019

    A number of recent articles suggest that Chinese officials may reduce their purchases of U.S. government bonds. It is very unlikely that China can do so in any meaningful way because doing so would almost certainly be costly for Beijing. And even if China took this step, it would have either no impact or a positive impact on the U.S. economy.

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