Trade never clears incrementally. It only clears systemically, and external imbalances are always, and must always be, perfectly consistent with internal imbalances.

An interview with Michael Pettis, a former investment banker turned music impresario who is quietly reshaping how Washington thinks about international trade.

A new paper, Trade Intervention for Freer Trade, Michael Pettis, a nonresident senior fellow in at the Carnegie Endowment for International Peace, and Erica Hogan, a research assistant in the Carnegie Global Order and Institutions program, assess policies that could create a new global trading system that preserves the freedom of nations to direct their economies while harnessing the benefits of trade. Please join Stewart Patrick, director of the Global Order and Institutions Program, for a conversation with Michael Pettis on these and other issues.

By targeting specific trade violations rather than balanced flows, global trade policy has been focusing on the wrong outcome. New trade rules are needed to create an international trading system in which comparative advantage allocates production.

It will require many years of real determination by Beijing to drive the role of consumption to much higher levels if China is to rebalance in a nondisruptive way.

Because of the way credit expansion is managed, monetary expansion in China is directed mainly toward the supply side of the economy.

Banks and other fixed-income investors are buying long-date government bonds because the economy is struggling and better alternatives don’t exist.

Ignoring the problems of its historical precedents won’t make China’s success any more likely.

Chinese imports were driven by investments, not consumption.

Almost everyone in economic policymaking circles is concerned about China’s high and rising debt burden, but there is little evidence that this is likely to change much in 2024.