Michael Pettis
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China Falls Victim to Greek Deficit Contagion
China’s steps to limit the damage from the Greek crisis will necessarily shift the brunt of the economic adjustment to other countries, unless the major trading powers can reach a burden-sharing agreement.
Source: Bloomberg

The Greek crisis may have changed that. The 15 percent slide in the euro’s value against the yuan over the past six months has eroded Chinese competitiveness in the market of its largest trading partner: the European Union. More importantly, many trade-deficit countries in Europe -- such as Greece, Portugal and Spain -- are having difficulty financing themselves. Without net capital inflows, these countries can no longer run current-account shortfalls.
Shift Burden
New Capital Inflows
Trade Wars
About the Author
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.
- Is China’s High-Quality Investment Output Economically Viable?Commentary
- What GDP Means in a Soft Budget Economy Like ChinaCommentary
Michael Pettis
Recent Work
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.
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