Commentary
Michael Pettis
{
"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"
]
}
Source: Getty
In The Media
Could China's Efforts to Cool the Economy Be Working Too Well?
China’s high level of investment is causing a rapid rise in debt and will likely lead to a slowdown in the country’s economic growth.
Published on Jun 13, 2011
Source: Marketplace
STEVE CHIOTAKIS: There's word today out of China -- big banks handed out fewer loans in May. Perhaps a sign Beijing's efforts to cool an overheated economy could be making some headway. But how cool is too cool? Michael Pettis is an economist at Peking University in Beijing. Hi Michael.
MICHAEL PETTIS: Hi how are you?
CHIOTAKIS: Doing well. Is there a risk that the Chinese government will over reach and hinder the country economically, or even cause a slowdown?
PETTIS: A slowdown is inevitable. We've been going extremely rapidly over the last 30 years because of huge increases in investment. And there's increasing evidence that five years ago, perhaps even ten years ago, a very large amount of this investment was being misallocated. It was being used to build excess real estate development or excess infrastructure. And one of the consequences is that we've been seeing a very rapid rising in debt and I don't think we can do this many more years before we run into real trouble.
CHIOTAKIS: How has China avoided the economic downturn the rest of the world's experienced?
PETTIS: Well, it hasn't really avoided it. What it did was it postponed it. They responded to the 2007-2008 crisis by taking a country which already had the highest investment growth rate in history and significantly increasing it. Now when you increase investment, you always get growth. But if the investment is not economically viable, you give back all of that growth in the future and I'm afraid that's what may have happened here.
CHIOTAKIS: Michael Pettis, economist at Peking University in Beijing. Michael thanks.
PETTIS: Thank you.
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.
- What’s New about Involution?
- Using China’s Central Government Balance Sheet to “Clean up” Local Government Debt Is a Bad IdeaCommentary
Michael Pettis
Recent Work
More Work from Carnegie Russia Eurasia Center
- Why Are China and Russia Not Rushing to Help Iran?Commentary
Most of Moscow’s military resources are tied up in Ukraine, while Beijing’s foreign policy prioritizes economic ties and avoids direct conflict.
Alexander Gabuev, Temur Umarov
- How Trump’s Wars Are Boosting Russian Oil ExportsCommentary
The interventions in Iran and Venezuela are in keeping with Trump’s strategy of containing China, but also strengthen Russia’s position.
Mikhail Korostikov
- Does Russia Have Enough Soldiers to Keep Waging War Against Ukraine?Commentary
The Russian army is not currently struggling to recruit new contract soldiers, though the number of people willing to go to war for money is dwindling.
Dmitry Kuznets
- Japan’s “Militarist Turn” and What It Means for RussiaCommentary
For a real example of political forces engaged in the militarization of society, the Russian leadership might consider looking closer to home.
James D.J. Brown
- A New World Police: How Chinese Security Became a Global ExportCommentary
China has found a unique niche for itself within the global security ecosystem, eschewing military alliances to instead bolster countries’ internal stability using law enforcement. Authoritarian regimes from the Central African Republic to Uzbekistan are signing up.
Temur Umarov
