Michael Pettis

Top Sovereign Lending Official at Exim Bank Under Investigation Zhu Ying, a key figure in African debt restructuring, is at the center of a corruption investigation

Caixin: "Exim Bank is under growing financial strain. Its 2024 annual report showed assets of 6.4 trillion yuan, but revenue fell 55.8% year-on-year to 10.3 billion yuan, and net profit plunged 66.9% to 2.9 billion yuan," (i.e an ROA of 0.05%).
www.caixinglobal.com/2025-11-25/t...

5/5
But if it isn't, the experience of other countries that have experienced rising overinvestment tied to even faster rising debt suggests that it is better to go through the difficult adjustment process with the cleanest possible central-government balance sheet.

4/5
Most of local government spending has gone to boost production and infrastructure. If this spending is productive, then they should keep doing it, and if local governments are having trouble raising the funding, the central government should certainly fund it.

3/5
As it gets harder for local governments to raise the funding needed to pay for their very high investment and subsidy bills, it may seem to make sense to shift a greater share of this borrowing onto the only clean balance sheet left, that of the central government.

2/5
around 14% of China's general public budget expenditure over the past decade, while local governments shoulder the rest". The article cites a researcher at CAFS as suggesting that China's central government share will rise to 30-40% by 2030.

China to Lift Share of Central Gov't Spending During 15th Five-Year Plan

1/5
Yicai: "China plans to increase the proportion of central government spending in the general public budget expenditure and strengthen its decision-making authority during the country's 15th Five-Year Plan. Central government spending accounted for...
www.yicaiglobal.com/news/china-t...

EU to tighten investment rules to stand up to China Commission wants greater benefits for local workers and technology transfers when foreign companies set up in bloc

FT: "The EU's industry commissioner, Stéphane Séjourné, has said the revised rules would probably stipulate that foreign investors had to recruit local workers and in “certain sectors like batteries” transfer technological knowhow."
www.ft.com/content/a719...

2/2
"The phrase," Caixin notes, "immediately sparked heated online debate and various interpretations. This wording is unusual, which raises the question: Is a “large-scale return” already happening, or are there warning signs?"

Commentary: Why China Is Worried About Migrants Returning Home A wave of returning and idle workers would threaten not just employment but China’s efforts to consolidate poverty alleviation gains, making early monitoring and targeted support essential

1/2
Caixin: "An official from China’s Ministry of Agriculture and Rural Affairs recently stated at a national conference on rural employment that the government must “prevent a large-scale return and idling of migrant workers in their hometowns.”"
www.caixinglobal.com/2025-11-21/c...

5/5
I expect production will increase in these sectors to make up for reduced production in those sectors most badly hit by involution (e.g. EVs, batteries, solar panels). This might suggest that foreign producers in these sectors will face more competition and lower prices.

China Unveils New Measures to Steady Growth Across 10 Key Industries

4/5
This won't change soon. Last month Beijing announced support for steel, nonferrous metals, petrochemical, chemicals, building material, machinery, automobile, electrical equipment, light industry, and electronic information manufacturing industries.
www.yicaiglobal.com/news/china-i...

3/5
Caixin goes on to note that the average price of Chinese steel exports dropped 19.3% in 2024, and another 9.5% so far this year. It cites a steel producer as saying: “Domestic demand is weak, foreign markets are better, so we’re all focused on expanding abroad.”

2/5
Caixin continues: "The imbalance sent a clear message: the core problem isn’t output. It’s overcapacity, with too few buyers at home to absorb what’s being produced. To fill the widening gap, Chinese steelmakers are aggressively pivoting to export markets."

In Depth: China’s Steelmakers Look Abroad as Domestic Pressures Mount Facing a dearth of demand at home, Chinese producers pursue growth from Guinea to the Gulf

1/5
Caixin: "By the end of September, Chinese mills had produced 746 million tons of crude steel, down 2.9% from a year earlier. But domestic consumption slumped 5.7% to just under 649 million tons, a much steeper decline."
www.caixinglobal.com/2025-11-21/i...

More likely the cold weather.

Xinhua: "China's electricity consumption, a key barometer of economic activity, registered 10.4% expansion last month, driven mainly by household electricity consumption (up 23.9%). From January to October, China's total power use climbed 5.1% percent."
english.news.cn/20251121/d6c...

Did globalisation kill neoliberalism? With Branko Milanović A new, less co-operative global era has begun

Very interesting Financial Times interview of Branko Milanović, although I think that rather than globalization having killed neoliberalism, as the title implies, it is neoliberalism that may killed globalization.
www.ft.com/content/b3a9...

6/6
a double-edged sword in a country heavily reliant on manufacturing exports to resolve domestic demand imbalances. It undermines its manufacturing competitiveness in a world already suffering from rising trade barriers.

5/6
As households see their purchasing power increase, they spend more on services, which replaces the jobs lost to productivity-enhancing technologies.

The problem China has today, as the US had in the 1930s, is that increasing wages is...

4/6
In the case of an economy suffering from weak demand, as fed chairman Marriner Eccles explained in the 1930s, the only sustainable solution to unemployment pressures is to increase domestic demand by directly or indirectly increasing household income.

3/6
But its not really technological progress that reduces the number of jobs in an economy. It is when average wages fail to keep up with the growth in productivity. It is only in that case that overall purchasing power lags behind production.

2/6
the article cites Liu Yuanchun as warning that “On the one hand, the supply of university graduates is increasing. On the other, technological progress is reducing the job-absorption capacity of corresponding high-end industries.”

‘Unpredictable risks’: China to see record graduates next year amid jobs crunch Employment pressures facing graduates will reach unprecedented levels over next decade, top economist warns.

1/6
SCMP: "China is preparing for an unprecedented wave of new university graduates next summer – a record 12.7 million outgoing students – intensifying pressure on an already strained job market and a slowing economy."
sc.mp/o7wwf?utm_so... via @scmpnews

2/2
deficit recorded in July."

One month tells us nothing, of course, but if this were to be the beginning of a sustained decline in the US trade deficit, it will set off much deeper changes in the global economy then we saw in the past few months of shifting trade.

Trade Deficit Declined in August, Delayed Figures Show The U.S. trade deficit shrank in August, the Commerce Department said, giving a delayed look at how tariffs were shaping international trade flows over the summer.

1/2
WSJ: "The US trade deficit shrank in August. Imports declined to $340.4 billion, a 5.1% decline compared with July, while exports rose by 0.1% to $280.8 billion, yielding a monthly trade deficit of $59.6 billion, 24% smaller than the $78.2 billion...
www.wsj.com/economy/trad...

3/3
It seems that everyone, whatever their ideological priors, is beginning to recognize that in a hyperglobalized world, countries that intervene minimally in their external accounts must bear the costs created and externalized by countries that intervene aggressively.

2/3
But not only does the experience of China (and many others) suggest that the truth is much more complex, the solutions the article proposes for Europe seem to consist mainly of trade and industrial policies aimed at protecting European industry from foreign mercantilism.

To avoid crushing change, Europe must take control of its destiny If it does not, China will exploit the continent’s weaknesses

1/3
This article argues (as The Economist must) that "using trade protection and industrial policy to shore up strategic manufacturing would only accelerate Europe’s decline".
www.economist.com/leaders/2025...

Are We the Mercantilists? The U.S. is playing defense against this practice, not embracing it.

Michael Lind argues that mercantilist policies that result in beggar-thy-neighbor trade surpluses invariably lead to retaliation and trade contraction. Although they are on opposite ends of the political spectrum, this is the same argument Joan Robison made.
www.commonplace.org/p/michael-li...

Lula, Ramaphosa and Sánchez: We face an inequality emergency The needs of ordinary people must be placed at the centre of the world’s agenda

"Extreme levels of inequality are by no means inevitable. They are a policy choice."
www.ft.com/content/9cc0...