Michael Pettis
@michaelpettis.bsky.social
Senior Fellow at Carnegie China. For speaking engagements, please write to chinfinpettis@yahoo.com
Michael Pettis is an American professor of finance at Guanghua School of Management at Peking University in Beijing and a nonresident senior fellow at the Carnegie Endowment for International Peace. He was founder and co-owner of punk-rock nightclub D22 in Beijing, which closed in January 2012. .. more
Economics
76%
Political science
11%
China’s Residential Land Sales Revenue Slumps 65% From Peak as State Backers Retreat
Local government financing vehicles are left struggling with large land inventories and tightening cash flows
www.caixinglobal.com
Caixin: "China’s revenue from residential land sales fell about 65% in 2025 from its 2020 peak. The slump highlights the deepening fiscal strain on regional authorities, who have traditionally relied on selling land to fund infrastructure and service debt."
www.caixinglobal.com/2026-01-06/c...
www.caixinglobal.com/2026-01-06/c...
For my friends in Beijing, this Tuesdays' performance will be especially interesting. Not only are Li Jianhong and Yang Haisong performing, but the show will start with a young new trio whose first performance three months ago blew us all away.
www.yicaiglobal.com
Yicai: "China's high-speed railroad network, which is the largest in the world, will expand by about 10,000 kilometers over the next five years to 60,000 km."
www.yicaiglobal.com/news/china-t...
www.yicaiglobal.com/news/china-t...
3/3
in its external accounts to slow or even reverse the decline in its share, other major manufacturers who don't intervene in their external accounts must balance the combined actions of China and the US by reducing their shares of global manufacturing.
in its external accounts to slow or even reverse the decline in its share, other major manufacturers who don't intervene in their external accounts must balance the combined actions of China and the US by reducing their shares of global manufacturing.
2/3
This is just how arithmetic works. If the world's largest manufacturer (China) intervenes in its external accounts to increase its share of global manufacturing, and the world's second-largest manufacturer (the US) intervenes...
This is just how arithmetic works. If the world's largest manufacturer (China) intervenes in its external accounts to increase its share of global manufacturing, and the world's second-largest manufacturer (the US) intervenes...
German exporters face prolonged slump in key U.S., China markets
German exporters should prepare for continued weakness in 2026 in their two largest markets, the United States and China, with little prospect of recovery, the BGA trade association said on Friday.
www.reuters.com
1/3
Reuters: "German exporters should prepare for continued weakness in 2026 in their two largest markets, the United States and China, with little prospect of recovery."
www.reuters.com/world/china/...
Reuters: "German exporters should prepare for continued weakness in 2026 in their two largest markets, the United States and China, with little prospect of recovery."
www.reuters.com/world/china/...
3/3
The point is that any economy that takes steps to limit domestic consumption, including of imported consumer goods, will tend to raise exports relative to imports. Comparative advantage, on the contrary, is expressed only in balanced trade.
The point is that any economy that takes steps to limit domestic consumption, including of imported consumer goods, will tend to raise exports relative to imports. Comparative advantage, on the contrary, is expressed only in balanced trade.
2/3
The fact that academic economists continue to insist that trade surpluses are simply an expression of comparative advantage shows not only how little they understand comparative advantage, but also how little they know about the world outside.
The fact that academic economists continue to insist that trade surpluses are simply an expression of comparative advantage shows not only how little they understand comparative advantage, but also how little they know about the world outside.
China imposes curbs on beef imports to protect domestic industry
China will impose an added 55% tariff on beef imports that exceed quota levels from key suppliers including Brazil, Australia and the U.S. in a move to protect its domestic cattle industry.
www.reuters.com
1/3
Reuters: "China will impose an added 55% tariff on beef imports that exceed quota levels from key suppliers including Brazil, Australia and the U.S. in a move to protect its domestic cattle industry."
www.reuters.com/world/china/...
Reuters: "China will impose an added 55% tariff on beef imports that exceed quota levels from key suppliers including Brazil, Australia and the U.S. in a move to protect its domestic cattle industry."
www.reuters.com/world/china/...
2/2
a top-tier national strategy. Yet by the end of the year, China presented a paradox: government stimulus flowed freely, but prices across the board continued to fall."
a top-tier national strategy. Yet by the end of the year, China presented a paradox: government stimulus flowed freely, but prices across the board continued to fall."
Year in Review: How Price Wars, Platform Battles and IP Booms Defined China’s 2025
From subsidy-fueled competition in retail to explosive growth in culture and services, 2025 laid bare the contradictions in China’s consumption-led recovery
www.caixinglobal.com
1/2
Good "Year in Review" piece by Caixin, including a discussion of why deflation is seen as such a problem: "In 2025, boosting domestic consumption graduated from an industry consensus to...
www.caixinglobal.com/2026-01-02/y...
Good "Year in Review" piece by Caixin, including a discussion of why deflation is seen as such a problem: "In 2025, boosting domestic consumption graduated from an industry consensus to...
www.caixinglobal.com/2026-01-02/y...
11/11
Some economists insist that you cannot say that a market is in a bubble when presumably rational investors say it isn't. But the economy itself can shift investment away from"rational" behavior as long as agents have different risk preferences and realistic time horizons.
Some economists insist that you cannot say that a market is in a bubble when presumably rational investors say it isn't. But the economy itself can shift investment away from"rational" behavior as long as agents have different risk preferences and realistic time horizons.
10/11
That is why these sequences are so dangerous – they can take in the whole economy. When eventually either excessive debt or stricter policies rein in the market, it is not just property developers who suffer. A wide range of agents can get caught up in the adjustment.
That is why these sequences are so dangerous – they can take in the whole economy. When eventually either excessive debt or stricter policies rein in the market, it is not just property developers who suffer. A wide range of agents can get caught up in the adjustment.
9/11
At first this shift in behavior further reinforces the market, as more and more agents find themselves effectively forced to speculate in rising property prices. This automatically increases the overall economy's bias toward "excessive" risk-taking.
At first this shift in behavior further reinforces the market, as more and more agents find themselves effectively forced to speculate in rising property prices. This automatically increases the overall economy's bias toward "excessive" risk-taking.
8/11
Local governments that cut taxes and rely more on rising land revenues outperform those that don't. Households that buy bigger apartments than they can afford get rich quicker. Property developers that buy land without restraint grow faster than those that don't.
Local governments that cut taxes and rely more on rising land revenues outperform those that don't. Households that buy bigger apartments than they can afford get rich quicker. Property developers that buy land without restraint grow faster than those that don't.
7/11
As the market shifts towards excessive risk taking, those that don't must drop out. For example businesses that buy more land than they need for future expansion outperform those that don't. Banks that lend aggressively against real estate learn that they can never lose.
As the market shifts towards excessive risk taking, those that don't must drop out. For example businesses that buy more land than they need for future expansion outperform those that don't. Banks that lend aggressively against real estate learn that they can never lose.
6/11
In that case excessive risk-takers always outperform, which means that not only do they expand their share of their market year after year, but also that they teach those that do not share their appetite for excessive risk taking that they will go out of business.
In that case excessive risk-takers always outperform, which means that not only do they expand their share of their market year after year, but also that they teach those that do not share their appetite for excessive risk taking that they will go out of business.