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%
2/2
real effective exchange rate fell 19%—its largest adjustment since 1990. Because China’s costs are falling much faster than those in the U.S. and Europe, a modest annual appreciation of 4-5% will not erode export competitiveness and could even reduce trade frictions."
real effective exchange rate fell 19%—its largest adjustment since 1990. Because China’s costs are falling much faster than those in the U.S. and Europe, a modest annual appreciation of 4-5% will not erode export competitiveness and could even reduce trade frictions."
Commentary: The Yuan’s Rebound Is Just Beginning
After breaking the key 7-per-dollar level, fundamental strengths and shifting U.S.-China ties will drive further gains, boosting Chinese assets and challenging bearish narratives
www.caixinglobal.com
1/2
The Chief Economist at Huatai Securities believes the RMB is beginning a strengthening cycle: "Fundamentally, the yuan is highly competitive, and its relative price advantage is growing daily. Between April 2022 and June of this year, the yuan’s...
www.caixinglobal.com/2025-12-26/c...
The Chief Economist at Huatai Securities believes the RMB is beginning a strengthening cycle: "Fundamentally, the yuan is highly competitive, and its relative price advantage is growing daily. Between April 2022 and June of this year, the yuan’s...
www.caixinglobal.com/2025-12-26/c...
China Starts State-Backed Venture Funds to Support Tech Startups
China has officially launched a national venture capital fund and three large regional funds, together worth billions of dollars, as part of a push to foster home-grown tech champions and improve inve...
www.bloomberg.com
More info in Caixin: "China on Friday officially launched a national venture capital fund, injecting 100 billion yuan ($14 billion) in central government capital aiming to mobilize 1 trillion yuan to support companies in strategic emerging and future industries."
www.bloomberg.com/news/article...
www.bloomberg.com/news/article...
China Starts State-Backed Venture Funds to Support Tech Startups
China has officially launched a national venture capital fund and three large regional funds, together worth billions of dollars, as part of a push to foster home-grown tech champions and improve inve...
www.bloomberg.com
Bloomberg: "China has launched a national venture capital fund and three regional funds, together worth billions of dollars, as part of a push to foster home-grown tech champions. The national fund will run for 20 years."
www.bloomberg.com/news/article...
www.bloomberg.com/news/article...
Precious Metals Craze Prompts China Fund to Turn Away Investors
A global frenzy for precious metals has provoked extreme measures in China’s investment landscape, with the country’s only pure-play silver fund turning away new customers after its repeated risk warn...
www.bloomberg.com
Chinese retail have been huge buyers of gold in recent years, and this year some of the interest seems to have shifted to silver.
www.bloomberg.com/news/article...
www.bloomberg.com/news/article...
4/4
With no chance of a revival in property investment, this suggests that Beijing will have little choice but to engineer another surge in manufacturing investment.
This of course has global implications, i.e. more downward price pressures on a wider variety of manufactured goods.
With no chance of a revival in property investment, this suggests that Beijing will have little choice but to engineer another surge in manufacturing investment.
This of course has global implications, i.e. more downward price pressures on a wider variety of manufactured goods.
3/4
But it also recognizes that it is harder than ever to justify more infrastructure investment on economic grounds, in which case the only way to rein in the debt burden is to rein in infrastructure investment.
But it also recognizes that it is harder than ever to justify more infrastructure investment on economic grounds, in which case the only way to rein in the debt burden is to rein in infrastructure investment.
2/4
screening projects to ensure they generate sufficient returns."
This puts Beijing in a tough position. It must revive investment if it is to achieve GDP growth of 5% in 2026.
screening projects to ensure they generate sufficient returns."
This puts Beijing in a tough position. It must revive investment if it is to achieve GDP growth of 5% in 2026.
China Trapped in Investment Slump as Infrastructure Bonds Dry Up
One measure of borrowing by China’s local governments for infrastructure is on pace to hit a six-year low, as Beijing clamps down on risks in a strategy shift that calls into question its promise to s...
www.bloomberg.com
1/4
Bloomberg: "One measure of borrowing by China’s local governments for infrastructure is on pace to hit a six-year low. Behind the downturn is China’s campaign to rein in so-called hidden local debt, along with increasingly stringent rules for...
www.bloomberg.com/news/article...
Bloomberg: "One measure of borrowing by China’s local governments for infrastructure is on pace to hit a six-year low. Behind the downturn is China’s campaign to rein in so-called hidden local debt, along with increasingly stringent rules for...
www.bloomberg.com/news/article...
China Expects Resale Homes to Play Big Role in Property Market Over Next Five Years
www.yicaiglobal.com
Yicai: "The floor area of sold homes and the investment completion were only at 48 percent and 62 percent in the first 11 months of this year, respectively, from the level in the same period in 2021, according to KPMG China."
www.yicaiglobal.com/news/china-e...
www.yicaiglobal.com/news/china-e...
Almost Half of China-Japan Flights to Be Axed Next Month
www.yicaiglobal.com
Yicai: "With the number of travelers between China and Japan continuing to decrease after relations between the two countries cooled last month, nearly half of the flights between the two countries are expected to suspend operations in January."
www.yicaiglobal.com/news/almost-...
www.yicaiglobal.com/news/almost-...
Reposted by Michael Pettis
How to Fix Free Trade
A global customs union could solve the problem of imbalances.
www.foreignaffairs.com
“To sustain a stable and fair global system, policymakers must recognize that integration entails shared constraints.” @michaelpettis.bsky.social makes the case for a global customs union:
Damned foreign dogs.
5/5
The obvious lesson here is that while import restrictions do indeed limit consumer choice in the short term, in an economy with enough domestic demand they can also create a very efficient domestic industry that ultimately provides much greater consumer choice.
The obvious lesson here is that while import restrictions do indeed limit consumer choice in the short term, in an economy with enough domestic demand they can also create a very efficient domestic industry that ultimately provides much greater consumer choice.
4/5
Foreign drones could be imported only for narrow research or demonstration purposes and were not permitted for aerial photography, infrastructure inspection, mapping, or logistics, What is more, foreign drones were excluded from government procurement.
Foreign drones could be imported only for narrow research or demonstration purposes and were not permitted for aerial photography, infrastructure inspection, mapping, or logistics, What is more, foreign drones were excluded from government procurement.
3/5
It certainly does, but perhaps only in the very short term. The irony of course is that in the early 2000s, when China was trying to build its own drone industry, there were similar restrictions on higher-quality foreign imports.
It certainly does, but perhaps only in the very short term. The irony of course is that in the early 2000s, when China was trying to build its own drone industry, there were similar restrictions on higher-quality foreign imports.
2/5
"In a statement provided to Caixin," the article continues, "Chinese drone maker DJI said it regretted the FCC’s decision, arguing that the move limits consumer choice and undermines principles of open and fair competition."
"In a statement provided to Caixin," the article continues, "Chinese drone maker DJI said it regretted the FCC’s decision, arguing that the move limits consumer choice and undermines principles of open and fair competition."
U.S. Regulator Targets Foreign Drones, Threatening Future DJI Models
FCC ruling spares existing devices but could shut new overseas drone products out of the U.S. market
www.caixinglobal.com
1/5
Caixin: "The FCC said that foreign-made drones and key components pose an “unacceptable risk” to U.S. national and public safety and should be added to the agency’s Covered List, a move that would bar new models from receiving regulatory approval."
www.caixinglobal.com/2025-12-24/u...
Caixin: "The FCC said that foreign-made drones and key components pose an “unacceptable risk” to U.S. national and public safety and should be added to the agency’s Covered List, a move that would bar new models from receiving regulatory approval."
www.caixinglobal.com/2025-12-24/u...
From Alsatians to autonomy: China seeks home-grown edge in police dogs
China's national security authorities are urging police across the country to favour the use of a home-grown dog breed over German Shepherds, Rottweilers, Malinois and Springer Spaniels, as Beijing re...
www.reuters.com
Funny article about an "increasingly fierce" global competition in "police dog technology".
www.reuters.com/world/asia-p...
www.reuters.com/world/asia-p...