Stephen Roach
@ssruschina.bsky.social
Author, Yale faculty, former Chief Economist Morgan Stanley. US-China Substack. Last book: Accidental Conflict
The liar-in-chief has gone too far in blaming Biden for the record inflation he inherited. His claims have no basis in fact, especially as compared to the Great Inflation of the 1970s and early 1980s. Equally culpable is his so-called team of expert economic advisors — Bessent, Lutnick, and Hassett.
Setting the Record Straight on Inflation
Unmasking one of the President's biggest economic lies
open.substack.com
December 5, 2025 at 5:20 PM
The liar-in-chief has gone too far in blaming Biden for the record inflation he inherited. His claims have no basis in fact, especially as compared to the Great Inflation of the 1970s and early 1980s. Equally culpable is his so-called team of expert economic advisors — Bessent, Lutnick, and Hassett.
While the sign at Hong Kong’s Airport still says “Welcome to Asia’s World City,” that reputation has been increasingly compromised by China’s stifling influence on the city’s governance and economic vitality. The “one country, two systems” model morphed increasingly into “one country, one system.”
Hong Kong's Identity Quandary
Project Syndicate: November 27, 2025
open.substack.com
November 27, 2025 at 4:55 PM
While the sign at Hong Kong’s Airport still says “Welcome to Asia’s World City,” that reputation has been increasingly compromised by China’s stifling influence on the city’s governance and economic vitality. The “one country, two systems” model morphed increasingly into “one country, one system.”
NVIDIA’s blowout 3Q earnings doesn’t validate an AI boom. It provides a signal of derived demand, driven by expectations of a $3-5 trln capex boom in data center construction between now and 2030. NVIDIA’s expected earnings trajectory is tied to the AI capex bubble it feeds off.
NVIDIA's Circular Signal
How can NVIDIA validate the AI bubble it feeds off?
open.substack.com
November 21, 2025 at 1:50 AM
NVIDIA’s blowout 3Q earnings doesn’t validate an AI boom. It provides a signal of derived demand, driven by expectations of a $3-5 trln capex boom in data center construction between now and 2030. NVIDIA’s expected earnings trajectory is tied to the AI capex bubble it feeds off.
Like Biden, Trump has an affordability problem. Unlike Biden=>Harris, Trump’s claim that affordability is a political hoax fails to make the distinction between inflation and the price level. On November 4, US voters understood the basic economics of that distinction better than their President.
Affordability for Dummies
A primer on America's most contentious economic issue.
open.substack.com
November 13, 2025 at 4:22 PM
Like Biden, Trump has an affordability problem. Unlike Biden=>Harris, Trump’s claim that affordability is a political hoax fails to make the distinction between inflation and the price level. On November 4, US voters understood the basic economics of that distinction better than their President.
In May 1930, over 1000 leading economists wrote an open letter to President Hoover urging him not to sign the Smoot Hawley Tariff Act. In October 2025 an Amicus Brief was filed before the Supreme Court by 44 distinguished economists urging rejection of Trump’s tariffs. Will SCOTUS do “a Hoover” ?
The Voices of Experts
Will the Supreme Court ignore the advice of economists on tariffs like Herbert Hoover did in 1930 ahead of enactment of the Smith-Hawley Act?
open.substack.com
November 7, 2025 at 10:53 PM
In May 1930, over 1000 leading economists wrote an open letter to President Hoover urging him not to sign the Smoot Hawley Tariff Act. In October 2025 an Amicus Brief was filed before the Supreme Court by 44 distinguished economists urging rejection of Trump’s tariffs. Will SCOTUS do “a Hoover” ?
Just back from two weeks in China. My take on what Beijing thinks of the Trump-Xi “deal.” Unsurprisingly, a very different take than the US view as per Trump.
A Deal Between Equals
Implications of the Trump-Xi deal in Korea
open.substack.com
November 3, 2025 at 6:14 PM
Just back from two weeks in China. My take on what Beijing thinks of the Trump-Xi “deal.” Unsurprisingly, a very different take than the US view as per Trump.
I document America’s mounting loss of leading Chinese scientists returning to the Mainland since the US presidential election in Nov 2024. This trend, in conjunction with efforts to slash Federal support for basic research, reinforces the destructive anti-science, anti-expert mindset of Trump 2.0.
America's Worrisome Exodus of Chinese Talent
A tabulation of recent depatures of leading Chinese scientists from US institutions. Guess where they are going?
open.substack.com
October 18, 2025 at 8:21 PM
I document America’s mounting loss of leading Chinese scientists returning to the Mainland since the US presidential election in Nov 2024. This trend, in conjunction with efforts to slash Federal support for basic research, reinforces the destructive anti-science, anti-expert mindset of Trump 2.0.
More detail on the macro drivers of Chinese consumer-led rebalancing: Relative to OECD norms — a good proxy for Xi Jinping’s 2049 goal of a “moderately well-off society” — China has more to gain from reducing precautionary saving than from boosting labor income. Both are needed, however.
How Should Chinese Consumers Rebalance?
China has more to gain from reducing fear-driven precautionary saving than from boosting labor income.
open.substack.com
October 10, 2025 at 4:08 PM
More detail on the macro drivers of Chinese consumer-led rebalancing: Relative to OECD norms — a good proxy for Xi Jinping’s 2049 goal of a “moderately well-off society” — China has more to gain from reducing precautionary saving than from boosting labor income. Both are needed, however.
As a follow up to my earlier proposal that China needs to set an explicit target of 50% for the household consumption share of GDP by 2035, the piece below quantifies what it would take. My answer: 7% consumption growth between now and 2035 versus 3.3% for the remainder of the Chinese economy.
The Math of China's Consumer-Led Rebalancing
Quantifying key milestones on the road to rebalancing.
open.substack.com
October 3, 2025 at 6:23 PM
As a follow up to my earlier proposal that China needs to set an explicit target of 50% for the household consumption share of GDP by 2035, the piece below quantifies what it would take. My answer: 7% consumption growth between now and 2035 versus 3.3% for the remainder of the Chinese economy.
A striking disconnect between ongoing services developement and lagging household consumption underscores China’s incomplete rebalancing. This paradox can best be resolved through a combination of social safety net reforms and a 50% target for the consumption share of Chinese GDP by 2035.
China's Last Structural Paradox
Social safety net reform is key to resolving China's disconnect between rising services and stagnant household consumption.
open.substack.com
September 26, 2025 at 8:25 PM
A striking disconnect between ongoing services developement and lagging household consumption underscores China’s incomplete rebalancing. This paradox can best be resolved through a combination of social safety net reforms and a 50% target for the consumption share of Chinese GDP by 2035.
As China puts the final touches on its upcoming Five-Year Plan (2026-30), America has neither a plan nor a strategy. Trumponomics is based largely on the whims of one man, in sharp contrast to China’s comprehensive “all-of-government” approach.
China Plans, America Reacts
Project Syndicate: September 25, 2025
open.substack.com
September 25, 2025 at 4:53 PM
As China puts the final touches on its upcoming Five-Year Plan (2026-30), America has neither a plan nor a strategy. Trumponomics is based largely on the whims of one man, in sharp contrast to China’s comprehensive “all-of-government” approach.
Following a Chinese ban of Nvidia purchases, Huawei has just rolled out a new strategy for indigenous AI innovation while China just cracked the Top 10 on the Global Innovation Index. America’s efforts to contain Chinese innovation have backfired.
A Good Week for Chinese Innovation
Huawei has rolled out a new three-year indigenous AI strategy while China has finally cracked the Top 10 in the Global Innovation Index. America has failed to contain Chinese innovation.
open.substack.com
September 19, 2025 at 4:58 PM
Following a Chinese ban of Nvidia purchases, Huawei has just rolled out a new strategy for indigenous AI innovation while China just cracked the Top 10 on the Global Innovation Index. America’s efforts to contain Chinese innovation have backfired.
Project Sydicate asked five of us to consider whether Trumponomics represents a rejection of neoliberalism or its natural progression, and how might it reshape the US economy? My answer, along with summaries of the others, follows.
Is Trump a State Capitalist?
A "Big Question" posed by Project Syndicate
open.substack.com
September 14, 2025 at 2:48 PM
Project Sydicate asked five of us to consider whether Trumponomics represents a rejection of neoliberalism or its natural progression, and how might it reshape the US economy? My answer, along with summaries of the others, follows.
The new focus of Chinese policy — involution — is yet another attempt to micromanage the supply side, this time focusing on the deflationary consequences of “overly-aggressive, disruptive” competition. By failing to tackle chronic problems of underconsumption, this campaign could well be stymied.
The Doublespeak of China's Anti-Involution Campaign
Another high-profile attempt to micromanage the supply side while ignoring the demand side
open.substack.com
September 12, 2025 at 9:28 PM
The new focus of Chinese policy — involution — is yet another attempt to micromanage the supply side, this time focusing on the deflationary consequences of “overly-aggressive, disruptive” competition. By failing to tackle chronic problems of underconsumption, this campaign could well be stymied.
Xi Jinping’s recent emphasis on China’s “unstoppable rejuvenation” signals that his political calculus has changed. With Chinese economic growth likely to fall short of the 2049 targets of the “Chinese Dream,” a large rejuvenation deficit has opened up. A shift from economic to military priorities.
China's Rejuvenation Deficit
A dramatic change in Xi Jinping's political calculus
open.substack.com
September 4, 2025 at 8:18 PM
Xi Jinping’s recent emphasis on China’s “unstoppable rejuvenation” signals that his political calculus has changed. With Chinese economic growth likely to fall short of the 2049 targets of the “Chinese Dream,” a large rejuvenation deficit has opened up. A shift from economic to military priorities.
The AI spending binge on data centers is a bubble. Reminiscent of services sector restructuring in the 1990s, a massive overhang of low-value, fixed cost LLM search processing will dilute the variable cost functionality and returns of large Mag 7-like AI companies. Hyper-scale data centers benefit.
AI Déjà Vu
The AI spending boom is a bubble — reminscent of that which sparked a major wave of services restructuring in the 1990s.
open.substack.com
August 28, 2025 at 4:53 PM
The AI spending binge on data centers is a bubble. Reminiscent of services sector restructuring in the 1990s, a massive overhang of low-value, fixed cost LLM search processing will dilute the variable cost functionality and returns of large Mag 7-like AI companies. Hyper-scale data centers benefit.
Jerome Powell’s recent speech at Jackson Hole was a courageous, Volcker-like act in support of Fed independence. Staying on mission, when the Fed is under extraordinary political pressure, is an inspiration for Lisa Cook and the rest of us. Powell deserves a place in the Pantheon of central banking.
The Heroes of US Central Banking
Project Syndicate: August 27, 2025
open.substack.com
August 27, 2025 at 5:00 PM
Jerome Powell’s recent speech at Jackson Hole was a courageous, Volcker-like act in support of Fed independence. Staying on mission, when the Fed is under extraordinary political pressure, is an inspiration for Lisa Cook and the rest of us. Powell deserves a place in the Pantheon of central banking.
ChinaFile asked five China watchers whether President Trump has changed his view on China. My take is that he will do whatever it takes to put another big notch in his deal belt. China and Harvard are two trophy deals that would enshrine his self-proclaimed legacy as deal maker-in-chief.
Is Trump Going Soft on China?
An August 19 ChinaFile Conversation
open.substack.com
August 22, 2025 at 12:05 PM
ChinaFile asked five China watchers whether President Trump has changed his view on China. My take is that he will do whatever it takes to put another big notch in his deal belt. China and Harvard are two trophy deals that would enshrine his self-proclaimed legacy as deal maker-in-chief.
The contentious March 2021 Anchorage summit between the US and China offers some important hints on what to expect this Friday between Trump and Putin. A deal focused Trump has lowered the bar on what to expect from this “listening exercise.” Trump’s congenital softness toward Putin is the wildcard
The Curse of Anchorage
Does the US-China confrontation of March 2021 provide a hint of what lies ahead this coming Friday?
open.substack.com
August 13, 2025 at 8:20 PM
The contentious March 2021 Anchorage summit between the US and China offers some important hints on what to expect this Friday between Trump and Putin. A deal focused Trump has lowered the bar on what to expect from this “listening exercise.” Trump’s congenital softness toward Putin is the wildcard
The legend of Zhao Gao, the most famous and powerful eunuch of the early Qin dynasty. The ancient roots of Chinese mendacity and loyalty tests as a prototype for the two Trump Administrations— from Sean Spicer to Kellyann Conway to Scott Bessent yesterday on MSNBC.
The Deer and the Horse
U.S. Treasury Secretary Scott Bessent as a case study in political mendacity.
open.substack.com
August 8, 2025 at 10:32 AM
The legend of Zhao Gao, the most famous and powerful eunuch of the early Qin dynasty. The ancient roots of Chinese mendacity and loyalty tests as a prototype for the two Trump Administrations— from Sean Spicer to Kellyann Conway to Scott Bessent yesterday on MSNBC.
Trump’s July 31 executive order details the Liberation Day 2.0 shock for 69 countries — the largest single-year increase in US tariffs since 1815. A subsequent spike in the Trade Policy Uncertainty Index is a strong hint of more carnage to come as the US economy veers ever closer to recession.
Calibrating the Tariff Shock
The single worst shock since 1815 in all of its gory detail.
open.substack.com
August 6, 2025 at 10:23 AM
Trump’s July 31 executive order details the Liberation Day 2.0 shock for 69 countries — the largest single-year increase in US tariffs since 1815. A subsequent spike in the Trade Policy Uncertainty Index is a strong hint of more carnage to come as the US economy veers ever closer to recession.
Trump’s firing of BLS Commissioner McEntarfer is beyond appalling. Data repression borrows a page from the classic playbook of autocracy. Trump’s bogus claims of data manipulation don’t mask underlying weakness of the US economy. Shooting the messenger disgraces the office of the presidency.
The Ultimate?
Trump shoots another messenger!
open.substack.com
August 2, 2025 at 1:59 AM
Trump’s firing of BLS Commissioner McEntarfer is beyond appalling. Data repression borrows a page from the classic playbook of autocracy. Trump’s bogus claims of data manipulation don’t mask underlying weakness of the US economy. Shooting the messenger disgraces the office of the presidency.
Liberation Day, take two, is at hand. While not as extreme as the April 2 folly, average effective tariff rates are now back to at least 18.4%, last seen in 1933. Myopic markets are betting that worst of the trade war is over. That is likely to be wishful thinking.
Feeling Liberated Yet?
Don't underestimate the perils of yet another Liberation Day!
open.substack.com
August 1, 2025 at 2:30 AM
Liberation Day, take two, is at hand. While not as extreme as the April 2 folly, average effective tariff rates are now back to at least 18.4%, last seen in 1933. Myopic markets are betting that worst of the trade war is over. That is likely to be wishful thinking.
Sino-American conflict resolution is stymied by toxic political pressures. It is time to start thinking in terms of a Project 2029 – a post-Trump agenda featuring people-to-people engagement, focus on shared mutual problems (climate, health, and AI), and an end to the blame game of codependency.
Project 2029: The Art of Conflict Resolution
Under the best of circumstances, the case for US-China conflict resolution is a stretch. A post-Trump proposal.
open.substack.com
July 25, 2025 at 2:41 PM
Sino-American conflict resolution is stymied by toxic political pressures. It is time to start thinking in terms of a Project 2029 – a post-Trump agenda featuring people-to-people engagement, focus on shared mutual problems (climate, health, and AI), and an end to the blame game of codependency.
The US just released an AI Action Plan fully eight years after China issued its own plan. With the Trump Administration slashing government support to basic research and still wedded to Biden’s chips blocking strategy, China is increasingly well positioned to prevail in AI over the long haul.
Who's Winning the US-China AI Race?
Project Syndicate: July 24, 2025
open.substack.com
July 24, 2025 at 12:51 PM
The US just released an AI Action Plan fully eight years after China issued its own plan. With the Trump Administration slashing government support to basic research and still wedded to Biden’s chips blocking strategy, China is increasingly well positioned to prevail in AI over the long haul.