Senior Fellow at Carnegie China. For speaking engagements, please write to chinfinpettis@yahoo.comhttps://bsky.app/profile/michaelpettis.bsky.socialhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mmb4as7bso2g1/8 Very interesting Caixin article on how the city of Zhuhai sold one of its most valuable assets, and the consequences of doing so. This is an important story because of the role state-owned assets can play in China's rebalancing. https://www.caixinglobal.com/2026-05-15/in-depth-how-the-gree-windfall-got-squandered-102444417.html?rkey=pAgjKe3ecjLgzOlntW1lHvFL%2FE7ci4pKfw77syfDkpdAMW2r8%2BZCcA%3D%3D&cxg=web&Sfrom=twitter20 May 2026 04:51 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mmb4as7bso2ghttps://bsky.app/profile/michaelpettis.bsky.social/post/3mmb2n5ycpk2g1/10 Important FT article by Mark Sobel, Brad Setser and Robin Brooks. They make the seemingly counterintuitive point that while incremental trade agreements, in which one side or the other agrees to buy a little more of this or a little less of... https://www.ft.com/content/b600dbba-e881-4d20-b55f-94b313b8d5d520 May 2026 04:22 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mmb2n5ycpk2ghttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm7njncpv22vXu Zhiyuan: "But Liang Qichao’s deepest influence on me is this: you should become a person of action. It may not produce a good outcome — there may be plenty of setbacks — but the act itself adds new dimensions to your thinking and keeps it alive." https://chinabooksreview.com/2026/05/19/xu-zhiyuan/19 May 2026 14:55 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm7njncpv22vhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm744nlvhk2hFT citing Zhang Yuhan: “The divergence underscores a bifurcated consumption recovery: consumers remain willing to spend on smaller lifestyle and tech upgrades, but confidence in long-cycle purchases tied to housing and income expectations remains subdued.” https://www.ft.com/content/5b1dcd37-7567-4302-9f7a-424ec7e43ee019 May 2026 09:44 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm744nlvhk2hhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm6qru6dns2qYicai: "China’s household debt fell by CNY786.9 billion last month, the steepest decline since records began, in start contrast with the seasonal mini spring recovery in the nation’s real estate market." https://www.yicaiglobal.com/news/chinas-household-debt-fell-by-record-usd1156-billion-despite-property-markets-mini-rally-in-april19 May 2026 06:21 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm6qru6dns2qhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm6q3hj5e22qWhile China's retail sales grew by a very disappointing 1.9% year on year in the first four months of 2026, according to Xinhua retail sales of services grew by 5.6%. https://english.news.cn/20260518/197348388e58440d9ca4f640b28ffed0/c.html19 May 2026 06:08 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm6q3hj5e22qhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm572vmijk2qCaixin: "Infrastructure investment remained relatively resilient, rising 4.3%, supported partly by spending on new infrastructure projects." No surprise. Infrastructure spending is the main thing under Beijing's control with which to hit the GDP growth target. https://www.caixinglobal.com/2026-05-18/china-fixed-asset-investment-falls-as-property-slump-deepens-102445153.html?rkey=pAgjKe3ecjLgzOlntW1lHvFL%2FE7ci4pKBx8zQvp1R2Y%2F4gIrOjXJTw%3D%3D&cxg=web&Sfrom=twitter18 May 2026 15:31 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm572vmijk2qhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm44tuodps2rA point too often missed. Higher oil prices are effectively a transfer from net oil consumers (households and businesses) to net oil producers (private and state-owned oil companies). [contains quote post or other embedded content]18 May 2026 05:19 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm44tuodps2rhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm43yvzfd22r1/5 It’s hard to know how significant this is, given the uncertainties created by the war, but April numbers were terrible for China. Industrial output grew 4.1% year on year in April, well below expectations. https://www.bloomberg.com/news/articles/2026-05-18/china-economy-slows-sharply-as-investment-returns-to-contraction?srnd=homepage-europe https://www.bloomberg.com/news/articles/2026-05-18/china-economy-slows-sharply-as-investment-returns-to-contraction?utm_source=website&utm_medium=share&utm_campaign=twitter18 May 2026 05:04 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm43yvzfd22rhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm42czxxh22r1/4 Reuters: "China has committed to purchasing at least $17 billion of U.S. agricultural ​products in 2026, 2027 and 2028." While this will be claimed as evidence that the meeting will reduce the US trade deficit, it is not obvious that it must. https://www.reuters.com/world/china/china-buy-least-17-billion-us-agricultural-products-annually-white-house-says-2026-05-17/18 May 2026 04:33 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm42czxxh22rhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm3y6mm3gk2r1/3 Peking University's Dandan Zhang explains that working hours for many workers in China, and especially gig workers, are way too long and are creating heath and social problems. They urgently need to be reduced. But cutting them creates a dilemma. https://www.eastisread.com/p/dandan-zhang-on-why-mandating-fewer?hide_intro_popup=true18 May 2026 03:55 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm3y6mm3gk2rhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mm3vpcbanc2rSCMP: "Sparks flew in a Beijing conference room last week, as diplomats, officials and experts from Europe and China clashed over their deepening trade problems." Joan Robinson warned that large, persistent trade surpluses would lead to retaliation and a contraction in trade. https://sc.mp/t8wu6?utm_source=twitter&utm_campaign=3353867&utm_medium=share_widget18 May 2026 03:11 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mm3vpcbanc2rhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlzzcgjurc2vBloomberg: "The lopsided foundations of world growth will focus global finance ministers this week in the aftermath of the summit that attempted to reset trade ties between its two biggest economies." Better late than never. https://www.bloomberg.com/news/articles/2026-05-17/world-imbalances-trouble-g-7-in-wake-of-trump-s-china-encounter?utm_source=website&utm_medium=share&utm_campaign=twitter17 May 2026 09:10 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlzzcgjurc2vhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlzyvs65i22v1/4 NYT: "President Trump departed Beijing on Friday, touting trade deals to sell American-made airplanes, farm goods and other products, the signature outcome of his two-day summit with Xi Jinping, China’s top leader." https://www.nytimes.com/2026/05/15/business/economy/trump-china-deals.html?smid=tw-share17 May 2026 09:03 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlzyvs65i22vhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlzxlb5yjs2v1/3 Bloomberg: "China should upgrade “outdated” industries and not scrap them because manufacturing remains the backbone of the economy, according to the MIIT's Li Lecheng." https://www.bloomberg.com/news/articles/2026-05-16/china-needs-to-modernize-older-sectors-not-scrap-them-minister17 May 2026 08:39 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlzxlb5yjs2vhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlxzmqbbzg2fCaixin: "The U.K. government introduced a bill to parliament on Thursday that would allow it to nationalize British Steel Ltd., prompting China’s commerce ministry to urge London to protect the legitimate rights of the company’s Chinese owner." https://www.caixinglobal.com/2026-05-15/uk-moves-to-fully-nationalize-chinese-owned-british-steel-102444263.html16 May 2026 14:10 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlxzmqbbzg2fhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlxawjuy7c2f1/12 Very good article by Greg Ip. I think the most important point he makes is this one: "The Achilles’ heel of Chinese industrial policy is its cost and waste. China runs bigger budget deficits relative to economic output than the U.S." https://www.wsj.com/world/china/beijings-industrial-policy-of-everything-leaves-rest-of-the-world-in-the-dust-8b94a046?st=sDsjou16 May 2026 06:48 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlxawjuy7c2fhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mluhthjbxs27While optimists hope that the summit will lead to a new US-China relationship, Jeremiah May argues that because the fundamental structural differences haven't changed, the best we can hope for is a short-term release of pressure. https://mayormaybenot.substack.com/p/a-sino-american-investment-deal-is15 May 2026 04:14 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mluhthjbxs27https://bsky.app/profile/michaelpettis.bsky.social/post/3mluh4cqib2271/2 China’s credit demand continued to weaken in April: "Total social financing reached 15.45 trillion yuan from January to April, 893 billion yuan less than the same period a year ago. The April figure stood at 620.7 billion yuan." https://sc.mp/a053l?utm_source=twitter&utm_campaign=3353585&utm_medium=share_widget15 May 2026 04:01 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mluh4cqib227https://bsky.app/profile/michaelpettis.bsky.social/post/3mls5ptl6cs2j1/7 China Daily: "China's household income growth slowed in the first quarter and failed to keep pace with GDP, underscoring the urgency for policymakers to quickly flesh out detailed measures under their previously announced income growth plans." https://www.chinadaily.com.cn/a/202605/14/WS6a051bfea310d6866eb487bd.html14 May 2026 06:08 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mls5ptl6cs2jhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlq3juhcom2sFor those interested in understanding the pressures facing China today, the best place to start is by understanding the structure of Japanese growth in the 1980s and its adjustment in the next two decades. This two-part series addresses some of these. https://eliasrutten.substack.com/p/japans-economic-miracle-is-also-its13 May 2026 10:23 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlq3juhcom2shttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlpsuyyxie2s1/4 Good Bloomberg article on the extent of hidden bad loans in the Chinese banking system. It is pretty widely acknowledged that bad loans have risen dramatically everywhere except in the official NPL ratios. https://www.bloomberg.com/news/articles/2026-05-12/china-s-3-trillion-of-hidden-bad-debt-prolongs-economic-pain?utm_source=website&utm_medium=share&utm_campaign=twitter13 May 2026 07:48 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlpsuyyxie2shttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlpqzyob6s2s1/6 Bloomberg: "German Chancellor Friedrich Merz drew shouts and jeers at a labor union conference as he made a pitch for ambitious reforms, underscoring the difficulty he’ll face as he seeks to reverse his beleaguered government’s fortunes." https://www.bloomberg.com/news/articles/2026-05-12/merz-to-meet-german-coalition-partners-as-reform-agenda-falters13 May 2026 07:15 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlpqzyob6s2shttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlpnospez22sDag Detter: "In China, too much capital is mobilised without enough return discipline. In Europe, too few public assets are structured in ways that allow it to be deployed. One system produces excess capacity. The other produces thin project pipelines." https://www.omfif.org/2026/05/china-overcapacity-mirrors-europe-underinvestment/13 May 2026 06:15 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlpnospez22shttps://bsky.app/profile/michaelpettis.bsky.social/post/3mln6y5fcmk2sAccording to Bloomberg, margin debt lending in China jumped to a record 2.8 trillion yuan on Monday, extending gains into a fourth session. Risk is rising, but I continue to expect that Chinese stocks will do well over the rest of this year. https://www.bloomberg.com/news/articles/2026-05-12/chinese-stocks-see-risk-appetite-revival-as-margin-loans-jump?utm_source=website&utm_medium=share&utm_campaign=twitter12 May 2026 06:47 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mln6y5fcmk2shttps://bsky.app/profile/michaelpettis.bsky.social/post/3mln6hfqir22sSCMP: "Pakistan is poised to become the latest partner in the China-centred Belt and Road Initiative, to sell “panda bonds” – yuan-denominated debt instruments sold onshore by foreign entities. Islamabad seeks to raise as much as US$250 million." https://sc.mp/4s657?utm_source=twitter&utm_campaign=3353149&utm_medium=share_widget12 May 2026 06:38 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mln6hfqir22shttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlkwiblzfk2aRhodium: "Chinese firms are emerging as major global competitors, but Beijing is intent on ensuring that this overseas expansion does not lead to a hollowing out of production or capabilities in China or a loss of control over key supply chains." https://rhg.com/research/chinas-next-generation-industrial-policy/11 May 2026 09:10 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlkwiblzfk2ahttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlknuirzy22a1/2 Daire MacFadden: "In countries running a current account deficit, persistent imbalances have hollowed out domestic manufacturing and generated a political backlash, as today’s tariffs and other trade protectionism show." https://www.ft.com/content/193eebad-3a12-4b2f-b33e-f4bae1a752a211 May 2026 06:35 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlknuirzy22ahttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlkm5mfg4v2l1/2 I knew Beijing was losing population, but I hadn't realized the demographics driving it. According to SCMP, "The percentage of Beijing’s population aged between 20 and 29 plunged from 21.3 per cent in 2015 to 11.4 per cent in 2024." https://www.scmp.com/economy/china-economy/article/3352898/why-gen-z-abandoning-beijing-greener-fields-elsewhere-china?module=top_story&pgtype=section11 May 2026 06:05 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlkm5mfg4v2lhttps://bsky.app/profile/michaelpettis.bsky.social/post/3mlklchtyi52l1/4 According to Reuters, domestic car sales in China were down 21.6% year on year in April, even as car exports surged 80.2%. Everyone knows that domestic demand remains incredibly sluggish in China, but such sharp drops in domestic car... https://www.reuters.com/business/autos-transportation/chinas-april-car-sales-drop-seventh-month-2026-05-11/11 May 2026 05:49 +0000at://did:plc:aday7msfnpqba7psqpjq3pij/app.bsky.feed.post/3mlklchtyi52l