Odd Lots Michael Pettis on Persistent Imbalances in Post-Pandemic China
Mar 11, 2021
Michael Pettis, a finance professor at Peking University and a senior fellow at the Carnegie-Tsinghua Center, shares insights on the Chinese economy's intriguing yet precarious state. He discusses China's impressive GDP growth contrasted with persistent imbalances, stressing the risks of high debt levels. Pettis dives into the disparity between investment and consumption, the implications for U.S.-China relations post-pandemic, and the challenges of sustaining technological advancements. Cultural shifts are also highlighted, showcasing a revival in the country's music scene.
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China's GDP: Input vs. Output
- China's GDP is an input, while in other countries it measures output.
- This makes direct comparisons misleading, as China's growth often relies on debt-fueled infrastructure and real estate.
China's Ghost Cities
- While some overbuilt areas in China have filled up, others, like Tianjin's financial center, remain empty.
- High investment and rising debt signal misallocation, a concern for Beijing.
China's Growth vs. Debt Debate
- There's a debate in China between prioritizing high growth and controlling debt.
- Academics and financial officials favor debt control, while political and military figures want higher growth.
