The China-Global South Podcast Michael Pettis Explains How China's Changing Economy Will Impact the World
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Oct 10, 2023 
Michael Pettis, a senior fellow at the Carnegie Endowment, discusses how China's changing economy will impact the world. They cover topics such as China's weakened economy post-pandemic, the challenges faced by developing countries, the role of the RMB, China's manufacturing sector, and the negative nature of social media reactions to China's projects.
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How China Raised Savings To Fuel Investment
- China raised savings by transferring income from households to businesses and government, forcing high investment out of domestic savings.
- That strategy worked to industrialize but created deep consumption imbalances that now drive overinvestment and debt.
Why China Expanded Then Retracted Overseas Lending
- China exported excess savings when domestic investment couldn't absorb them, first piling up US reserves then diversifying into developing-country loans.
- Rapid overseas lending peaked around 2015–2016 and then contracted after risky cases like Venezuela exposed repayment problems.
Historical Parallels For China's Lending Cycle
- Michael Pettis likened China's outbound lending cycle to US lending booms in the 1920s and Soviet, Japanese experiences.
- He cited Venezuela's 2015 collapse as the shock that prompted China to pull back from aggressive overseas lending.