Michael Pettis's Blog

Senior Associate

Michael Pettis is a Senior Associate at the Carnegie Endowment for International Peace and a finance professor at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets. He has taught, from 2002 to 2004, at Tsinghua University’s School of Economics and Management and, from 1992 to 2001, at Columbia University’s Graduate School of Business. He is also Chief Strategist at Shenyin Wanguo Securities (HK).

Pettis has worked on Wall Street in trading, capital markets, and corporate finance since 1987, when he joined the Sovereign Debt trading team at Manufacturers Hanover (now JP Morgan). Most recently, from 1996 to 2001, Pettis worked at Bear Stearns, where he was Managing Director-Principal heading the Latin American Capital Markets and the Liability Management groups. He has also worked as a partner in a merchant banking boutique that specialized in securitizing Latin American assets and at Credit Suisse First Boston, where he headed the emerging markets trading team. Besides trading and capital markets, Pettis has been involved in sovereign advisory work, including for the Mexican government on the privatization of its banking system, the Republic of Macedonia on the restructuring of its international bank debt, and the South Korean Ministry of Finance on the restructuring of the country’s commercial bank debt.

Pettis is a member of the Institute of Latin American Studies Advisory Board at Columbia University as well as the Dean’s Advisory Board at the School of Public and International Affairs. He received an MBA in Finance in 1984 and an MIA in Development Economics in 1981, both from Columbia University.

How Trump Can Fix America's Trade Imbalance

Aug 6 – Taxing capital inflows is a far better way to balance trade than imposing tariffs. This would address the root causes of trade imbalances, improve the productive investment process, and shift most of the adjustment costs onto banks and speculators...

China Cannot Weaponize Its U.S. Treasury Bonds

May 30 – A number of recent articles suggest that Chinese officials may reduce their purchases of U.S. government bonds. It is very unlikely that China can do so in any meaningful way because doing so would almost certainly be costly for Beijing. And even if China...

Should the United States Run a Trade Surplus?

Mar 5 – Although standard trade theory predicts that highly advanced economies with sophisticated financial sectors, like the United States, should generally run trade surpluses, the country has run persistent, and often large, trade deficits for five decades...

Why U.S. Debt Must Continue to Rise

Feb 08 – Many Americans are worried about the seemingly inexorable rise in U.S. debt, whether government debt, household debt, or business debt. They are right to be concerned. Rapidly rising debt is a problem not just in the United States...

The Chinese Economy May Be Growing at Half of What's Officially Reported

Feb 04 – Analysts are increasingly skeptical that China’s very high reported GDP growth rate provides a meaningful picture of the economy’s health. There are, however, at least three very different ways...

Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

By Michael Pettis – China’s debt problems have emerged so much more rapidly and severely this year than in the past that a growing number of analysts believe that this may be the year that China’s economy breaks...

The U.S. Trade Deficit Isn’t Caused by Low American Savings

By Michael Pettis – Economist Joseph Stiglitz recently published an interesting piece in Project Syndicate called “The US is at Risk of Losing a Trade War with China.” I am always surprised by claims that deficit countries like the United...

Tariffs and Trade Intervention

By Michael Pettis – Given all the discussions about the beginning of a tariff war between the United States and China, I thought it might be helpful to wade through some of the relevant issues. To summarize, I want to...

High Wages Versus High Savings in a Globalized World

By Michael Pettis – Investment-driven growth can broadly occur in the form of one of two models, each with a different way of treating wages and household income. One model, which I will call the high-wage model...

The GDP of Bridges to Nowhere

By Michael Pettis – I was recently part of a discussion on a listserv that brings together Chinese and foreign experts to exchange views on China-related topics. What set off this discussion was a claim that the Chinese economy...

What Would Happen If China Stopped Buying U.S. Treasury Bonds?

By Michael Pettis – If China is indeed threatening to retaliate against any U.S. trade action by reducing its purchases of U.S. government bonds, not only would this be a pretty hollow threat, but in fact it would be exactly what Washington wants. To see why...

China Update - Why Is the Consensus Now So Optimistic?

As long as China has debt capacity, it can achieve any GDP growth rate Beijing requires, simply by allowing credit to expand. But debt levels are already high, and credit must expand at an accelerating pace to maintain growth. China is probably still a few years away...

Mexico’s Positive Impact on the US Trade Balance

Contrary to what one might first expect, Mexico’s role in global trade is actually beneficial to the United States. While restricting Mexican imports will reduce the American deficit with Mexico, it will increase the overall American deficit.

Is Peter Navarro Wrong on Trade?

Whether the US current account deficit is harmful or not to the US economy depends on the assumptions we make about capital scarcity. In a world awash with excess capital and insufficient demand, the US current account...

Three Possible Scenarios for China

In an article in Wednesday’s Financial Times, Gabriel Wildau, Yuan Yang, and Tom Mitchell set out a range of economic outcomes for China. They propose three scenarios that they think—and I agree—are the most plausible ones.

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