China Is Exporting Unemployment | Michael Pettis on Global Trade Imbalances, American Capital Controls, and the End of The Chinese Growth Miracle

Forward Guidance

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Recent writings by Michael Pettis:

“Which Country Should Design U.S. Industrial Policy?”: https://carnegieendowment.org/china-financial-markets/2024/07/which-country-should-design-us-industrial-policy?lang=en

“Trade and the Manufacturing Share”: https://www.phenomenalworld.org/analysis/trade-and-the-manufacturing-share/

“Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace”: https://www.amazon.com/Trade-Wars-Are-Class-International/dp/0300244177

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Timestamps:

(00:00) Introduction

(01:18) The Problem With China's Investment-Driven Growth Model

(09:52) Why Increasing China's Consumption Is So Hard

(17:36) China's Plan To Reignite Economic Growth In China

(20:43) Why China Will Follow Similar Path To Japan In Its Economic Decline In 1990s

(24:03) Impact That Trade Surplus Countries (China, Germany, etc.) Have on Trade Deficit Countries (U.S., U.K., etc.)

(28:06) VanEck Ad

(28:46) Interview Continues

(36:59) The Fall of The "Trade Is Always Good" Consensus Among Economists

(49:58) Permissionless Ad

(50:57) Is China "Cheating At Trade"?

(57:19) The Three Things The U.S. Can Do To Respond To Its Role As "Global Consumer Of Last Resort"

(01:01:53) Why U.S. Capital Controls Are Necessary To Truly Fix The American Trade Deficit

(01:06:35) Both Trump and Biden Factions Are Determined To Resolve U.S.' Trade Imbalances

(01:08:36) China's Move From Real Estate To Manufacturing Is Exacerbating Its Trade Surplus With The Rest Of The World

(01:14:53) Chinese Real Estate Crisis Unlikely To Imperil The Chinese Banking System, Argues Pettis (Because The Government Is In Control)

(01:18:58) What About The Chinese Shadow Banking System?

(01:21:13) How Pettis Sees This All Playing Out

(01:25:09) How Falling Real Estate Prices (And Stock Markets) Impact Sentiment In China

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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.