Michael Pettis

In many ways the argument this book makes about China's economy is now conventional--its growth has been fueled by investment, the investment is funded through financial repression that results in an extremely low consumption share of national income, much of the investment is misallocated in part because of the scale and in part because of the poor incentives and mispricing, it will inevitably have to rebalance--a process that could be rapid/disorderly or managed/orderly. The upside is that while China will slow dramatically in the rebalancing process, the shift towards consumption will partially offset that slowing and insulate the household sector. The downside is that notwithstanding this the most benign forms of rebalancing are politically threatening and thus, in Michael Pettis's view, unlikely to occur. The story Pettis tells would all cohere even if China was a closed economy--much of it is about domestic savings and its allocation to domestic investment--although it also has a substantial international component that will affect the global economy.

What makes Pettis's book so striking is when he puts his arguments to the test--predicting that China will grow at a 3-4 percent annual rate in the coming decade. This puts him numerically below many of the other China bears even if his qualitative arguments are similar.

Some of the argumentation in the book is overly breathless for my taste, especially around global rebalancing. And much of it makes it sound like Pettis has invented some of the more basic concepts. But overall it is an interesting, provocative and timely take on China's economy.… (plus d'informations)