In Restructuring the Chinese Economy, Michael Pettis outlines six paths that China can follow—the only logical paths that lead ultimately to. Avoiding the Fall: China’s Economic Restructuring. MICHAEL PETTIS. Copyright Date: Published by: Carnegie Endowment for International Peace. Avoiding the Fall has 98 ratings and 6 reviews. The days of rapid economic growth in China are over. Mounting debt and rising internal distortions mean t.

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The very cheap capital especially means that a very significant portion of the cost — as much as 20 to 40 percent of the total amount of the loan — is forced onto depositors just in the form of low interest micheal. Pettis thinks that China is massively over investing in infrastructure and that this investment has become unproductive. There are no discussion topics on this book yet. Will China start selling to its own people?

He was a very successful trader prior to this. Jason Kam rated it it was amazing Dec 24, It’s a great book though. micuael

Fresh insight, especially about accounting wise. It is increasingly accepted that China’s pettks model, which served it very well in the s and 90s, reached its useful limit during the past decade. Luke rated it it was amazing Mar 20, Nov 30, JG rated it liked it Shelves: Ask most people what China’s comparative advantage is, and they are likely to say that it is the huge pool of cheap and disciplined labor.

Just as a revaluation of the renminbi implies a transfer of wealth from the People’s Bank of China to Chinese households, and so is likely to increase consumption, other transfers from the state sector to households can have the same effect.

But in fact this doesn’t seem to be reflected in the economy. Keen was right overall but wildly wrong on detail, michaeo made a bet that Australian houses would plummet in value which they promptly did not. The only question is how to proceed. Other editions – View all Avoiding the Fall: And much of it makes it sound like Pettis has invented some of the more basic concepts. If China’s comparative advantage were cheap labor, we would expect its growth to be heavily labor-intensive as businesses laded up on the most efficient input.


In many ways the argument this book makes avoidign China’s economy is lettis conventional–its growth has been fueled by investment, the investment is funded through financial repression that results in an Sub three percent growth is a certainty. Apr 29, Tirath rated it it was amazing.

Over the long term, Chinese growth will be much healthier and the risk of a Chinese debt crisis much reduced, but over the short term, unless there is an unlikely surge in global demand, China cannot both rebalance its economy and improve its trade performance. These paths range mlchael debt crisis and negative growth, at one extreme, to a massive wealth transfer from the lettis to Chinese households, with steady growth for many years, at the other.

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. Samuel Gruen rated it really liked it Aug 14, He points to falll examples of Brazil in the s, Japan in the s, the US in the early s and a hypothesized example of Germany in the late s as examples of a failure of pehtis kind of development.

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 reader would require a basic understanding of balance of payments, michwel beyond that, Pettis does a fabulous job of explaining what has been going wrong with the China model of growth, and how it has been successfully petyis up until now. Mike rated it really liked it Jul 18, Some of these issues include large alterations in interest rates, wages, currency, and legal structure, with, of course, political gain of the reimbursements of growth. But overall it is an interesting, provocative and timely take on China’s economy.

It may be true that labor is cheap in China, but capital is cheaper, and can even be free or have a negative cost as a result of a negative interest rate.


Avoiding the Fall: China’s Economic Restructuring – Michael Pettis – Google Books

In Restructuring the Chinese Economy, Michael Pettis outlines six paths that China can follow – the only logical paths that lead ultimately to rebalancing – and discusses the political and economic strengths and limitations of each. Speculators, because they trade frequently, nichael the liquidity and trading volume that allows value investors and relative value traders to execute their trades cheaply.

China was able to raise debt quickly and spawn investment that permitted it to circumvent the complications of its development model. If it does that, then it will need to return money to the household sector, which will decrease capital available for investment.

Avoiding the Fall: China’s Economic Restructuring by Michael Pettis

This leads into another key point: A Chinese rebalancing is inevitable and the most interesting question is how it will occur. Anton I rated it really liked it Oct 08, One of the best thd I have read this year. Politics in China hindered the types of changes required to allow the country to keep growing in a positive manner. Brazil does not fit into the group.

Avoiding the Fall: China’s Economic Restructuring

In light of these issues, Pettis brilliantly lays out the routes China can take while bearing in mind their limitations. Mounting debt and rising internal distortions mean that rebalancing is inevitable. Pettis draws apt parallels between China, and Brazil of 70s, US of the 20s and 30s, Japan of the 90s; and very logically goes on to show the need for China to rebalance, followed by how it could potentially do so.

To see what your friends thought of this book, please sign up. The urge The days of rapid economic growth in China are over.