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The total amount invested in new railway projects in China was equal to over one-third of one percent of GDP in the first quarter and just over one percent of GDP in the second quarter. Even though China already has by far the most extensive and...
xinhuanet.com/english/2020-0…
...advanced rail networks for any developing country – including two-thirds of the world’s high-speed rails – Beijing still relies heavily on further expansion in the railway system to generate growth. A month ago the Ministry of Transport even proposed spending additional...
...money to develop infrastructure, public transportation, and logistics facilities as a way – a little weirdly – of helping China boost consumption.
en.people.cn/n3/2020/0609/c…
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Michael Pettis
@michaelxpettis
Yet another government official who thinks that changing the currency in which China conducts trade and parks excess savings is like changing the color of his shirt. If China stops buying dollars and starts selling, it must either allow its current...
scmp.com/economy/china-…
...account surplus to transform into a current account deficit, or it must find some other country willing to run the current account deficits which are currently absorbed by the US. It clearly cannot afford the first, it is unlikely to find the second, and there are no other...
...options. In the end it is more likely that the US will finally take steps to prevent foreigners from accumulating dollars than it is that China will choose to stop accumulating dollars.
Read 3 tweets
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Michael Pettis
@michaelxpettis
The Shanghai Stock Exchange Composite Index was up nearly 6% today (3,333) and up 21% since late March. In June 2014 we saw the start of an incredible bull market in China (up nearly 160% in one year, peaking at 5,166) shortly after editorials in...
scmp.com/business/marke…
...leading newspapers signaled to investors that the government strongly supported rising stock markets, and the regulators accommodated with leniency on stock margin. That ended in tears in June 2015 with a nearly 50% drop over the next six months once the government...
...reversed its signaling, followed by 3 years of a downward drift in prices. Chinese investors are extremely sensitive to signaling by the government because they expect regulators to accommodate government expectations very forcefully.

Today a series of articles in...
Read 14 tweets
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Michael Pettis
@michaelxpettis
Interesting piece by @lajohnstondr on Jack Ma’s dream to “flatten” world trade. To the extent that this means reducing the role of large multinationals in favor of “millions of goods-trading mum and pop entrepreneurs”, it is a good thing, but...
soas.ac.uk/blogs/study/co… via @@SOAS
...the biggest problem with world trade is that frictionless trade and capital flows encourage countries to improve competitiveness by suppressing wages. In that case a “flatter” global trading system could also be one in which income inequality is made worse and in which...
...more trading among “mum and pop entrepreneurs” is their desperate response to lower wages. More than a “flatter” global trading system, what we need is one in which countries cannot undermine domestic wages and social benefits and get away with it by dumping the...
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