1/5 It's not so much Atlanticism but international relations more generally that will remain in retreat no matter who wins the US election, and although the world tends to be obsessed with the US and with its bilateral relationships, this retreat won't...
3/5 intensify, and anti-foreign and anti-immigrant feelings rise, and I think this remains a global issue. Perhaps because of its obsession with the US and with, more recently, the Trump circus, much of the world (and the global press) seems to focus on bilateral problems the...
4/5 US has with Europe, China and Russia, but in fact the three have equally, and often more, serious problems with many of their own immigrants, neighbors and international relationships, and this says nothing about either intra-European conflict or similar problems affecting...
5/5 India, the UK, Saudi Arabia, Brazil etc. Unfortunately I think the widespread desire to turn inwards and reject "foreigners" is structural, based on domestic economic imbalances, and so will continue for a few more years before reversing.
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1/5 Reuters: "The EU should consider either an unprecedented 30% across-the-board tariff on Chinese goods or a 30% depreciation of the euro against the renminbi to counter a flood of cheap imports, a French government strategy report said on Monday." reuters.com/world/china/fr…
2/5 I think it's only a question of time before the EU will intervene in its external account to protect its manufacturing sector, just as China has done for decades and the US is increasingly trying to do. It can implement all the reforms that have been proposed to improve...
3/5 the efficiency of its manufacturing, but while these reforms may indeed do just that, they won't improve Europe's competitive position.
This may sound counterintuitive at first, but I have a piece coming out soon in Engelsberg Ideas explaining why.
1/11
SCMP: "China’s potential growth rate could fall to about 2.5 per cent in the coming years unless action is taken, prominent Chinese economist Zhou Tianyong has warned." sc.mp/itwrt?utm_sour…
2/11
“Without a strong turnaround in total factor productivity and a meaningful expansion in household consumption, it will be difficult for China’s economic growth to reach 4 per cent or higher,” he added.
3/11
A 2-3% growth rate is becoming an increasingly popular reference growth rate for Chinese analysts. I'd argue that over the past several years, 2-3% has actually been the upper limit of growth once we strip out the "positive" impact of not recognizing bad investment.
1/8 Jason Furman: "A weaker dollar may improve the economy’s long-run balance, but it does so by forcing Americans to cut back on spending. That is like telling children to eat more spinach today so they will be healthier in the future." nytimes.com/2026/02/03/opi…
2/8 Furman is right. Currency appreciation reduces consumption costs in the short term by making imports cheaper, but in a hyperglobalized world, it also undermines domestic manufacturers by making them less competitive against foreign manufacturers.
3/8 Academic economists (mainly in the US) will argue that this is a good thing because the goal should be to maximize consumption, but the only sustainable way to maximize consumption over the longer term is to maximize production. ft.com/content/89110b…
1/4 Yicai: "China's macro leverage ratio – a measure of total debt relative to nominal GDP – rose by 11.8 percentage points to 302.3 percent in 2025, exceeding the 10.1 point increase recorded in 2024, according to a new research report by CASS. yicaiglobal.com/news/chinas-de…
2/4 There is a lot of disagreement about the real debt-to-GDP ratio in China, especially given the difficulty of counting hidden debt, along with an "abnormal" rise in payables and receivables that reflects inability to pay debt more than it reflects rising revenues.
3/4 If we use the official total social finance number as the measure of debt, the ratio is 315%. The BIS and other entities show even higher ratios. But whatever the real number, it is among the highest in the world, perhaps exceeded only by Japan among major economies.
1/7 SCMP: "Chinese scholars have called for greater urgency in reducing reliance on US dollar assets, particularly after Washington and its allies froze about US$300 billion in Russian foreign exchange reserves in 2022." scmp.com/economy/global…
2/7 Although this may be a favorite new topic among academics – and not just Chinese academics - few seem to understand that a country cannot restructure global capital flows without also restructuring global...
3/7 trade flows, nor that a country cannot change its external imbalances without either changing its internal imbalances or changing the external imbalances (and thus the internal imbalances) of its trade partners.
1/12
This talk about Europe's ability to wield its holdings of US Treasuries as a political tool is as divorced from reality as the talk about China's ability to wield its holdings of US Treasuries as a political tool.
via @ftft.com/content/7d6436…
2/12
For all the huffing and puffing, Chinese holdings of US assets actually increased. This shouldn't have been a surprise. If you run massive trade surpluses, you have no choice but to acquire foreign assets, and if you won't acquire the alternatives, you must buy US assets.
3/12
These analysts seem to forget that you cannot change your capital account without also changing your trade account, and that you cannot change your external imbalances without also changing your internal imbalances.