Share this page!

Enter URL or ID to Unroll

You can paste full URL like: https://x.com/threadreaderapp/status/1644127596119195649
or just the ID like: 1644127596119195649

How to get URL link on X (Twitter) App

  1. On the Twitter thread, click on or icon on the bottom
  2. Click again on or Share Via icon
  3. Click on Copy Link to Tweet
  4. Paste it above and click "Unroll Thread"!
  5. More info at Twitter Help
Michael Pettis Profile picture
@michaelxpettis
Sep 30, 2020 • 4 tweets • 1 min read • Read on X
1/4
 I think this is a little deceptive. While the RMB may have appreciated against USD during the past three months by 3.7%, this was partly because the dollar was weak. Against the CFETS basket, which is a better measure of the performance of...

ft.com/content/ace4da…
2/4
 the RMB, it still performed well, but it rose by 2.8% during the past three months. For what it's worth it rose by 2.7% against the BIS currency basket and 2.3% against SDR.

The point is that analysts who only look at RMB in USD terms may think the RMB has been far...
3/4
 more volatile than it really is, but in fact over the past four years it has risen just 0.6% against the CFETS index, and has never been more than 3-4% above or below its current level.

I expect the RMB will remain stable or a little stronger over the rest of this...
4/4
 year, partly because Beijing wants to signal a stable currency and partly because I think there has been a lot of upward pressure on the RMB (and perhaps hidden intervention that isn't showing up in PBoC reserves.)

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with Michael Pettis

Michael Pettis Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @michaelxpettis

Michael Pettis Profile picture
May 31
1/6
 According to the Peterson Institute's Arvind Subramanian in an article today: "If there is any truth to the adage that China is the only country in history with a comparative advantage in every industry, then targeting...

afr.com/policy/economy…
2/6
 the world’s most efficient exporter and supplier with protectionist measures could create lucrative opportunities for its competitors."

This strikes me as a bizarre thing to say.
3/6
 China's large, persistent trade surpluses are sometimes ascribed to its having "a comparative advantage in every industry", but, as I explain in a recent FT piece this just suggests a very poor understanding of comparative advantage.

ft.com/content/8e24a1…
Read 6 tweets
Michael Pettis Profile picture
May 30
1/8
 Good FT article on currency pressures facing the PBoC. The negative RMB carry versus USD and other currencies, combined with very limited RMB upside, makes it rational for anyone who can short the RMB to do so.

via @ftft.com/content/385814…
2/8
 This of course puts substantial downward pressure on the RMB, but the PBoC is very reluctant to see the RMB depreciate. They are reluctant partly for reasons of international prestige, with Xi Jinping calling earlier this year for a strong RMB policy.
3/8
 But the main reason is because a weaker RMB worsens the demand imbalance in China by shifting resources from household consumers to manufacturing exporters. This would make China all the more vulnerable to trade conflict.
Read 8 tweets
Michael Pettis Profile picture
May 29
1/4
 Andreas Kluth argues that for the US to remain the world leader, it must maintain a global trading system that requires surging US debt to maintain global demand and a continued decline in the role of manufacturing in its economy.

via @opinionbloomberg.com/opinion/articl…
2/4
 This was the old Nixon-Kissinger line in the early 1970s. While their economic advisors warned repeatedly about policies that undermined the US economy, they countered by arguing that the economic trade-off was worth the geopolitical leadership.
3/4
 We are going to see this argument a lot. I've long argued that industrial and trade policies needed to revive US manufacturing will benefit American workers, businesses and the middle class, but will be ferociously opposed by Wall Street and the foreign affairs establishment.
Read 4 tweets
Michael Pettis Profile picture
May 29
1/4
 The point that Setser is making is an important point, although it should also be an obvious one. China has certainly benefitted from technological convergence, but there is no reason why technological convergence must lead to lagging imports.
2/4
 It's strange to argue that technological convergence is characterized by rising trade surpluses, as if the point of exports and rising productivity were to accumulate foreign claims rather than to increase domestic welfare.
3/4
 It suggests that beneath all the talk of free trade, at heart most people are still old fashioned mercantilists who secretly (and not so secretly) believe that the purpose of trade is to accumulate bullion by maximizing exports and minimizing imports.
Read 4 tweets
Michael Pettis Profile picture
May 28
1/6
 PKU's Huang Yiping proposes that Beijing should take a page from the Marshall Plan and make massive loans to developing countries to expedite their green transition. This would help China digest its industrial overcapacity and promote use of the RMB.

sc.mp/zylvz?utm_sour…
2/6
 This is actually a good idea. China seems incapable of resolving its problems of overcapacity and excess savings, at least within a reasonable time frame, and much of the rest of the world refuses to accommodate China's inability to do so.
3/6
 As of now China is forcing its excess savings mainly onto countries that don't need it, in which case the expansion in Chinese production must come at the expense of production in those countries.
Read 6 tweets
Michael Pettis Profile picture
May 27
1/10
Steven Rhoads says more income inequality in the US is a good thing because more income inequality means more savings (the rich save a higher share of their income than the rest), more savings means more...

via @WSJopinionwsj.com/articles/you-s…
2/10
productive investment, and more productive investment means faster growth, and this faster growth eventually "trickles down" to benefit the non-rich.

This is a case, very common in mainstream economics, of ideology passing for science.
3/10
As we approach the limit on inequality, in which a few people own everything, it is obvious that investment must collapse because there would be insufficient demand to justify further investing to increase production.
Read 10 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

Send Email!

:(