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
Oct 4, 2020 • 4 tweets • 1 min read • Read on X
1/4
 The author says that "since 2015, the central bank has allowed the currency to trade more freely. The PBoC’s shift has enabled the renminbi to undertake the same signalling role that the yen historically played regarding the dollars prospects."

ft.com/content/0534f1…
2/4
 I disagree with much of this article, but especially the claim that the RMB began trading freely in 2015. In fact what happened is that the PBoC shifted from targeting USD to targeting a basket of currencies (the CFETS RMB Index). If you continue tracking the RMB against...
3/4
 the dollar, it might seem that the RMB has become much more volatile, but most of that is simply USD volatility.

Against the basket, on the other hand, the RMB has been very stable: it is less than 1% higher today, for example, than it was four years ago. What is...
4/4
 more, during the past four years it has always has remained well within four percentage points of its current level, and at least 3/4s of that time it has remained within two percentage points of its current level. This is far from being a freely floating currency.

• • •

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
Jul 4
1/12
A Tsinghua-related think tanks argues that "China should issue 30 trillion yuan in treasury bonds to swap local governments’ hidden liabilities to re-energise growth momentum and cut off financial risks at their root."
via @scmpnewssc.mp/gz8bj?utm_sour…
2/12
This would help in two ways, according to the report. It would transfer debt from local government balance sheets to the central government balance sheet, giving them more breathing space to prop up the economy, and it would reduce interest payments.
3/12
But this is what comes of treating a systemic issue incrementally. The problem is not that local governments have too much debt. The excessive debt burden of local governments is actually a symptom of the real problem.
ft.com/content/630f82…
Read 12 tweets
Michael Pettis Profile picture
Jul 3
1/8
 A China Finance 40 Forum research piece by Yu Fei and Guo Kai argues that when adjusted for purchasing power and for volumes, Chinese consumption is much higher than the current consensus.
pekingnology.com/p/chinas-consu…
2/8
 They are probably right, although I would caution that using purchasing power adjustments in a system in which producer prices are highly subsidized by households is likely to substantially overstate the real extent of the purchasing power adjustment.
3/8
 But while Yu and Guo do not misconstrue the implications of their work for China's internal and external imbalances, I suspect that quite a few analysts will argue that this study shows that China does not have an underconsumption problem.
Read 8 tweets
Michael Pettis Profile picture
Jul 2
1/6
 A decision by China to offer more debt relief could be a “game changer for the poor and the system,” said Kevin Gallagher, the director of the Boston University Global Development Policy Center. “It’s really in China’s strategic interest to do that.”

nytimes.com/2025/07/01/bus…
2/6
 Ironically, debt relief is also in the economic interest of creditor countries, especially if, as in the case of China, the economy is highly dependent on export surpluses.

That's because capital flows are just the reverse of trade flows.
3/6
 To put it another way, every dollar an overly-indebted developing country earns from its exports must be recycled, either in the form of debt repayment or in the form of imports. The less that goes to the former, the more that is available for the latter.
Read 6 tweets
Michael Pettis Profile picture
Jul 2
1/8
 The euro is up 14% against the dollar this year, as well as against the yuan (11%) and the yen (4%), driven by financial inflows rather than by economic fundamentals (i.e. higher relative productivity grown).

bloomberg.com/news/articles/…
2/8
 If sustained, it will almost certainly have an adverse impact on EU manufacturing. In that case ECB rate cuts may keep unemployment from rising (by boosting domestic consumption), but they won't prevent the EU economy from shifting out of manufacturing towards services.
3/8
 It seems absurd that major, open economies like the EU and the US should allow imbalances in their domestic economies to be determined by changes in global financial flows, and especially by changes in the way less open surplus countries decide to balance their surpluses.
Read 8 tweets
Michael Pettis Profile picture
Jun 30
1/4
 I just finished Martin Daunton's excellent survey and analysis of the last 100 years of globalization. There is an enormous amount of material here (nearly 900 pages) and it may not be an easy read for those who aren't already very familiar with much of this history. Image
2/4
 But for those who are, or who want to be, it's well worth the effort. While the book is ostensibly about the process of globalization, and the role of government and government institutions in that process, especially in pivotal periods during the 1930-40s, the 1970s and...
3/4
 in the past decade, a major theme is the enormous distortions caused by the unfettered flow of capital, the ways in which these flows dislocated domestic economies, and the various (mostly unsuccessful) attempts individually and collectively to control them.
Read 4 tweets
Michael Pettis Profile picture
Jun 28
1/4
 Good John Authers article on business profits in the US: "After-tax profits account for an unprecedented 10.7% of gross domestic product, when in the last 50 years of the 20th century, they never exceeded 8%."
@johnauthers_
bloomberg.com/opinion/articl…
2/4
 "The only time approaching their current share of the economy was in 1929 on the eve of the Great Crash. If the nation is to deal with inequality, money must be redistributed from somewhere; corporate profits are an obvious source of funds."
3/4
 Speaking of 1929, we need to re-read Marriner Eccles (FDR's Fed chairman) on the relationship between income inequality, weak domestic demand, rising debt needed to boost domestic demand, and the eventual collapse in production once rising debt can no longer be sustained.
Read 4 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!

:(