China's Infrastructure Push Fuels Iron Ore Rally
1/4 Bloomberg: "Iron ore rose as signs of solid Chinese demand offset concerns over rising supply" No surprise here. China needed to boost infrastructure investment sharply, and this had to be good for related commodities. https://t.co/xLQ6XURUTD
Panama Canal Saga Exposes France's Colossal, Overlooked Scandal
I just finished David McCullough's 600-page book on the building of the Panama Canal. There was much less economic history here than I would have preferred, but it is nonetheless a great story, even if towards the end there is...
Trade Resilience Demands Coordination, Not Isolated Restrictions
1/2 Ngozi Okonjo-Iweala: "In an interconnected trading system, resilience cannot be secured through national measures alone. The alternative to co-ordinated adjustment is a cycle of restrictions that leaves all countries worse off." https://t.co/aoaPrtM3qQ
China Vows to Curb Local Debt, Boost Growth
1/7 Bloomberg: "China pledged to step up efforts to defuse local government debt risk while supporting growth, as the State Council called for stronger policy execution in a challenging global environment." https://t.co/d7kk0t3Ahy
China's Shipbuilding Output Soars, Grabs 85% of Orders
Xinhua: "From January to March, the country's shipbuilding output was up 46% year on year, accounting for 57.3% of the global total. New orders surged 195.2% from a year earlier, representing 84.9% of the global market share." https://t.co/Sj3d2sxmPE
China’s Q1 Gold Surge Driven by Bars, Not Jewelry
Xinhua: "China's gold consumption edged up 4.41% year on year in the first quarter of 2026, driven by a 46.4% increase in demand for gold bars and coins. Gold consumption for jewelry, however, fell 37.1%. While all of these gold...
China’s Crackdown Will Squeeze Debt‑laden Carmakers
1/6 SCMP: "Beijing’s tighter oversight of vicious price competition in the automotive sector is expected to increase borrowing pressure on mainland carmakers and accelerate the exit of weaker, debt-laden players amid softening consumer demand, according to S&P Global Ratings." https://t.co/jlaxAjpD2B
Beijing's Premier Experimental Music Night Shifts to Saturday
To my friends in Beijing, the Sally Can't Dance Tuesday shows have become, over the past nine months, one of the main focal points for experimental and improvised music in Beijing. Because of the holiday, we moved Tuesday's performance...
Small Chinese Banks Squeezed by Real‑estate Exposure, Limiting Credit
1/2 Good Caixin article on the acute problems faced by Chinese banks as they are forced to pile into real estate assets that backed defaulted property loans: "The problem is most acute for smaller lenders", draining their capacity to lend to...
China’s City Stimulus May Bottom Top‑tier Housing Markets
China Daily: "A new wave of stimulus policies launched in the past week by key Chinese cities, including Shenzhen, Guangzhou, Tianjin and Wuhan, is expected to lower homebuying costs and boost market confidence, paving the way for the housing market...
EU Trade Chief Warns Against China Deal, Eyes New Tools
1/6 SCMP: "The EU’s top trade official used her departing appearance at the EU Parliament to pour cold water on the prospect of an investment deal with China, hinting that new weapons for dealing with Chinese “macroeconomic imbalances” could be on...
China’s Bad‑Debt Managers Use Bank Stake Gains to Offset Slump
1/4 Caixin: "The results underscore how China’s leading bad-debt managers are leaning on accounting gains linked to state-backed bank stakes to offset the effects of the prolonged property slump and broader economic slowdown." https://t.co/4pXLE9Y3rM
China’s May Day Sales Surge 14%; Wage Growth Needed
Xinhua: "The sales revenue of China's consumption-related industries rose 14.3% year on year during the May Day holiday, reflecting a further release of consumption potential." That's very good news, but what matter is if it can be sustained without faster growth...
Analysts Ignore China's Stated Economic Woes, Echoing Japan Past
It is strange how several commentators who denied over a decade ago that China has excess manufacturing capacity, low consumption, overinvestment in property and infrastructure, high and rising debt, and large trade surpluses, continue angrily to deny it even long...
Wage‑Suppressing Policies Fuel Persistent Global Trade Imbalances
Very good Michael McNair piece on the various confusions in Maurice Obstfeld's latest piece on global imbalances. Investors, business managers, workers, policymakers and even the IMF (albeit kicking and struggling) increasingly understand the adverse impacts of large, persistent trade imbalances...
Aging Migrant Workforce Shifts to Low-Pay Service Jobs
1/3 Another very interesting Caixin article, this time on migrant workers: "China’s migrant workforce is aging as more workers move into lower-paying service jobs, putting pressure on income growth amid a shifting economic landscape." https://t.co/0caseuTyjM
China Urges EU to Drop Discriminatory Investment Rules
China Daily: "China has called on the EU to remove discriminatory requirements against foreign investors, local content mandates, compulsory transfers of intellectual property and technology, and restrictions on public procurement." https://t.co/WiZSoHM4tE
China’s Wind Surge Outpaces Global Capacity, Proves Prescient
NYT: "Last year, China installed three times as much wind power capacity as the rest of the world combined, even as its turbine exports jumped. The war has made China’s investments in wind look prescient." https://t.co/9AvdVUmIDM
Tariffs Yield Minimal Deficit Gains, Need Systemic Policy
WSJ: "The figures measure the limited progress made toward the Trump administration’s goal of reducing the deficit in the 12 months after President Trump rolled out steep global tariffs in April 2025." Not much surprise here. Trade policies only work if...
Martin Wolf Decodes Global Imbalances with Systemic Insight
1/9 Brilliant article by Martin Wolf on global imbalances. Wolf is one of the few economists who have an intuitive sense of the global economy as an economic system, which means he is also one of the few who understands how...
China, Indonesia Debut Cross‑border QR Payments, Boosting Yuan
SCMP: "China and Indonesia have launched a new cross-border QR payment system, marking the latest step in Beijing’s drive to build a regional digital payments network as it pushes to internationalise the yuan and reduce dependence on the US dollar." https://t.co/NEt62G5jZ7
Rising Inequality Threatens China’s Common Prosperity Goals
1/2 SCMP: "Chinese citizens are facing growing inequality in wages and wealth, constraining the country’s “common prosperity” agenda at a time of slowing economic growth, a prominent economist, Zhejiang University dean Li Shi, has warned." https://t.co/JhNycibuSx
EU Bans Chinese Inverters From Funded Clean‑energy Projects
SCMP: "The EU has taken its most direct step yet to cut Chinese clean energy hardware out of publicly funded projects, banning Chinese inverters from all EU-funded schemes in a move Brussels described as the first in a series of...
Shenzhen's Retail Sales Stagnate Amid Strong GDP Growth
1/4 SCMP: "China’s top tech hub, Shenzhen, saw retail sales grow by just 0.5% year on year in the first quarter after reporting gross domestic product growth of 5.8% for the same period, casting a spotlight on its unbalanced development as... https://t.co/s3A260dwXx
Business Model, Not Tech, Drives Today’s Robotics Success
1/2 SCMP: "The technology is no longer the biggest uncertainty, the business model is." For those old enough to remember the famous robotics boom in Japan in the 1980s, this story may seem pretty familiar. https://t.co/rhiMlRaWQG
China's AI Valuations Fueled by Policy, Not Just Profit
Caixin: "In China, the AI investment thesis is shaped as much by geopolitics and policy as by profits." Interesting article on the spread of AI-related supervaluations. https://t.co/85yfiduKbD
NEV Charging Spikes 55.6% on May Day, Signaling Travel Shift
Xinhua: "China's highway NEV charging volume jumped 55.6% year on year on the first day of the five-day May Day holiday, underscoring a fundamental shift in travel patterns as electric vehicles have become a popular choice for long-distance journeys." https://t.co/ugj5Om5aIa
Investing in Infrastructure Can Reduce Germany’s Debt Burden
Germany's reluctance to invest in productive infrastructure isn't a sign of thriftiness, nor does it help Germany keep its debt burden low. If the investment is productive – i.e. if it creates more economic value than it costs in economic...
Chinese Banks Post Q1 Profit Rebound on Steadier Margins
1/9 Caixin: "China’s major state-owned and joint-stock commercial banks showed a broad rebound in revenue and profit in the first quarter of 2026, driven by stabilizing net interest margins as funding costs improved." https://t.co/eF2k1cx4c9
China's De-Dollarization Is Just a Reserve Shift
1/4 Brad Setser explains why China didn’t truly de-dollarize—it just shifted its dollar holdings from official reserves at SAFE to less transparent state entities like banks and investment funds. @Brad_Setser https://t.co/xz6NMW6HWT
Chinese Carmakers Sell More, Earn Much Less
1/5 Good Caixin article on the profit squeeze among Chinese automakers: "China’s automotive industry entered 2026 under mounting strain, as a bruising price war and chronic overcapacity left many carmakers selling more cars while making less money." https://t.co/P0kwGwW54U
China's Overinvestment Fuels Tech and Infrastructure Success
My latest piece for Carnegie, in which I argue that the story of Chinese systematic overinvestment is fully consistent with the seemingly contradictory story of its technological achievements and great infrastructure. https://t.co/YkSsd4R8s5
China Pilots Crackdown on Debt‑laden Zombie Firms
1/9 Interesting SCMP article: "China’s top market regulator is intensifying its crackdown on debt-laden “zombie companies” – rolling out a pilot programme in seven economic hubs to facilitate the forced exit of unprofitable firms." https://t.co/MyTz0VUKAc
China Pivots to Service Consumption for Growth
1/5 Caixin: "Boosting domestic demand remains paramount, but the strategy is evolving. Driven by a resilient service sector that outpaced overall retail sales in the first quarter, Beijing is pivoting toward service consumption." https://t.co/eoPwiFskb4
Richer Chinese Provinces Outpace Poorer Ones, Widening Gap
Caixin breaks down first quarter growth by province. With the exception of Guangdong, it seems that richer provinces generally grew faster than poorer provinces, exacerbating economic divergence. https://t.co/AbJFY18BH4
China Pledges Stronger Protections for Expanding Gig Workforce
1/4 SCMP: "China has vowed to better protect the country’s vast gig-economy workforce, as an economic slowdown leads millions of people to sign up for delivery, ride-hailing and other informal jobs on online platforms." https://t.co/09iuzB0OlM
Rising Inventories Boost China's Q1 GDP Despite Weak Demand
Many analysts have wondered how to reconcile China’s stronger-than-expected GDP growth in the first quarter of 2026 with the relative weakness observed in growth in retail sales, fixed investment, and net exports. In my latest piece, I argue that a...
China’s Industrial Profits Surge 15.5% on Chips, Commodities
Xinhua: "Profits of China's major industrial firms increased 15.5% year on year during the January-March period, accelerating by 0.3 percentage points from the growth posted in the first two months of the year." The rise was driven by sectors that specialize...
Downgrade Exposes Weaknesses in China’s Credit Ratings
Caixin: "A sudden downgrade of a state-backed financing vehicle in eastern China is exposing weaknesses in the country’s credit rating industry, raising concerns over hidden risks in the local government debt market." https://t.co/HjgmNQTIdy
China's Q1 2026 Fiscal Spending
Xinhua: Central government fiscal expenditure rose 4.9% in the first quarter of 2026 while fiscal revenue was up 2.7%. Local government expenditure increased 2.3% while revenue rose 2.1%. Tax revenue was up 2.2%, while non-tax revenue rose 2.9%. https://t.co/dqrunbaUK9
Uncertainty, Not Sticky Wages, Drives Coordination Failure
Very good essay by Brad Delong: "It loses the essential Keynesian insight that the problem is not that wages are sticky or that the economy has moved to a bad equilibrium but that in a world of genuine uncertainty, coordinating...
China Could Replicate Eurodollar Model for Global CNY
1/8 Brendan Greeley on the development of the eurodollar. If Beijing truly wants CNY to be more widely used in international finance, the eurodollar market provides one potentially useful model to show how that might happen. https://t.co/OoBlDvaenX
China’s Commodity Stockpiles, Not Strategy, Cushioned Iran War Impact
1/5 It's true that China was able to withstand the effects of the Iran war better than many other countries because it had stockpiled commodities. But it is a little silly, perhaps even a little orientalist, to say that it did...
China PE Pivots to Hard Tech, Old Sectors Collapse
Yicai: "China’s private equity market is showing a sharp split. “Hard tech” industries such as robotics and advanced materials are attracting most of the capital, while previously popular areas such as second-hand e-commerce and apparel have seen funding drop by...
Japanese Success Stemmed From Subsidies, Not Management Style
Tordior is right. In the 1980s, the US and Europe encouraged Japanese investment because they thought it would bring the "Japanese" management style that explained Japan's manufacturing success. But Japanese manufacturers ended up being no more successful than local ones once...
IMF Acknowledges Excessive Imbalances, Hinting at Katz Influence
Even the IMF formally recognizes (although everyone I know in the IMF has long understood this) that "excessive" imbalances are a problem. Is Dan Katz's influence starting to be felt?
Dim Sum Bond Borrowing Hits Record RMB300bn This Year
FT: "Total borrowing in so-called dim sum bonds — issued outside the mainland, mostly in Hong Kong, and denominated in renminbi — has hit Rmb300bn ($44 bn) so far this year, more than twice the amount at this point in...
China’s Q1 Income Growth Lags Behind 5% GDP Expansion
1/2 Yicai: "Chinese residents’ income growth slowed to 4.9% in nominal terms and 4.0% in real terms in the first quarter, even as the country’s economy expanded by a better-than-expected 5%." This is one percentage point less income growth than last year. https://t.co/MiWs3mdvcf
How Global Imbalances Ripple Across Nations
Adam Tooze has a very good new Substack article on global imbalances. I discuss below where I (mostly) agree and disagree (more in emphasis than in substance), focusing especially on how imbalances are transmitted from country to country. @adam_tooze https://t.co/n6KhuJ5NMS
Yuan's Share of Global FX Trades Climbs to 8.5%
Bloomberg: "The yuan made up 8.5% of global currency transactions including spot, forwards, swaps and options, up from 7% in 2022. That compared with 89% for the dollar, 28.9% for the euro 16.8% for the yen, and 10.2% for the...