China: Limits to Debt-Fueled Growth?

by Michael Pettis Perceptions have certainly changed a lot in the last few months. As recently as three years ago there were so few analysts who were skeptical about the sustainability of Chinese growth that we rarely disagreed among ourselves. Now, however, the group of skeptics has become large enough that there are serious disagreements …

Politics of the Economically Possible in China

by Minxin Pei, Project Syndicate When sound economic advice is divorced from political reality, it probably will not be very useful advice. The history of multilateral financial institutions like the International Monetary Fund and the World Bank is littered with well-intentioned and technically feasible economic policy prescriptions that political leaders ignored. But that has not …

China Can Avoid a Hard Landing but not an Ultimate Reckoning

the idea that China can “grow” out of the debt problem once again by keeping investment high is wrong. First, it would only increase capital misallocation and debt levels, and would require even lower growth in the future. We can’t keep pushing the cost off into the future, as attractive an option as that always seems. Second it would put unbearable pressure on household income and consumption, and so ensure that the one thing China needs above all – a rapid rise in household consumption – is all but impossible.