Michael Pettis

Financial Markets Expert; Closely-Watched Blogger
Author, The Great Rebalancing

Expert on emerging economies and an influential voice on Asian financial markets and the Chinese economy.

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Biography

Wall Street veteran, merchant banker, equities trader, economist, finance professor, entrepreneur — iconoclast — Michael Pettis is a unique individual living and working in China, at the heart of the world’s most exciting and vibrant economy.

Having learned firsthand how markets operate during his years on Wall Street, Michael has taken his knowledge and insight and applied them to the Asian financial markets as an expert analyst, commentator, and participant. His work and research focuses on monetary policy, trade policy, and the development of the banking and financial markets in China.

Michael is the author of The Volatility Machine: Emerging Economics and the Threat of Financial Collapse. The book is a classic examination of the causes of financial crises in emerging-market countries and is critical reading for investors, businesspeople and anyone else interested in understanding where the international economy is going.

His current book is Avoiding the Fall: China's Economic Restructuring. He is also co-author of the recently published The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy.

Michael is a contributor to the Financial Times. He is published in Foreign Affairs, Foreign Policy, Far Eastern Economic Review, and The Wall Street Journal, just to name a few. Pettis writes an influential and widely-respected blog China Financial Markets.

"The worse things have looked for the world financial system, the more the world has heard from a Beijing-based financial expert named Michael Pettis, whose blog, China Financial Markets, is one of a handful I check for clues about what is happening in the Chinese economy."
— James Fallows in The Atlantic

"Anyone who cares about China is going to check in to see what Mike is thinking," says Hans Humes, president of New York hedge fund Greylock Capital Management, who worked with Pettis in the 1980s at Manufacturers Hanover Trust. "They would be crazy not to."
Business Week

An entrepreneur and music lover, Michael is a force in the Beijing indie-music scene as a club owner, talent manager representing local bands, and record label owner.

Credentials

  • Professor, Peking University’s Guanghua School of Management
  • Senior Associate, Carnegie Endowment for International Peace
  • Member, Board of Directors, ABC-CA Fund Management Co., a Sino–French joint venture based in Shanghai
  • Former trader, Manufacturers Hanover
  • Former Managing Director-Principal heading the Latin American Capital Markets and the Liability Management groups, Bear Stearns
  • Former head, emerging markets trading team, Credit Suisse First Boston
  • Co-founder, D-22, an indie rock club in Beijing.
  • Music talent manager; record label owner
  • Member, Institute of Latin American Studies Advisory Board , and Dean’s Advisory Board, School of Public and International Affairs, Columbia University
  • MBA in Finance, Columbia University
  • MIA (Master of International Affairs) in Development Economics, Columbia University.

Books

Avoiding the Fall

China's Economic Restructuring

Michael Pettis

The days of rapid economic growth in China are over. Mounting debt and rising internal distortions mean that rebalancing is inevitable. Beijing has no choice but to take significant steps to restructure its economy. The only question is how to proceed. Michael Pettis debunks the lingering bullish expectations for China's economic rise and details Beijing's options. The urgent task of shifting toward greater domestic consumption will come with political costs, but Beijing must increase household income and reduce its reliance on investment to avoid a fall.

Carnegie Endowment for International Peace (September 16, 2013)

The Great Rebalancing

Trade, Conflict, and the Perilous Road Ahead for the World Economy

Michael Pettis

China's economic growth is sputtering, the Euro is under threat, and the United States is combating serious trade disadvantages. Another Great Depression? Not quite. Noted economist and China expert Michael Pettis argues instead that we are undergoing a critical rebalancing of the world economies. Debunking popular misconceptions, Pettis shows that severe trade imbalances spurred on the recent financial crisis and were the result of unfortunate policies that distorted the savings and consumption patterns of certain nations. Pettis examines the reasons behind these destabilizing policies, and he predicts severe economic dislocations — a lost decade for China, the breaking of the Euro, and a receding of the U.S. dollar — that will have long-lasting effects.

Pettis explains how China has maintained massive — but unsustainable — investment growth by artificially lowering the cost of capital. He discusses how Germany is endangering the Euro by favoring its own development at the expense of its neighbors. And he looks at how the U.S. dollar's role as the world's reserve currency burdens America's economy. Although various imbalances may seem unrelated, Pettis shows that all of them — including the U.S. consumption binge, surging debt in Europe, China's investment orgy, Japan's long stagnation, and the commodity boom in Latin America — are closely tied together, and that it will be impossible to resolve any issue without forcing a resolution for all.

Demonstrating how economic policies can carry negative repercussions the world over, The Great Rebalancing sheds urgent light on our globally linked economic future.

Princeton University Press (Jan 23, 2013)

Praise

"Through the past decade of China's financial and strategic emergence, Michael Pettis has been a source of unfailing common sense about the possibilities and limitations of the Chinese model. Now he has put his analysis and recommendations into one concise book. I highly recommend reading and reconsulting his book to put the daily flow of China news into perspective."
— James Fallows, author of China Airborne

"This is a brilliant book, one that absolutely must be read by all who are concerned with globalization's future. Michael Pettis debunks the reigning conventional wisdom about international trade, finance, and globalization, and provides the most clear-eyed, unbiased, and unvarnished insights into how the Chinese economy works. From Chinese savers to Greek debtors to American bankers, Pettis shows how we are all connected — and what to prepare for on the road ahead."
— Clyde Prestowitz, author of The Betrayal of American Prosperity

"Michael Pettis has written an essential guide to the macroeconomic imbalances that bedevil today's global economy. We ignore his message at our peril."
— Dani Rodrik, author of The Globalization Paradox

"This is a profoundly interesting exploration of the causes of the trade and capital imbalances that produced the 2008 financial crisis. Michael Pettis argues that the structural gap between China's domestic consumption and production is the central reason for its pursuit of export-led growth through currency undervaluation. His analysis focuses valuable attention on the deep domestic reforms required in all the major trading countries for the 'great rebalancing' of their international accounts — and the avoidance of continuing crises."
— Robert Skidelsky, author of Keynes: The Return of the Master

After the Fall

The Future of Global Cooperation: Geneva Reports on the World Economy 14

Jeffry A. Frieden, Michael Pettis, Dani Rodrik, and Ernesto Zedillo

The latest title in CEPR/ICMB's Geneva Reports on the World Economy series asks the following questions: What are likely to be the principal issues facing the international economy over the next decade? What could a realistic analysis hope for in the way of progress in confronting the problems of the future? What are the constraints imposed by the realities of international and domestic politics? What forms of international economic cooperation are most important to pursue, and most likely to be achieved?

Centre for Economic Policy Research, copublished with the International Center for Monetary and Banking Studies (January 31, 2013)

The Volatility Machine

Emerging Economics and the Threat of Financial Collapse

Michael Pettis

This book presents a radically different argument for what has caused, and likely will continue to cause, the collapse of emerging market economies. Pettis combines the insights of economic history, economic theory, and finance theory into a comprehensive model for understanding sovereign liability management and the causes of financial crises. He examines recent financial crises in emerging market countries along with the history of international lending since the 1820s to argue that the process of international lending is driven primarily by external events and not by local politics and/or economic policies. He draws out the corporate finance implications of this approach to argue that most of the current analyses of trecent financial crises suffered by Latin America, Asia, and Russia have largely missed the point. He then develops a sovereign finance model, analogous to corporate finance, to understand the capital structure needs of emerging market countries. Using this model, he finally puts into perspective the recent crises, a new sovereign liability management theory, the implications of the model for sovereign debt restructurings, and the new financial architecture. Bridging the gap between finance specialists and traders, on the one hand, and economists and policy-makers on the other, The Volatility Machine is critical reading for anyone interested in where the international economy is going over the next several years.

Oxford University Press, USA (May 17, 2001)

Topics

Michael tailors each presentation to the needs of his audience and is not limited to the topics we have listed below. These are subjects that have proven valuable to customers in the past and are meant only to suggest his range and interests. Please ask us about any subject that interests you; we are sure that we can accommodate you.

Financial Markets

Asian economies

Videos

Internationalization of the Renminbi

China's rebalancing and what it means for the world

Feedback

A world leading bank:
I can't speak highly enough about the quality of his presentation at our conference. It really was out of the top drawer and his combination of background and expertise and the fact he lives and teaches in China make him, I would say, one of the top if not the leading western China authority.

Articles

— China Financial Markets
— ValueWalk
— ValueWalk
— ValueWalk
— Wall Street Pit
— Wall Street Pit
— Bloomberg
— Wall Street Pit
— ValueWalk
— Credit Writedown
— ValueWalk
— Global Economic Intersection
— Foreign Policy
— Credit Writedowns
— Financial Sense
— Credit Writedowns
— Wall Street Pit
— Financial Sense
— Wall Street Pit
— Real Clear World
— Financial Sense
— CNN
— The New York Times
— Global Economic Intersection
— Foreign Policy
— Economy Watch
— Financial Sense
— Foreign Policy
— The Wall Street Journal
— Project Syndicate
— Business Insider
— Financial Times