US Economist Michael Pettis Warns of a Chinese Flood of Goods to Europe
Michael Pettis, an American economist, has warned Europe of a potential flood of cheap Chinese goods. “China could continue to flood European markets with cheap goods to support growth at home” Pettis told the Spiegel. This trend is already becoming apparent.
Pettis, who has been teaching finance at Peking University in Beijing for over 20 years, has been warning of the consequences of China’s overcapacity for a long time. Now, he expects new anti-China tariffs in the US, once the new government of Donald Trump takes office, to increasingly shield the US market from Chinese goods, which would then have to find new markets. “They won’t be the developing countries, they can’t afford it. It will be Japan, India, and Europe” Pettis said. Europeans have every reason to be deeply concerned about these prospects.
On the other hand, Pettis is more optimistic about the Chinese stock market. “The situation at the Chinese stock market is very volatile” he said. “But I think there are more opportunities than risks right now.” After the stock prices had developed rather disappointingly for years, they rose significantly after Beijing relaxed credit in September. “The regulatory authorities would not like to see prices fall again after this enormous increase” Pettis said. “They will do what they can to support the market.