“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
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“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
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Who Will Win The War Of Neo-Mercantilists?

Martin Wolf Financial Times

Date Posted:: July 22, 2026
Is Database:: Database

Martin Wolf estimates that under reasonable assumptions, China should be earning ~$100B annually on her $4T of foreign assets. Yet, China shows an unexplained negative net income of around $125bn on its net foreign asset position.

China’s macroeconomics are very different from those obtained before the global financial crisis and, even more so, before the end of its property boom. Exports are surging, but domestic demand has stalled. China's export surplus in manufacturing is now around 2% of world GDP, which is “roughly twice the largest surplus Japan ever ran.” Most importantly, China shows an unexplained negative net income of around $125bn on its net foreign investments. But it should, on reasonable assumptions about the income it earns on its $4tn in net foreign assets, have a surplus of some $100bn. As a result, Brad Setser argues, the renminbi is by now some 30% undervalued. China’s policies look unavoidably threatening to much of the world. If a major trading partner runs huge and persistent trade and current account surpluses, everyone else has to run offsetting deficits. This leads to the shrinkage of sectors specialising in producing tradable goods and services, as well as huge domestic financial deficits.

Takeaways by Macro Roundup^® AI

China's manufacturing export surplus stands at roughly 2% of world GDP, described as roughly twice the largest surplus Japan ever ran, while exports surge and domestic demand stalls.
China reports an unexplained negative net income of about $125bn on its net foreign investments, though reasonable assumptions about returns on its $4tn in net foreign assets imply a surplus near $100bn.
Brad Setser argues the renminbi is some 30% undervalued; persistent Chinese trade and current account surpluses require offsetting deficits elsewhere, shrinking sectors producing tradable goods and services and producing large domestic financial deficits.

Who Loses from China’s Export Gains?

Charles Austin Jordan and Logan Wright Rhodium Group

Date Posted:: September 24, 2026
Is Database:: Database

China’s share of global exports by volume is on track to rise from 20% in 2025 to 28% by 2030. Yet China’s rising export share may depress the total value of global exports as lower-priced Chinese goods displace more expensive exports from other countries.

The net result of our projection would suggest that China gains around $1.13 trillion in annual export value by 2030 relative to the baseline scenario, while the rest of the world loses around $5.1 trillion, with the G7 accounting for $2.25 trillion of those potential losses alone. This implies that China’s export share gains effectively destroy overall global trade values relative to the status quo due to continued declines in export prices. Regardless of which assumptions are used, China’s export share gains appear to reduce global total potential export values, because trade patterns are shifting toward Chinese goods that are declining in price.

Takeaways by Macro Roundup^® AI

The projection has China gaining roughly $1.13 trillion in annual export value by 2030 relative to the baseline scenario, while the rest of the world loses about $5.1 trillion.
The G7 accounts for $2.25 trillion of the projected $5.1 trillion in export value losses borne by countries outside China.
China’s export share gains appear to reduce global total potential export values regardless of the assumptions used, because trade patterns shift toward Chinese goods whose prices continue to decline.

The Export Wave Is Cresting

Andrew Batson Gavekal

Date Posted:: September 23, 2026
Is Database:: Database

Andrew Batson argues that as the memory-chip price cycle’s impact on Chinese export growth fades, export growth in renminbi terms in 2027 “will most likely converge toward the recent trend for products outside the AI complex, which is around 5–7%.”

China’s latest extraordinary export wave is showing signs of cresting. The headline YoY growth of exports has leveled off over the past three months, staying around 24-27% in US dollar terms and 18-20% in renminbi terms. The boom in exports of products associated with investment in artificial intelligence is certainly not over, but current super-high growth rates will probably slow in coming months. Memory chips are now the biggest single swing factor for exports, and prices for some products have recently leveled off after their massive surge. While the ebb and flow of memory prices is difficult to forecast, growth of total exports in 2027 will most likely converge toward the recent trend for products outside the AI complex, which is around 5-7%. Semiconductor cycles have limited implications for China’s vast range of other exports, which are still very competitive in global markets.

Takeaways by Macro Roundup^® AI

China’s export growth has leveled off over the past three months at roughly 24–27% year-on-year in US dollar terms and 18–20% in renminbi terms, a sign the export wave is cresting.
Memory chips are the biggest single swing factor for China’s exports, with prices for some products leveling off after a massive surge and super-high AI-related growth rates likely to slow in coming months.
Total Chinese export growth in 2027 will most likely converge toward the recent 5–7% trend for products outside the AI complex, which remain very competitive in global markets.

China’s Trade Surplus With EU Hits Record as Tensions Intensify

Bloomberg Staff Bloomberg

Date Posted:: July 14, 2026
Is Database:: Database

China’s trade surplus with the European Union increased 27% y/y to $32.9B in June. China’s surplus with Germany more than doubled.

China’s trade surplus with the European Union climbed to a fresh high, keeping the issue of growing imbalances high on the agenda as the bloc weighs new measures to shield local industries. With exports to the EU soaring to a record, China’s surplus with the bloc rose 27% from a year earlier to $32.9 billion in June, according to Chinese customs data released on Tuesday. The country’s surplus with Germany more than doubled year-on-year while plunging 81% with France. For the first half of the year, China imported $135.6 billion of goods from the EU, up 9% from a year earlier. Meanwhile its exports amounted to $312.3 billion during the period, a gain of 17%.

Takeaways by Macro Roundup^® AI

China's trade surplus with the EU rose 27% from a year earlier to $32.9 billion in June, with exports to the bloc reaching a record, according to Chinese customs data.
China exported $312.3 billion of goods to the EU in the first half of the year, up 17%, while importing $135.6 billion from the bloc, up 9%.
China's surplus with Germany more than doubled from a year earlier while its surplus with France fell 81%, as the EU weighs new measures to shield local industries.

The Emergence Of A New Anchor

Charles Gave and Louis-Vincent Gave Gavekal

Date Posted:: May 20, 2026
Is Database:: Database

Post-covid, Renminbi bonds have outperformed all major bond markets over 1, 3, 5, and 10 years. Charles and Louis-Vincent Gave argue that two parallel worlds are emerging: an inflationary OECD and a deflationary Asia/emerging markets.

Renminbi bonds have now outperformed other major bond markets year to date, over the past 12 months, three years, five years, so far this decade, and over the past 10 years. Most countries now trade more with China than with the US. This is arguably the major shift of the past two decades. Put differently, for all the talk of “deglobalization,” the world is not so much “deglobalizing” as “de-Westernizing.” The idea that the world is closing in on itself would sound silly to anyone living in Jakarta, Mumbai, Dubai, or São Paulo. And the more countries trade with China, the more comfortable they become saving in renminbi and buying renminbi bonds to fund future trade. In turn, this implies the coexistence of two worlds: one stable—Asia and emerging markets—and one unstable—the OECD; one inflationary—the OECD—and the other deflationary—Asia and emerging markets.

Takeaways by Macro Roundup^® AI

Renminbi bonds have outperformed other major bond markets year to date and over the past 12 months, three years, five years, this decade, and the past 10 years.
Most countries now trade more with China than with the United States, a shift the author calls arguably the major one of the past two decades and a sign the world is "de-Westernizing" rather than deglobalizing.
The author argues that greater trade with China makes countries more comfortable saving in renminbi and buying renminbi bonds, implying two coexisting worlds: a stable, deflationary Asia and emerging markets, and an unstable, inflationary OECD.

Finding China in the U.S.TIC Data

Brad Setser Council on Foreign Relations

Date Posted:: May 19, 2026
Is Database:: Database

Once you add back what’s hidden in European custodial centers, China’s US bond holdings have fallen less than the headline “China” line suggests. Setser estimates that China’s total US assets are still 50–55% of its reserve portfolio.

China hasn’t disclosed the currency composition of its reserves since 2020. But it isn’t clear that China’s central bank has shifted its currency composition of its foreign currency holdings around a lot, in part because the dollar share of its reserves was already low (5 percent) and going underweight the dollar means losing yield. But there is no doubt that China’s holdings did start to disappear from the U.S. data right after the G-7 immobilized Russian reserves in early 2022. There is a clear fall around this time in the bonds China holds in U.S. custodians. Estimating China’s true holdings of U.S. assets has gotten harder because it seems like China has diversified not just out of the US, but also out of Euroclear (a large Belgium-based custodian). The overall result suggests that China has reduced the share of its portfolio in long-term Treasuries, while increasing its bill holdings and maintaining a sizeable Agency portfolio of around 10 percent of total reserves (more than before 2020). Zooming the chart in highlights that the key implication of this upward adjustment to China’s estimated holdings of Agencies is that China’s total U.S. financial holdings remain between 50 and 55 percent of its reserve portfolio.

Takeaways by Macro Roundup^® AI

China's total U.S. financial holdings remain between 50 and 55 percent of its reserve portfolio after an upward adjustment to its estimated Agency holdings, which stand at around 10 percent of total reserves, more than before 2020.
China's holdings began disappearing from the U.S. data right after the G-7 immobilized Russian reserves in early 2022, with a clear fall in the bonds China holds at U.S. custodians.
China appears to have reduced the share of its portfolio in long-term Treasuries while increasing bill holdings, and estimating its true U.S. asset holdings has grown harder as it diversified out of Euroclear as well.

How Should We Measure Economic Power?

Chris Miller Chris Miller's Newsletter

Date Posted:: May 18, 2026
Is Database:: Database

Citing Brooks and Vagle, Miller argues profits are a better measure of economic power than output, and the US and its allies are ahead, especially in high tech. But, Miller asks, “Is perhaps profitability the right metric in peace but not in war?”

Profit, [Brooks and Vagle] argue, is evidence that one company can do something others can’t. Monopolists have the highest profit. Oligopolists make good money. Manufacturers of toys and textiles have razor thin margins. When Brooks and Vagle measure profits, they find that U.S. firms dominate, while Japan and Europe remain significant players. China is a second-tier player. The U.S. and allies lead in profits across the board. When it comes to high tech products, the imbalance in America’s favor is particularly pronounced. If profitability is the result of power dynamics, then the U.S. is far more powerful than comparing GDP or industrial output implies. There are a couple of potential counterarguments. Is China pursuing a loss-leading strategy, accepting low profits in the short run to win market share in the long run? In solar power, China has commoditized the sector and produced overcapacity that has led to losses, not profits. There’s no moat in solar the way there is around tech. Is perhaps profitability the right metric in peace but not in war? China is betting that its production advantage will create more durable CATL-style moats that eventually enable both profit and power.

Takeaways by Macro Roundup^® AI

Brooks and Vagle argue profit is evidence that a firm can do something others cannot, and their measurement of profits finds U.S. firms dominate, with Japan and Europe significant players and China a second-tier player.
The imbalance in America's favor is particularly pronounced in high-tech products, suggesting that, if profitability reflects power dynamics, the U.S. is far more powerful than comparisons of GDP or industrial output imply.
China has commoditized solar power and produced overcapacity that has led to losses rather than profits, without the moat that surrounds tech, while betting its production advantage will create more durable CATL-style moats enabling both profit and power.

Martin Wolf estimates that under reasonable assumptions, China should be earning ~$100B annually on her $4T of foreign assets. Yet, China shows an unexplained negative net income of around $125bn on its net foreign asset position.

Is China's currency undervalued as its export surplus hits record levels?

Takeaways by Macro Roundup® AI

Related Articles:

China’s share of global exports by volume is on track to rise from 20% in 2025 to 28% by 2030. Yet China’s rising export share may depress the total value of global exports as lower-priced Chinese goods displace more expensive exports from other countries.

Do China's export share gains reduce global export values?

Takeaways by Macro Roundup® AI

Related Articles:

Andrew Batson argues that as the memory-chip price cycle’s impact on Chinese export growth fades, export growth in renminbi terms in 2027 “will most likely converge toward the recent trend for products outside the AI complex, which is around 5–7%.”

Is China's export boom leveling off toward slower growth?

Takeaways by Macro Roundup® AI

Related Articles:

China’s trade surplus with the European Union increased 27% y/y to $32.9B in June. China’s surplus with Germany more than doubled.

Is China's trade surplus with the European Union reaching record levels?

Takeaways by Macro Roundup® AI

Related Articles:

Post-covid, Renminbi bonds have outperformed all major bond markets over 1, 3, 5, and 10 years. Charles and Louis-Vincent Gave argue that two parallel worlds are emerging: an inflationary OECD and a deflationary Asia/emerging markets.

Is rising trade with China making countries save in renminbi?

Takeaways by Macro Roundup® AI

Related Articles:

Once you add back what’s hidden in European custodial centers, China’s US bond holdings have fallen less than the headline “China” line suggests. Setser estimates that China’s total US assets are still 50–55% of its reserve portfolio.

Has China's holdings of U.S. assets become harder to track?

Takeaways by Macro Roundup® AI

Related Articles:

Citing Brooks and Vagle, Miller argues profits are a better measure of economic power than output, and the US and its allies are ahead, especially in high tech. But, Miller asks, “Is perhaps profitability the right metric in peace but not in war?”

Do corporate profits measure national economic power better than GDP?

Takeaways by Macro Roundup® AI

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