The Taiwan red line was given much greater emphasis at the Beijing summit than in the past. Coupled with China’s other red lines, the risk of increasing red line inflation needs to be taken seriously.

Podcast with John Ellis. Covers my views on China, the US-China relationship, and the Summit — and a little about the path that brought me here. open.substack.com/pub/stephenr...

My take on the just completed Trump-Xi summit in Beijing. Long on stagecraft but short on deliverables, this was a classic “place holding summit.” Both leaders went through the motions but didn’t do much else other than declare “mission accomplished” on stability. Time will tell…

Jointly authored with Max Baucus, former US amb to China, and published by invitation of The Economist under the title, “The pact that could help America and China repair relations,” a BIT could make a real difference to next week’s Xi-Trump summit in Beijing.

The possibility of scientific collaboration between the US and China, which is essential for the future of humankind, seems remote today. But if it could occur between two adversaries — USSR/ Russia and the US — there is hope for US-China collaboration. Lessons from the International Space Station.

Amid a series of massive illegal policy blunders, US President Trump has set his sights on a triumphant mid-May summit with Chinese President Xi. It is likely to go poorly since Trump has no understanding of Chinese strategy that goes back to Sun Tzu (6th century BC).

World economic growth is barely hovering above the 2.5% to 3.0% danger zone. Facing war, massive global supply disruptions, and Trump’s repeated foreign policy blunders, global recession is likely later this year or early 2027. Don’t be lulled into complacency by frothy equity markets. See attached

Just back from a week in China. K-shaped contrast between Xi-speak and sagging spirits of workers. AI is everywhere except in the diminished sentiment of the Chinese labor market. At odds with resilience in official GDP stats just released for 1Q.

The IMF has just pre-released one of the analytical chapters of its upcoming World Economic Outlook (due out April 14). It is packed with fantastic macro research on wars and postwar recoveries. With the Iranian War now in its 44th day and counting, this is a must read.

China does strategy. Trump does not. He claims he “will feel it in his bones” when the war with Iran is over. Little wonder he failed to grasp the strategic significance of the Strait of Hormuz. Obliteration is not strategy, as Trump threatens Iran with another deadline. Sun Tzu explains why.

The China Development Forum, long China’s pre-eminent conference of frank and open exchange as conceived brilliantly by Zhu Rongji, has lost its soul. Sad to see after 25 consecutive years as the longest attending foreign delegate — and being disinvited this year.

Both the US and China, which claim to be fixated on stability, in reality, are flirting with unstable policy and political models. This has heightened uncertainty, taking a toll on their real economies, and further damaged the relationship between them.

First time in 26 years that I was disinvited to the China Development Forum. My analysis of a pirated copy of the agenda shows 117 speakers were given about 6 mins each to opine during 10 seminars over the last two days. Lip service to debate after the rollout of the new 15th Five-year Plan.

“Chinese consumer-led rebalancing was the focus of a popular course, “The Next China,” that I taught at Yale for 13 yrs (2010-22). For the 1,400 students who took that course, my sincere apologies for having misled you that this was close at hand. I still hope that day will come … eventually.”

I was holding out hope that the Chinese government might send an important message of its commitment to boost household consumption as a share of GDP. They hinted earlier at that possibility but in the end, they failed to deliver. Implications of this disappointment discussed in this latest piece.

I was holding out hope that the Chinese government might send an important message of its commitment to boost household consumption as a share of GDP. They hinted at that possibility in a draft of their new Plan. In the end, they failed to deliver. Implications discussed in my latest piece.

China’s new 15th Five-Year Plan purports to deliver on consumer-led growth. Yet too much emphasis on temporary trade-in allowances and not enough support from social safety net reforms. Still a chance for good news, that a consumption target will be released after the Two Sessions end March 12.

Unlike the fictious war in Albania that was featured in the 1997 film, “Wag the Dog,” today’s war in Iran is very real. But the basic message of the movie endures — a president using war to deflect attention from political problems at home.

SCOTUS Nails POTUS!

The Supreme Court has put America’s rule of law on the same page with Trump’s tariff policy blunder. This piece examines economic implications of the SCOTUS verdidict — both domestic and global. A victory for the US Constitution, a loss for executive overreach of a wannabe authoritarian.

Ten months ago, I highlighted my top ten reasons to dismiss Howard Lutnick’s “insights” on Trump’s misguided trade policy. Little did I know of the just-revealed character flaws that further discredit any remaining shreds of his credibility. Will he survive as Secretary of Commerce?

Kevin Warsh has much to gain from studying the real interest rate record of his predecessors. Bottom line: Avoid being Arthur Burns, avoid the “new paradigm” pitfalls of Alan Greenspan, and stay clear of the never-ending emergencies of Ben Bernanke. Study Volcker as a hero of political independence.

“American Exceptionalism” has long been taken for granted. To the extent that leadership is an important aspect of such perceived supremacy, Donald Trump appears to be a disqualifying consideration. How exceptional are we now — especially compared with another country, another system, like China?

Donald Trump is heading to Davos having just threatened 8 European countries with coercive tariffs for their reluctance endorse his ridiculous land grab of Greenland. Does Europe have the spine to resist, when the American power structure has rolled over with gratuitous compliance?

Jerome Powell’s willingness to take on Donald Trump is an extraordinary act of political courage. It stands in sharp contrast to my personal experience with Arthur Burns in the early 1970s when a politically compliant Fed ushered in the Great Inflation.

Contrary to widespread views by China hawks — which include almost everyone these days — America’s snatch of Maduro is unlikely to trigger a copycat operation by China in Taiwan. The most important of the three reasons I cite is strategy, which dates back to to Sun Tzu in the fifth century.

Although diplomacy has long been at the forefront of Sino-American engagement, the rise of politically constrained, egocentric leaders has rendered it ineffective. It is not too soon to start considering a new architecture of engagement for the post-Trump era.

People are getting more upbeat on China. The IMF just nudged up its f’cst for 2026. Yet the data flow is weak, especially the consumer, capex, and an exploding current account surplus. This increases pressure on consumer-led rebalancing to avoid a further protracted shortfall in the Chinese economy

The liar-in-chief has gone too far in blaming Biden for the record inflation he inherited. His claims have no basis in fact, especially as compared to the Great Inflation of the 1970s and early 1980s. Equally culpable is his so-called team of expert economic advisors — Bessent, Lutnick, and Hassett.

While the sign at Hong Kong’s Airport still says “Welcome to Asia’s World City,” that reputation has been increasingly compromised by China’s stifling influence on the city’s governance and economic vitality. The “one country, two systems” model morphed increasingly into “one country, one system.”

NVIDIA’s blowout 3Q earnings doesn’t validate an AI boom. It provides a signal of derived demand, driven by expectations of a $3-5 trln capex boom in data center construction between now and 2030. NVIDIA’s expected earnings trajectory is tied to the AI capex bubble it feeds off.

Like Biden, Trump has an affordability problem. Unlike Biden=>Harris, Trump’s claim that affordability is a political hoax fails to make the distinction between inflation and the price level. On November 4, US voters understood the basic economics of that distinction better than their President.

In May 1930, over 1000 leading economists wrote an open letter to President Hoover urging him not to sign the Smoot Hawley Tariff Act. In October 2025 an Amicus Brief was filed before the Supreme Court by 44 distinguished economists urging rejection of Trump’s tariffs. Will SCOTUS do “a Hoover” ?

Just back from two weeks in China. My take on what Beijing thinks of the Trump-Xi “deal.” Unsurprisingly, a very different take than the US view as per Trump.

I document America’s mounting loss of leading Chinese scientists returning to the Mainland since the US presidential election in Nov 2024. This trend, in conjunction with efforts to slash Federal support for basic research, reinforces the destructive anti-science, anti-expert mindset of Trump 2.0.

More detail on the macro drivers of Chinese consumer-led rebalancing: Relative to OECD norms — a good proxy for Xi Jinping’s 2049 goal of a “moderately well-off society” — China has more to gain from reducing precautionary saving than from boosting labor income. Both are needed, however.

As a follow up to my earlier proposal that China needs to set an explicit target of 50% for the household consumption share of GDP by 2035, the piece below quantifies what it would take. My answer: 7% consumption growth between now and 2035 versus 3.3% for the remainder of the Chinese economy.

A striking disconnect between ongoing services developement and lagging household consumption underscores China’s incomplete rebalancing. This paradox can best be resolved through a combination of social safety net reforms and a 50% target for the consumption share of Chinese GDP by 2035.

As China puts the final touches on its upcoming Five-Year Plan (2026-30), America has neither a plan nor a strategy. Trumponomics is based largely on the whims of one man, in sharp contrast to China’s comprehensive “all-of-government” approach.

Following a Chinese ban of Nvidia purchases, Huawei has just rolled out a new strategy for indigenous AI innovation while China just cracked the Top 10 on the Global Innovation Index. America’s efforts to contain Chinese innovation have backfired.

Project Sydicate asked five of us to consider whether Trumponomics represents a rejection of neoliberalism or its natural progression, and how might it reshape the US economy? My answer, along with summaries of the others, follows.

The new focus of Chinese policy — involution — is yet another attempt to micromanage the supply side, this time focusing on the deflationary consequences of “overly-aggressive, disruptive” competition. By failing to tackle chronic problems of underconsumption, this campaign could well be stymied.

Xi Jinping’s recent emphasis on China’s “unstoppable rejuvenation” signals that his political calculus has changed. With Chinese economic growth likely to fall short of the 2049 targets of the “Chinese Dream,” a large rejuvenation deficit has opened up. A shift from economic to military priorities.

The AI spending binge on data centers is a bubble. Reminiscent of services sector restructuring in the 1990s, a massive overhang of low-value, fixed cost LLM search processing will dilute the variable cost functionality and returns of large Mag 7-like AI companies. Hyper-scale data centers benefit.

Jerome Powell’s recent speech at Jackson Hole was a courageous, Volcker-like act in support of Fed independence. Staying on mission, when the Fed is under extraordinary political pressure, is an inspiration for Lisa Cook and the rest of us. Powell deserves a place in the Pantheon of central banking.

ChinaFile asked five China watchers whether President Trump has changed his view on China. My take is that he will do whatever it takes to put another big notch in his deal belt. China and Harvard are two trophy deals that would enshrine his self-proclaimed legacy as deal maker-in-chief.

The contentious March 2021 Anchorage summit between the US and China offers some important hints on what to expect this Friday between Trump and Putin. A deal focused Trump has lowered the bar on what to expect from this “listening exercise.” Trump’s congenital softness toward Putin is the wildcard

The legend of Zhao Gao, the most famous and powerful eunuch of the early Qin dynasty. The ancient roots of Chinese mendacity and loyalty tests as a prototype for the two Trump Administrations— from Sean Spicer to Kellyann Conway to Scott Bessent yesterday on MSNBC.

Trump’s July 31 executive order details the Liberation Day 2.0 shock for 69 countries — the largest single-year increase in US tariffs since 1815. A subsequent spike in the Trade Policy Uncertainty Index is a strong hint of more carnage to come as the US economy veers ever closer to recession.