Michael Pettis: Currency weakness amid trade surpluses questions free-market principles

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Iryna Sazhynska

12.05.2026

Michael Pettis: Currency weakness amid trade surpluses questions free-market principles — Currency and trade surplus disconnect

Michael Pettis questions why an already-weak currency would continue to weaken in the face of large and growing trade surpluses under a truly free-trading global economy where prices are set by efficient resource use and without government intervention in trade.

He suggests that under ideal market conditions, such currency behavior would not occur, implying that external factors or interventions may be influencing currency movements.

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Pettis has previously reported on China's regulator launching a pilot program to force unprofitable zombie companies out of the market. He has also argued that Germany's low levels of infrastructure spending are not effective in reducing debt unless the projects have clear value, noting that productive investment does not raise Germany's debt burden. These posts reflect Pettis’s focus on how government policy shapes market outcomes.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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