Chinese investment has stalled out in the third quarter. Real...
Brad Setser@Brad_Setser
82 views
Oct 21, 2025
~1 min read
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Chinese investment has stalled out in the third quarter. Real estate investment continues to fall, and infrastructure and manufacturing investment have stopped growing .... with one notable exception: autos
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Autos are an interesting sector for the global economy because the incremental Chinese production since 2018 has basically come from exports -- the domestic market has been around 25m cars for a while
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Vehicle exports will top 7.5m cars/ tracks this year -- and are on trajectory to reach 8-9m next year (massive scale) ... with a strong contribution from EVs and pug in hybrids in 2025
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ICEs and EVs/ NEVs are basically splitting the domestic market (ICE sales have stabilized at around 12m cars), which means a lot of China's 20-25m in EV production capacity is available for export
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The swing in China's net exports of autos is massive -- and so big that it should on its own lead the IMF to question its view that China's external surplus is only modest in size and not a major global policy concern ...
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And China's auto imports have basically fallen in 1/2 since 2021, and will be down to 0.5m cars this year (tiny v a domestic market of 25m cars). This chart alone explains much of Germany's current malaise ...
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Personally don't see how more balance can be brought into global trade by adjusting sectoral Chinese policies alone (China isn't going to stop adding auto export capacity ... )
But I gather @IMFNews isn't convinced (yet) that the exchange rate needs to play a role
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But I gather @IMFNews isn't convinced (yet) that the exchange rate needs to play a role
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