China’s economic growth is sputtering, the Euro is under threat, and the United States is combating serious trade disadvantages.

Another Great Depression? Not quite.

Noted economist and China expert Michael Pettis argues instead that we are undergoing a critical rebalancing of the world economies. Debunking popular misconceptions, Pettis shows that severe trade imbalances spurred on the recent financial crisis and were the result of unfortunate policies that distorted the savings and consumption patterns of certain nations. Pettis examines the reasons behind these destabilizing policies, and he predicts severe economic dislocations–a lost decade for China, the breaking of the Euro, and a receding of the U.S. dollar–that will have long-lasting effects.

Pettis explains how China has maintained massive–but unsustainable–investment growth by artificially lowering the cost of capital. He discusses how Germany is endangering the Euro by favoring its own development at the expense of its neighbors. And he looks at how the U.S. dollar’s role as the world’s reserve currency burdens America’s economy. Although various imbalances may seem unrelated, Pettis shows that all of them–including the U.S. consumption binge, surging debt in Europe, China’s investment orgy, Japan’s long stagnation, and the commodity boom in Latin America–are closely tied together, and that it will be impossible to resolve any issue without forcing a resolution for all.

Demonstrating how economic policies can carry negative repercussions the world over, The Great Rebalancing sheds urgent light on our globally linked economic future.

Michael Pettis is professor of finance and economics at Peking University, a senior associate at the Carnegie Endowment, and a widely read commentator on China, Europe, and the global economy. He is the author ofThe Volatility Machine: Emerging Economies and the Threat of Financial Collapse.

“[Michael Pettis is] a brilliant economic thinker.”–Edward Chancellor, Wall Street Journal

“Insightful. . . . [O]ffers a sweeping perspective that links trade, exchange rates, and cross-border capital flows to underlying domestic taxation, investment, and fiscal policies. . . . Pettis’s erudite, but lucid and very readable analysis brims with surprising ripostes to conventional wisdom. . . . Pettis’s stimulating, contrarian take on the present crisis challenges dogma with clear thinking.”—Publishers Weekly

“This is a book that should be read by: (a) politicians, central bankers and anybody else involved in macroeconomic policy; (b) all economists; (c) all students of economics; and (d) everybody else. The Great Rebalancing: Trade, Conflict and the Perilous Road Ahead for the World Economy by Michael Pettis is as sharp and clear as a cut diamond in its analysis of the continuing global imbalances. The author brings logic, accounting identities and clarity of thought and language to bear on the issue of prospects for the global economy, putting most other commentators into the shade.”–Diane Coyle, Enlightened Economist