“Trump isn’t building a wall around the US. He’s building a wall around China—and he’s getting the world to help him do it.”
🎙️ Episode Overview
In this timely and far-reaching episode, Brian McCarthy, founder of Macrolens, joins Lyric Hughes Hale to explore the hard realities of China’s economic system, the accelerating decoupling from the US, and what it all means for global markets. McCarthy, a longtime observer of China's financial architecture and one of the most original macroeconomic thinkers today, explains why China is economically “stuck,” why a North Korea-style retreat is increasingly plausible, and why the US is now building a tariff wall around China.
The conversation weaves through currency dynamics, the collapse of real estate, FX manipulation myths, tech sector power struggles, and the strategic thinking behind recent tariff decisions. This episode is essential listening for investors, policymakers, and anyone trying to make sense of the seismic shift underway in US–China relations.
Topics Discussed
The role of tariffs and how Trump’s new strategy signals a major shift in global economics
The structural flaws of China’s investment-led growth model
The "Impossible Trinity" and why China can’t maintain monetary independence, currency stability, and an open capital account simultaneously
The 2015 RMB devaluation and its implications for global markets
The RMB peg, devaluation risks, and FX forward fragility
China's long-standing capital misallocation and the myth of consumption rebalancing
The risk of China closing itself off from the world (the “North Korea scenario”)
What investors should watch for next—including currency markets, capital flight, and geopolitical flare-ups
How COVID lockdowns may have been a "beta test" for social compliance
🎤 Key Moments
On China's Economic Model
❝ The only way China can sustainably pivot to consumption is to surrender the control of the resource allocation process to entrepreneurs. And it’s never going to happen.
On the Currency Dilemma
❝ They either tighten monetary policy, let the currency go, or close trading. All three are viable. That’s not a market-based currency.
On Moral Hazard and Reform
❝ China’s investment is driven by central planning, not entrepreneurs. There’s a huge disconnect between GDP and real wealth creation.
On Xi Jinping’s Strategic Missteps
❝ Xi Jinping is in a box. If he really wanted to think outside the box, he’d do the last thing Trump expects—capitulate.
On the Supply Chain Shocks
❝ Trump wants carnage to light a fire under the rest of the world to get with his China decoupling strategy.
On De-dollarization Myths
❝ There is no alternative to the U.S. dollar. People conflate trade settlement with reserve status—they’re completely different.
📚 Influences
Jude Wanniski
Influential American journalist and economist, known for his advocacy of supply-side economics
-Notable Work: The Way the World Works (1978)
-Founder of Polyconomics, a supply-side consulting firm influential in U.S. economic policymaking during the Reagan era
-Wanniski's principles—particularly around Say's Law and gold as a monetary benchmark—shaped McCarthy’s economic worldview
Say's Law implies that production is the key to economic growth and prosperity, and that government policy should encourage (but not control) production rather than consumption.💬 Join the Discussion & feel free to share this podcast:
What do you think about Brian McCarthy’s perspective on China’s economy?
Follow Brian McCarthy
📈 MacroLens Substack
🐦 X (Twitter): @BrianGoBoSox
About our Host:
Lyric Hughes Hale
Lyric Hughes Hale serves as Editor-in-Chief of Econvue, which publishes a newsletter, econVue+. She hosts The Hale Report, a podcast series on global economics. She is Director of Research at Hale Strategic
📍Chicago
The World Rebalances
💬 As geopolitical tensions have risen, there is no doubt in my mind that China is the clear target of the US tariffs. The rest is theater.
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