Finance

Goldman Sachs said Wednesday that it agreed to sell its fintech lending platform GreenSky to a group of investors led by private equity firm Sixth Street.
The deal, which includes a book of loans created by Goldman, will result in a 19 cents per share reduction to third-quarter earnings, Goldman said in the statement.
The New York-based bank is scheduled to disclose results Tuesday.

David Solomon, CEO of Goldman Sachs, during a Bloomberg Television at the Goldman Sachs Financial Services Conference in New York on Dec. 6, 2022.
Michael Nagle | Bloomberg | Getty Images

Goldman Sachs said Wednesday that it agreed to sell its fintech lending platform GreenSky to a group of investors led by private equity firm Sixth Street.
The deal, which includes a book of loans created by Goldman, will result in a 19 cents per share reduction to third-quarter earnings, Goldman said in the statement. The New York-based bank is scheduled to disclose results Tuesday.

The move is the latest step CEO David Solomon has taken to retrench from his ill-fated push into retail banking. Under Solomon’s direction, Goldman acquired GreenSky last year for $1.7 billion, overruling deputies who felt the home improvement lender was a poor fit. Months later, Solomon decided to seek bids for the business amid his broader move away from consumer finance. Goldman also sold a wealth management business and was reportedly in talks to offload its Apple Card operations.
“This transaction demonstrates our continued progress in narrowing the focus of our consumer business,” Solomon said in the release.
The bank is now focused on its core strengths in investment banking and trading and its push to grow asset and wealth management fees, he added.
Goldman will continue to operate GreenSky until the sale closes in the first quarter of 2024, the bank said.
The expected hit to third-quarter earnings includes expenses tied to a write down of GreenSky intangibles, as well as marks on the loan portfolio and higher taxes, offset by the release of loan reserves tied to the transaction, Goldman said.

It follows a $504 million second-quarter impairment on GreenSky disclosed in July.
The Sixth Street group includes funds managed by KKR, Bayview Asset Management and CardWorks, according to the release.
Private equity groups have played key roles in several of the banking industry’s asset divestitures since the start of the year, providing funding for the PacWest merger with Banc of California, for example.
Read more: Goldman Sachs faces big write down on CEO David Solomon’s ill-fated GreenSky deal More

The stock sell-off that hit regional banks this year has exposed lenders including Zions and Comerica to the risk of being delisted from the S&P 500 index.
The banks, each with market capitalizations of around $5 billion, were the fourth- and sixth-smallest members of the 500 company listing as of this week, according to FactSet.
That leaves the companies in a similar position to Lincoln National, which got shunted from the S&P 500 last month and placed into a small-cap index.

A customer enters Comerica Inc. Bank headquarters in Dallas, Texas.
Cooper Neill | Bloomberg | Getty Images

The stock sell-off that hit regional banks this year has exposed lenders including Zions and Comerica to the risk of being delisted from the Standard & Poor’s 500 index.
The banks, each with market capitalizations of around $5 billion, were the fourth- and sixth-smallest members of the 500 company listing as of this week, according to FactSet.

That leaves the companies in a similar position to Lincoln National, which got shunted from the S&P 500 last month and placed into a small-cap index. Blackstone, the world’s largest alternative asset manager, took Lincoln National’s spot.
This year’s regional banking crisis has already caused changes in the composition of the S&P 500, the most popular broad measure of large American companies in the investing world. Silicon Valley Bank and First Republic were removed from the benchmark after deposit runs led to their government seizure. More changes may be coming, especially if the industry faces a protracted slump, according to analysts.
“It’s absolutely a risk,” Chris Marinac, research director at Janney Montgomery Scott, said in an interview. “If the market were to further change the valuation of these companies, especially if we have higher rates, I wouldn’t rule it out.”

Banks begin disclosing third-quarter results Friday, led by JPMorgan Chase. Investors are keen to hear how rising interest rates affected bond holdings and deposits in the period.
Companies that no longer qualify as large-cap stocks are at heightened risk of demotion from the S&P 500. There were seven members valued at $6 billion or less at the end of August. Two of them were removed the following month: insurer Lincoln National and consumer firm Newell Brands.

Those that join the benchmark often celebrate the milestone. The popularity of mutual funds and ETFs based on the index means that new members typically see an immediate boost to their stock price. Those that get demoted can suffer declines as fewer money managers need to own shares in the companies.

S&P guidelines

To be considered for inclusion in the S&P 500, companies need to have a market capitalization of at least $14.5 billion and meet profitability and trading standards.
Members that violate “one or more of the eligibility criteria for the S&P Composite 1500 may be deleted from the respective component index at the Index Committee’s discretion,” according to S&P Dow Jones Indices’ methodology.
Still, that doesn’t mean Zions or Comerica are on the cusp of a delisting. The committee that decides the composition of the S&P 500 looks to minimize churn and accurately represent reference sectors, making changes only when “ongoing conditions warrant an index change,” according to S&P.

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Shares of regional banks ZIons and Comerica have tumbled this year.

For instance, after the onset of the Covid pandemic in March 2020, many retail S&P 500 companies temporarily violated the profitability rule, but that didn’t result in widespread demotions, according to a person who has studied the S&P 500 index.
S&P Dow Jones Indices declined to comment for this article, as did Comerica. Zion’s didn’t immediately return a message seeking comment.
Besides Zions and Comerica, KeyCorp and Citizens Financial are the only other S&P 500 banks with market caps below the threshold for inclusion in the index, according to an Aug. 31 Piper Sandler note. KeyCorp and Citizens, however, each have market caps of greater than $10 billion, making them less likely to be impacted than smaller banks.
After Blackstone became the first major alternative asset manager to join the S&P 500 last month, analysts said that peers including KKR and Apollo Global may be next, and they would likely replace other financial names. KKR and Apollo each have market capitalizations of greater than $50 billion.
“Perhaps more demotions of low-market cap financials are to come,” Wells Fargo analyst Finian O’Shea said in a Sept. 5 research note.
– CNBC’s Gabriel Cortes contributed to this article. More

Scott Sheffield, CEO of Pioneer Natural Resources.
Adam Jeffery | CNBC

Pioneer Natural Resources CEO Scott Sheffield said oil prices could move a lot higher if Iran gets involved in Hamas’ war on Israel.
“If Iran enters the war, we’re going to see much higher oil prices, obviously,” Sheffield said on CNBC’s “Squawk Box” Wednesday.

Iran is a major oil producer and key backer of Hamas, the Palestinian Islamist group designated by the U.S. as a terrorist organization. A wider conflict could pose a major threat to global crude supplies, which have been cut back by Saudi Arabia and Russia in recent months.
Brent crude traded slightly lower to $86.93 a barrel Wednesday, while the U.S. West Texas Intermediate (WTI) crude fell by 78 cents, or 0.91%, to $85.19. Brent and WTI had surged more than $3.50 on Monday on concern that the clash between Israel and Hamas could escalate into a broader conflict.

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U.S. West Texas Intermediate

“It’s going to be up to [Prime Minister Benjamin] Netanyahu, I believe. So depends on how much evidence he has that they’re behind it and whether or not he decides to do anything about it,” Sheffield said.
The death toll is rising in Israel as missiles rain down and hostilities head into the fifth day. The Israeli military said it is amassing troops near the Gaza Strip.
U.S. Secretary of State Antony Blinken, who is due to arrive in Israel on Thursday, said Sunday that it is not clear there was any involvement by Iran.
Exxon Mobil said Wednesday it agreed to buy shale rival Pioneer Natural Resources for $59.5 billion in an all-stock deal, or $253 per share. More

The Mobil logo and gas prices are displayed at a Mobil gas station on October 28, 2022 in Los Angeles, California.
Mario Tama | Getty Images

Check out the companies making headlines in premarket trading.
Plug Power — The battery stock added nearly 6% after the company projected a sharp rise in revenue by 2027 to roughly $6 billion, according to a regulatory filing.

Timken — Shares fell roughly 2% following a downgrade by Bank of America to underperform from neutral, with analyst Michael Feniger noting concern over inventories moving forward.
Take-Two Interactive — Take-Two Interactive Software rose around 1% after Raymond James upgraded the stock to outperform and expressed optimism about its near- and medium-term future. The firm cited a path to more consistent releases and reasonable valuation based on the company’s Grand Theft Auto 6 release soon.
DaVita, Novo Nordisk — Shares of the dialysis services provider sank 15% on the news of Ozempic’s effectiveness in Novo Nordisk’s kidney disease treatment study. Shares of Novo Nordisk added 3.1%.
Exxon Mobil, Pioneer Natural Resources – Shares of Exxon Mobil were lower by more than 1% premarket after the company agreed to buy Pioneer for nearly $60 billion, or $253 per share, in an all-stock merger. Meanwhile, Pioneer shares rose 2.5%. Exxon said production volume in the Permian Basin would more than double after the deal closes.
Humana — Shares dipped slightly after Humana said Bruce Broussard will step down as CEO in the second half of 2024.

Sherwin-Williams — Shares of the paint company fell less than 1% after the Serwin-Williams said Heidi G. Petz would assume the chief executive role beginning Jan. 1, 2024. Petz will also continue in her role as president after assuming CEO duties.
CSX — Shares added nearly 2% after an upgrade to overweight from JPMorgan. The firm said that CSX represents the “best near-term growth opportunity” among U.S. rail stocks.
Amgen — The biotech stock ticked up 0.6% following an upgrade to outperform from Leerink Partners, with analyst David Risinger highlighting long-term revenue potential of $19.3 billion. 
— CNBC’s Tanaya Macheel, Pia Singh and Michelle Fox contributed reporting More

“What we are saying is there is a recovery but it’s going to be gradual,” said Christine Peng, head of Greater China consumer sector at UBS. “Nowadays the consumption growth is still way below the pre-Covid level.”
UBS expects consumption growth to pick up to 5% or 6% toward the end of 2024, Peng said, noting there’s “no way” retail sales can go back to 9% in the near future due to low consumer confidence.
Chinese luxury spending at home and abroad in September was about 80% what it was in 2019, up from the 70% to 75% recovery seen in August, according to HSBC, citing Global Blue data for duty-free shopping.

A woman waits on her bicycle to cross an intersection outside a new shopping mall in Beijing, China, on Sept. 13, 2023.
Kevin Frayer | Getty Images News | Getty Images

BEIJING — China’s consumer spending still isn’t growing as fast as it did before the pandemic, analysts said.
Retail sales for the Sept. 29 to Oct. 5 holiday period rose by 9% from a year ago, according to state media reports of Ministry of Commerce data. The figures did not include Oct. 6, the final and eighth day of the Golden Week holiday.

While that marked a pickup in pace from August, the multi-year trend in retail sales indicates less than 3% growth a year since the start of the pandemic, according to estimates from Christine Peng, head of Greater China consumer sector at UBS.
“What we are saying is there is a recovery but it’s going to be gradual,” she told CNBC in a phone interview Tuesday. “Nowadays the consumption growth is still way below the pre-Covid level.”
China’s retail sales fell by 0.2% in 2022, according to official figures. Retail sales had grown by 8% in 2019.

Consumers have started to spend more money, but they still maintain a cautious attitude when it comes to how they are spending the money.

Christine Peng

UBS expects consumption growth to pick up to 5% or 6% toward the end of 2024, Peng said, noting there’s “no way” retail sales can go back to 9% in the near future due to low consumer confidence.
She also pointed to the impact of the property slump — since much of household wealth is in real estate — and a decline in government spending due to local debt troubles. Consumers remain uncertain about future income amid government regulatory tightening, she noted.

“Consumers have started to spend more money, but they still maintain a cautious attitude when it comes to how they are spending the money,” Peng said.
The long Chinese Golden Week holiday that ended last week saw domestic tourism rebound to around pre-pandemic levels. Overseas travel had yet to fully recover to 2019 levels.

Economic uncertainty contributed to Chinese residents’ preference to travel domestically, said Imke Wouters, partner at consulting firm Oliver Wyman. The firm surveyed more than 3,800 affluent Chinese consumers in September and found the “casual luxury shopper” was more cautious due to the economy.
However, Wouters said that when affluent consumers traveled domestically, a significant number chose Hainan. The tropical province is known for its duty-free shopping malls and natural scenery.
During the latest holiday, tourist visits to Hainan went up by 15% versus the peak year of 2021, Wouters pointed out.
China has sought in the last few years to build up Hainan as a duty-free shopping center. Prior to the pandemic, many Chinese had traveled to Europe and other countries to buy luxury goods.
Chinese luxury spending at home and abroad in September was about 80% what it was in 2019, up from the 70% to 75% recovery seen in August, according to HSBC, citing Global Blue data for duty-free shopping.
In the Asia-Pacific region, Chinese spending on luxury goods has already recovered to 2019 levels, the report said. But in continental Europe such spending is only about half of where it was prior to the pandemic, HSBC said.
In contrast, tourists from the U.S. and Middle East are spending about 250% more on luxury goods in Europe than they did prior to the pandemic, the report said.

Read more about China from CNBC Pro

Consumer spending has lagged China’s overall economic growth since the pandemic started in early 2020. The country ended its stringent Covid-19 restrictions in late 2022, but the economy’s initial recovery has slowed amid a real estate market decline and a drop in exports.
More recently, different parts of the vast economy have started to show a pickup in growth.
“Some casual dining restaurant chain[s] have been telling us that same-store sales [have] recovered to 90% of the 2019 level,” Peng said. She said that’s “a pretty meaningful acceleration” compared to the summer, when same-store sales were 70% to 80% of the 2019 level.

Peng said retailers selling toys and groceries have seen sales per store recover to 90% of the 2019 level, while sportswear brands saw about 20% to 30% sales growth versus the holiday last year.
Appliances and furniture sales were more muted, as were sales of premium products such as baijiu, Peng added. “Consumer spending has come back, but some of the categories that get exposure to corporate spending is not returning to the pre-Covid 2019 level.”
China is set to report September retail sales on Oct. 18, along with third-quarter GDP. More

Credit card interest rates and debt are at all-time highs.
Consumers used their cards to make more purchases amid pandemic-era inflation.
With some exceptions, there’s currently no federal cap on credit card interest.
Sen. Josh Hawley, R-Mo., introduced the Capping Credit Card Interest Rates Act in September. It would impose a maximum 18% interest rate.

Luis Alvarez | Digitalvision | Getty Images

Some lawmakers and regulators are calling for interest rate caps and lower fees on credit cards as debt levels march higher.
Total credit card debt topped $1 trillion in the second quarter of 2023 for the first time ever.

The average interest rate for all cardholders jumped to more than 21% in August, the highest on record, according to Federal Reserve data. Some cards — retail store cards, in particular — charge more than 30%, said Ted Rossman, industry analyst for CreditCards.com.
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Sen. Josh Hawley, R-Mo., introduced a bill in September to cap credit card rates — also known as the annual percentage rate, or APR — at 18%, citing “higher financial burdens” shouldered by working people.
The legislation, the Capping Credit Card Interest Rates Act, would also aim to prevent card companies from raising other fees to evade a cap.
Meanwhile, the Consumer Financial Protection Bureau proposed a rule earlier this year to slash fees for late credit card payments. One prong of the rule would lower fees for a missed payment to $8 from as much as $41.

In June, four senators — Sens. Richard Durbin, D-Ill.; Roger Marshall, R-Kan.; J.D. Vance, R-Ohio; and Peter Welch, D-Vt. — introduced the Credit Card Competition Act. That act aims to reduce merchant card transaction fees that may get passed on to consumers.

“I think some of the [political] lines are starting to blur a little bit, at least on credit card issues,” Rossman said.
However, it’s unclear if these measures will succeed.
For example, Democrats are “likely to embrace” Hawley’s bill since progressives have long favored a federal interest rate cap, Jaret Seiberg, analyst at Cowen Washington Research Group, wrote in a recent research note. But it likely doesn’t have enough support to overcome a filibuster in the Senate and is almost a nonstarter in the Republican-controlled House, he said.
“We do not see a path forward for legislation to cap credit card interest rates,” Seiberg said.
The CFPB is also embroiled in a legal fight before the Supreme Court that, depending on the outcome, has the potential to erase all agency rulemakings from the books.  

There’s virtually no federal cap on card rates

Americans have leaned more on credit cards to pay their bills as pandemic-era inflation raised prices on food, housing and other consumer items at the fastest pace in four decades.
Credit cards are the “most prevalent form of household debt,” and their use continues to spread, according to the Federal Reserve Bank of New York. There are 70 million more credit card accounts open now than in 2019, it said.
Rates have moved upward as the Federal Reserve has raised its benchmark interest rate to reduce inflation.
Credit card interest rates have predominantly remained below 36% due to “self-restraint” by banks, though that’s still “extremely high” for a credit card, said Lauren Saunders, associate director at the National Consumer Law Center.
However, current federal law generally doesn’t impose a ceiling on rates, she said.

I think some of the [political] lines are starting to blur a little bit, at least on credit card issues.

Ted Rossman
industry analyst for CreditCards.com

There are some exceptions: The Military Lending Act caps interest for active duty servicemembers and dependents at 36% for consumer credit. Federally chartered credit unions have an 18% limit.  
Past legislative proposals have also sought to slash interest rates. For example, Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y., introduced a measure in 2019 that would have capped rates at 15%.
Reps. Jesús “Chuy” García, D-Ill., and Glenn Grothman, R-Wis., proposed a 36% cap on consumer loans in 2021. Grothman plans to reintroduce the legislation next year, his office said.
“The 36% interest rate cap for active-duty servicemembers and their families has proven to be a highly effective measure in providing protection against predatory lending practices,” Grothman said in an email. “Why should we not extend these same protections to veterans and all Americans?”
The financial services industry remains largely opposed to imposing a ceiling.
Eight trade groups representing lenders such as banks and credit unions wrote a letter to Sen. Hawley in September, stating that his proposed cap would have adverse effects including restricting the availability of credit and eliminating or reducing popular card features such as cash back rewards.
Interest income accounts for 80% of company profits on credit cards, according to a 2022 study published by the Federal Reserve.

How to reduce your personal card rate to 0%

 Rossman’s general advice to consumers: Make your personal credit card rate 0%.
That means paying your bill in full and on time each month. Such customers don’t get charged interest, while those who carry a balance from month to month generally accrue interest charges.
That advice wouldn’t change, even if the rate were capped at 15% or 18%, for example, he said.
“[Such rates] would be better, but no picnic in my estimation,” Rossman said.

The average credit card balance is almost $6,000, according to TransUnion.
At 18% interest, cardholders with an average balance who make only the minimum monthly payment would be in debt for 206 months and make $7,575 in total interest expenses, according to Rossman. The latter figure doesn’t include payments toward principal.
“Minimum-payment math is brutal,” he said. “Your debt can drag on for decades.”
Join CNBC’s Financial Advisor Summit on Oct. 12, where we’ll talk with top advisors, investors, market experts, technologists and economists about what advisors can do now to position their clients for the best possible outcomes as we head into the last quarter of 2023 and face the unknown in 2024. Learn more and get your ticket today. More

A pedestrian walks past a display of Skechers shoes.
David Paul Morris | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Skechers — The shoe company gained 1.6% after UBS reiterated its buy rating on shares. UBS said Skechers’ brand and products “continue to resonate with global customers.”

Palantir Technologies — Shares of Palantir Technologies gained more than 1% after the data analytics and software company won a $250 million contract with the U.S. Army, working to develop artificial intelligence and machine-learning capabilities through 2026.
PepsiCo — The beverage giant gained nearly 2% after posting a third-quarter earnings beat Tuesday. The company reported an adjusted $2.25 per share on $23.45 billion in revenue, while analysts polled by LSEG, formerly known as Refinitiv, forecast earnings of $2.15 per share and revenue of $23.39 billion.
Solar companies — Shares of solar companies rallied Tuesday, putting the Invesco Solar ETF (TAN) on pace for its best day since March 21. SolarEdge added 4.8% and First Solar rose 5.4%. Sustainability-focused real estate investment trust Hannon Armstrong advanced 9.8%, bolstered by Baird saying the stock could have 81% upside.
Electronic Arts — Shares of the video game publisher rose 2.8% after Bank of America upgraded Electronic Arts to buy from neutral. The investment firm said the rebrand of EA’s FIFA franchise is going well, creating upside for the stock.
Defense stocks — L3Harris Technologies and Northrop Grumman both pulled back greater than 1% Tuesday. The defense and aerospace companies rose Monday after the Israel-Hamas war began over the weekend. 

Rivian — Shares of the electric vehicle manufacturer rose 4.5% after UBS upgraded the stock to buy from neutral. Analyst Joseph Spak said a recent sell-off has opened up an attractive entry point for investors.
Truist Financial — Shares jumped more than 6%. Late Monday, Semafor, citing people familiar, reported that Truist is in talks to sell its insurance brokerage business to private equity firm Stone Point in a $10 billion deal.
Block — Shares added 5.2% after Bank of America reiterated its buy rating on the payments stock. Analyst Jason Kupferberg cited the stock’s currently cheap valuation and strong fundamentals as catalysts for potential upside.
Akero Therapeutics — Shares of the biotechnology company tumbled 62.6% after its cirrhosis drug efruxifermin failed to meet a primary benchmark during its Phase 2B study.
Unity Software — The video game software company added nearly 1.1%. Late Monday, the company announced that John Riccitiello is retiring as CEO of Unity and will no longer be on its board. The move follows a controversial pricing change Unity announced in September. James Whitehurst will become Unity’s interim CEO.
Arm Holdings — Shares added 2.7% a day after several bullish calls on the stock. Deutsche Bank and JPMorgan were among the firms that initiated coverage of Arm Holdings with buy ratings Monday. The firms were positive on the semiconductor’s revenue growth.
Ameris Bancorp — Shares of Ameris rose 2.3% after D.A. Davidson upgraded the stock to buy from neutral. The firm said capital levels are healthy and appear well-shielded from unrealized losses tied to rising rates. D.A. Davidson also hiked its price target by $1 to $44 per share, implying about 15% upside from Monday’s close.
— CNBC’s Pia Singh, Tanaya Macheel, Jesse Pound, Michelle Fox, Lisa Kailai Han and Samantha Subin contributed reporting. More

“Consumption is the sole end and purpose of all production,” Adam Smith pointed out. But his “perfectly self-evident” maxim has never held much sway in China. Earlier this year the country’s statisticians revealed that household consumption accounted for only 37% of China’s gdp in 2022, its lowest since 2014.Although removing strict covid-19 controls should have helped lift that percentage a bit, improvements in Chinese data analysis could lift it rather more. China’s headline statistics may understate both household income and consumption. Look closer and both appear higher than often reported—and both have risen faster.For almost two decades, Chinese policymakers have sought to “rebalance” the economy from exports and investment towards spending on more immediate gratifications. “We will work to restore and expand consumption…and increase personal income through multiple channels,” the finance ministry declared in this year’s budget, for example. Yet progress has been slow. In recent years, the imf has graded China’s efforts on a colour-coded “rebalancing scorecard”. The latest card, published in February, was mostly red.Advocates of rebalancing typically identify two problems. First, Chinese households save a lot of their income; second, their income is too small a slice of the national cake. The second problem features prominently in the arguments of Michael Pettis, an influential professor at Peking University. In the West, he has noted, household income typically represents 70-80% of gdp. In China, by contrast, it is only 55%. Rebalancing, he has argued, will necessarily involve shifting wealth and therefore power to ordinary people.Indeed, some analysts now wonder if Xi Jinping, China’s leader, has soured on the goal altogether. For him, the end and purpose of Chinese production is not limited to consumption—it includes aims like making China a resilient power, less dependent on “chokehold” technologies dominated by the West. As a young man, he was “repulsed by the all-encompassing commercialisation of Chinese society”, according to the leaked account of a professor who knew him in the 1970s and 1980s.But although Mr Xi is no fervent champion of rebalancing, his scorecard may be better than commonly thought. Economists have long believed that China’s figures understate household earning and spending. Surveys probably fail to capture the unreported “grey” income of the wealthy. And the national accounts probably still underestimate the implicit “rent” that homeowners pay themselves when they live in property they own.Less well known are the struggles of China’s statisticians to account for goods and services that governments provide to individuals at little or no cost. These transfers include education and health care, such as reimbursements for medicines. They also encompass cultural amenities and subsidised food. Zhu Hongshen of the University of Virginia has highlighted community canteens, often housed in state-owned buildings but operated by private contractors, which provide tasty dishes, such as oyster mushroom or spicy cucumber, at heavily discounted prices.According to international standards, these goodies should appear in the official statistics as “social transfers in kind” (sometimes abbreviated to stik). They can then be added to household income and consumption to provide a fuller “adjusted” picture. “In principle, social transfers should be included in a complete definition of income”, argued an international team of experts known as the Canberra Group in 2001, although they recognised it is not straightforward to do in practice.image: The EconomistChina in particular has struggled. In the past, it has not reported them cleanly or separately, shovelling them into other parts of the national accounts, including government consumption. If these transfers are ignored, then the disposable income of China’s households was only 62% of national income in 2020 (and as low as 56% in 2010). This seems strikingly low, as Mr Pettis has argued. But that is partly because of everything it leaves out. If social transfers in kind are also stripped out of the disposable income of other countries, their numbers look more like China’s. The figure for the euro area would be less than 64% in 2020 (see chart 1). By this measure, a dozen European countries had a smaller income share than China.Fortunately, China’s statisticians can now do better. In the past few years, they have begun publishing figures for social transfers in kind in their annual statistical yearbooks, Mr Zhu has pointed out. They amounted to 6.8trn yuan ($1trn, or almost 7% of national income) in 2020, larger, as a share of gdp, than America’s. That has allowed China’s National Bureau of Statistics to publish an “adjusted” figure for disposable income that makes international comparisons with oecd countries easier.image: The EconomistAdding these social transfers in kind raises China’s share of household income to 69% of national income, placing it near the bottom of the pack, but not at the very bottom. Moreover, since they have grown faster than the economy over the past decade, they make Mr Xi’s rebalancing record more promising. Household consumption, including these transfers, increased from 39% of gdp in 2010 to 45% in 2019 before the pandemic struck (see chart 2).These revisions do make government consumption look weaker. And China’s social transfers in kind, as a share of national income, are still not high compared with the oecd average. There is thus scope to raise them. If Mr Xi objects to the commercialisation of Chinese society or idleness-breeding cash handouts, the state could instead provide more of the things that he thinks his citizens should be consuming. That would be a way for Mr Xi to rebalance towards consumption without reconciling himself to consumerism. ■ More