u/Virtual-Alps-2888

This is an interesting article by Huang Yasheng. It critically points out a difference between absolute and comparative advantage, showing that the latter is the basis for healthy trade while the former is the basis for global destabilisation of trade.

Two relevant paragraphs for those too lazy to read:

> This is not a side effect of an aging population or of automation but it is deeply rooted in the nature of its economic system and its political economy. It is where the capital-cost advantage and the labor-cost advantage turn out to come from the same source. When workers are paid less than the value of what they produce, the difference does not disappear. It goes to the other parts of the economy. Some of it goes to the government, whose share of the national wage bill has roughly doubled since the 1980s. The rest goes to the capital sector, enabling corporations and capital providers to make and to fund large-scale investment projects, build factories and power stations, invest in AI technologies and solar panels, and create an infrastructure the rest of the world envies.

And:

> There is an old idea behind this. Karl Marx argued that capitalism would squeeze workers so hard that they could no longer afford to buy what they made. He turned out to be wrong about market economies, and Henry Ford explained why back in 1922: the owner, the worker, and the customer are ultimately the same people, so a business that underpays its workers ends up destroying its own market. **A free market, left alone, has reason not to squeeze labor too far. It takes a state to override that logic and hold wages down on purpose. That is what China has done. In effect it has built the kind of economy Marx feared, and it has done so deliberately.**

Boldened words mine.

Great open-source article on Chinese animals and the economics of rearing them across centuries in Xi An.

I’ll preface I don’t believe in this concept, at least not how it is defined (or not defined) in modern soft-nationalist parlance.

But, if you think a eunuch bro (sis?) during the Tang has a lot of civilisational similarities with you as a Chinese person, that’s cool by me, we can agree to disagree.

But while the civilisationists want to debate how much Li Chengcian is actually sooo Chinese despite his Turkiphilia, *I want to know what kind of food Chang‘an has as a city.* Where did they source them from? were there vegans? How did the Chinese perceive these vegans?

what about Wang Mang and his abolition of slavery? Was he a liberal? Or were there political-economic calculations behind that decision?

what did the Song Chinese think of gunpowder? Did they fear it like how we fear AI? were there Song Dynasty criminal cases where a naughty grandson tried setting off fireworks in his grandma’s knickers?

What about Ming scholar officials as they toured the country? Did they make snide remarks about local country bumpkins? What was the city-rural divide like?

and money… on a scale of 1-10, how angry were border officials with Mongols when they traded horses with the hapless Chinese? Were there refund policies?

what about princess stories? Do we have written accounts of sad princesses who were homesick when they had to *heqin* with other kings during the warring state period? (Who cares who united who, people love princess stories)

Time to tell these stories, because at least Western history does these things: folklore, ecological history, legal history, changing culture and values over time (how to do this last bit, if your goal as a historian is just to show continuity?)

Surely, out of all these ideas, civilisational continuity has to be the most sleepworthy and uninteresting.

The key point of this article, which lamentably was not developed further, is the “officializing” of shadow banking debt. The transfer of these hidden debt onto official balances sheets may solve the issue of transparent figures, but it only reveals the hidden economic problem rather than solve it. 

The fundamental problem leading to such massive debt is twofold. (1) excessively high GDP targets set by the central government (2) a managed economy that operates on soft budget constraints, rather than hard budget constraints. 

Interesting that Chinese economists agree that massive persistent trade surpluses are not strength but economic weakness. Chinese economists have suggested reducing tax rebates on exports, and redirecting the capital to household incomes.

This is broadly in line with Western economists call for China to boost consumption and stop engaging in disruptive trade practices where subsidized Chinese industries swallow market share instead of more productive firms.

This directly contradicts the narrative that trade surplus/deficit is a matter of 'winning' or 'losing' a trade war in the mercantilist sense where technological superiority or superiority in economic scaling leads to an edge over deficit countries. The truth is - as Setser and Pettis have argued - persistent and large surpluses and deficits both cause economic pain.

Very interesting article on the fiscal stability of the Chinese economy. The good news is that much local government hidden debt is now 'financially cleaned-up' by repositioning them within official balance sheets. Economic data on Chinese debt is now much clearer.

The obvious problem is that this transfers a massive amount of debt onto local govt official balance sheets. Some of the local govt strategies are interesting. From the source:

• Some LGFVs have issued bonds with interest reaching double digits
• Others like Hubei and Hunan securitize state-owned assets (e.g. bridge underpass spaces or reservoir silt) and selling them to raise cash.

The second one is interesting. Although the article doesn't state it, Michael Pettis observed that selling assets to finance the very things that cause Chinese debt to exponentially increase to begin with, is a very unwise thing to do.