Profile picture
, 4 tweets, 1 min read
My Authors
Read all threads
According to this article, “previous attempts to reform the [state-owned] sector have failed to make long-term improvements in efficiency.” We have been debating the effect of these reforms on productivity for well over a decade. The reason there...

scmp.com/economy/china-…
...cannot be long-term improvements in state-sector efficiency is because the purpose of the state sector is to allow the country to deliver GDP growth rates that exceed the productive growth rate of the real Chinese economy.

The state sector can only do this by engaging in...
...activities that the private sector finds unproductive. But if the whole purpose of the state sector is to boost economic activity by engaging in non-productive behavior, it is pretty meaningless to discuss what kinds of state-sector reforms will result in greater...
...efficiency. The performance of the state sector isn't driven by economic efficiency. It is driven by economic activity, most of which is inherently inefficient.

ft.com/content/907740…
Missing some Tweet in this thread? You can try to force a refresh.

Keep Current with Michael Pettis

Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

More from @michaelxpettis see all

Profile picture
Michael Pettis
@michaelxpettis
The fact that Zhou Li, a former deputy director of Beijing’s International Liaison Department, is complaining about the “unprecedented” coronavirus stimulus in the United States shows just how confused many – if not most – Chinese officials are about...
scmp.com/economy/china-…
...the role of an international currency and why, for all their talk, CNY will not become a major currency. China’s response to the huge demand shock imposed by Covid-19 has been mostly in the form of supply-side stimuli. This cannot possibly work except to the extent that...
...China can take advantage of demand-side stimuli abroad by rapidly increasing its trade surplus (which has been soaring since Q1). With the rest of the world buying USD assets, this mostly means that China’s recovery depends in part on a wider US trade deficit, which the...
Read 8 tweets
Profile picture
Michael Pettis
@michaelxpettis
This kind of economics is faith-based rather than logical. According to the Ayn Rand Institute, newly-created government money can only cause egg prices to rise: “Take eggs as the symbol. You can spend the newly created money to buy a dozen eggs, but...

newideal.aynrand.org/to-take-or-not…
...the government is not adding to the egg supply, only to the supply of dollars.”

This simply isn’t true. Consider the obvious case in which egg farmers are unable to sell all the eggs their hens lay because high levels of unemployment make it impossible for consumers to...
...buy them. Without sufficient demand, farmers have to destroy eggs or stop producing them. In that case, giving money to consumers to buy eggs increases both the demand for and supply of eggs, and so leaves everyone better off.

This isn’t to say that expanding the...
Read 7 tweets
Profile picture
Michael Pettis
@michaelxpettis
Yet another government official who thinks that changing the currency in which China conducts trade and parks excess savings is like changing the color of his shirt. If China stops buying dollars and starts selling, it must either allow its current...
scmp.com/economy/china-…
...account surplus to transform into a current account deficit, or it must find some other country willing to run the current account deficits which are currently absorbed by the US. It clearly cannot afford the first, it is unlikely to find the second, and there are no other...
...options. In the end it is more likely that the US will finally take steps to prevent foreigners from accumulating dollars than it is that China will choose to stop accumulating dollars.
Read 3 tweets

Embed code for your website

×
Follow Us on Twitter!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3.00/month or $30.00/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!