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Another good article by Zhou Xin. A few years ago China analysts were hotly arguing over whether or not urbanization could drive economic growth.

We are now seeing that while anticipating urbanization can cause economic activity in the short term, it...

scmp.com/economy/china-…
...does not cause economic growth, although most economists still have a very hard time distinguishing between the two. Urbanization is actually a cost, not a source of growth, and it is only economically justified if there are jobs in the city that cause an increase in...
...productivity that exceeds the cost of urbanizing workers. Just building a lot of apartments, roads and subways may have made sense when the productive demand for workers was very high, but it never made sense as a way to create productive demand for workers.
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More from @michaelxpettis see all

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Michael Pettis
@michaelxpettis
1/8
Very good article, Keith, but while I agree that part of the reason for the surge in China’s exports may have to do with its having emerged first from C-19, and because “families all over the world are sprucing up the homes they are now stuck inside...buying everything...
2/8
from computer screens and stereo systems to power tools and home saunas – many of which are made in China”, this doesn't at all explain what I think may be the more important story, which is China’s soaring trade surplus.

After all if Chinese exports are doing fine, the...
3/8
resulting foreign income should also drive higher Chinese imports, unless there were policy distortions preventing the two from moving in line with each other.

And there are. The imbalance between imports and exports is systemic, and cannot simply reflect strong foreign...
Read 8 tweets
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Michael Pettis
@michaelxpettis
1/-

And the fourth quote from Marriner Eccle's 1939 speech:

“It may be, of course, that an epoch-making discovery is just around the corner that will result in a greatly increased flow of investment. It may even be that private capital will suddenly...

fraser.stlouisfed.org/title/statemen…
2/-

and spontaneously begin to flow in greater volume than it ever has before. I feel strongly, however, that even if that should happen, the only safe course for the nation to pursue is, while hoping for the best, to plan for the worst. There is nothing to be lost by this...
3/-

course of action. If it should develop that our labor is practically all employed, our income restored, and Government is competing with private business for labor, then the Government could and should promptly curtail its investment operations. There will be nothing...
Read 4 tweets
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Michael Pettis
@michaelxpettis
1/-

The third quote from Marriner Eccle's 1939 speech:

“Perhaps the most important single step that can be taken now to increase the purchasing power of consumers and thus to diminish the need for investment outlets is to revamp our present old-age...

fraser.stlouisfed.org/title/statemen…
2/-

insurance program… This system needs to be so revised as to provide a reasonable pension to old people immediately, regardless of whether or not they have contributed to the fund. This would not only meet a great social need and popular demand, but would also be...
3/-

a sound economic measure at this stage in our economic life.”
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