Short China

I can understand why people are short China, perhaps they're even in the right. But being here I couldn't care less about the figures.

The Chinese, some of them, are the sort of people you hope will succeed.

They're the type of people that devour an entire book in one sitting to keep from paying; and that strikes me as the important bit.

Yes, numbers aren't looking good, but then they shouldn't be; the economy isn't good and there's a leadership transition to consider.

I imagine leadership transitions are always a slow time of sorts for China relative to others. If I were an empiricist, I'd bother to read some graphs and figure out for sure. But, then we'd have to agree to trust the data or on some means of adjusting it.

So, I'll make an argument from axioms instead. The leadership in power is only maintained in power by delivering a mix of public and private goods to their selectorate. China has a huge selectorate; hence it's success despite the form of government. Because of the large size, a significant amount of the leadership's bid comes in the form of quasi-public goods like 4,000 rmb pensions for Civil Servants. But another significant form of private good is access to cheap money.

During a leadership transition that access dries up. The old leadership is transitioning from authority to power; they don't need to bribe people to govern, they just need to bribe enough people to maintain influence. So, they allow the crusaders at the People's Bank of China to tighten oversight. This makes cheap money a hard thing to find or force.

But the new leadership will have to turn on the spigot anew, as surely as the Emperor prays to Heaven for his rice.