Free exchange--The mop that never stops 

How China revived and recast its economy at the same time 

经济学人10月刊

Suppose, for example, that workers in every generation plough a portion of their income into an intrinsically useless asset, such as an empty flat, which they plan to sell when they retire. Because every cohort has the same plan, each will find buyers among their descendants for the asset they bought from their forefathers. Since another generation is “always coming along”, as Samuelson put it, this chain need never break.

Plough=plow n （农机）犁或是像犁一样的工具 v用犁耕地

Intrinsically /ɪnˈtrɪnzɪkli; ɪnˈtrɪnsɪkli/ adv. 本质地；内在地；固有地

cohort /ˈkəʊhɔːt/  n. 一群；步兵大队；支持者；同生群

If the economy is growing, each generation will have more income to spend on the asset than the one preceding it. That will allow the seller to earn a positive return. And if the economy’s growth rate exceeds the interest rate, this return will be higher than what other saving vehicles, such as bank deposits, can offer. This condition, known as dynamic inefficiency , was once thought to be rare. But in an era of near-zero interest rates, it has come to seem almost familiar. China’s dynamic inefficiency was documented in 2006 by economists at the Hong Kong Monetary Authority and has been confirmed by subsequent studies.

dynamic inefficiency：动态无效率（经济学术语）根据百科、学术、知网等文章，直观来讲，资本过度累积，高于其均衡水平，这种现象被称为动态无效率。这表明老百姓存的钱太多，可以通过适当的措施，比如发现国债等提高现在和未来的消费水平。止于这种无效率为何产生，目前up主没有查到。文中解释是当经济增长率超过利率时，房产投资的回报要高于储蓄所得回报，这种情况被称为流动无效率。

It may be that China’s interest rate understates the true return on capital in the country, thanks to lingering financial repression. But even so, a long-lasting bubble could arise, according to a 2014 paper by Kaiji Chen of Emory University and Yi Wen of the Federal Reserve Bank of St Louis. In their model, private capital earns impressive returns for as long as it can profit from cheap labour migrating from fields to factories and from state-owned enterprises to private firms. That gives entrepreneurs the financial means to venture large sums in the property market. At the same time, they know that the profitability of their businesses will eventually decline as labour becomes scarce. That gives them the motive to diversify their wealth into other stores of value, such as property.

lingering  adj. /ˈlɪŋɡərɪŋ/  拖延的；缠绵的；缓慢消失的；迟迟不去的 • a painful and lingering death 痛苦而拖延时日的死亡

In this scenario, property prices will keep pace with the rate of return to entrepreneurial capital, which is even higher than the growth rate of the economy as a whole. Then, as workers become harder to find, the returns to capital and to property steadily diminish in tandem. The later chapters of Mr Orlik’s book explain how China managed this slowdown. It entered 2016 in a shaky state. Real-estate developers held daunting inventories of unsold flats and owed similarly daunting sums to shadow lenders. China also suffered from overcapacity in allied industries, such as steel, which threatened to plunge the economy into deflation.

entrepreneurial capital：企业资本     tandem  n. /ˈtændəm/ 双座自行车；双人自行车

IN ˈTANDEM (WITH SB/STH) 并行；并驾齐驱；同时实行

Daunting  /ˈdɔːntɪŋ/  adj. 使人畏缩的；使人气馁的；令人怯步的

Plunge··into··（用力的）投入、跳入       Deflation  n.通货紧缩；放气

shadow lender 相当于shadow bank 影子银行，指游离于银行监管体系之外、可能引发系统性风险和监管套利等问题的信用中介体系(包括各类相关机构和业务活动)。影子银行引发系统性风险的因素主要包括四个方面:期限错配、流动性转换、信用转换和高杠杆。比如民间借贷，暴雷的P2P信贷等

How did China cope? The answer is what you might call the five r’s: reflating and remixing the economy, as well as refinancing, rotating and writing off assets and liabilities. China remixed the composition of activity without reducing its pace, spending less on new mines and steel plants, and more on infrastructure. Projects financed with short-term high-interest bank loans were refinanced with low-yielding bonds issued by provincial governments. Some debt rotated from overstretched developers onto the cleaner balance-sheets of households who were given easier access to mortgages.

reflate  v. /ˌriːˈfleɪt/ (经 ) 通货再膨胀，通货复胀（增加货币供应以刺激对商品等的需求）

Write-off：取消，注销，勾销

Overstretched  /ˌəʊvəˈstretʃt/ v. （使）勉强维持；过度伸展；对……需求过分（overstretch 的过去式及过去分词） adj. 超出承受能力的；缺少（资金、人力等）的

mortgage /ˈmɔːɡɪdʒ/ 1.房屋抵押贷款 •an increase in mortgage rates. 房屋抵押贷款利率的上升。2. 抵押 •They had to mortgage their home to pay the bills. 他们不得不抵押他们的房子来还账。

Clean-up operation

China also wrote off bad loans (including shadow loans) and many physical assets. Old mines were closed. Slums were cleared. Displaced households were given money to help buy newer flats. These efforts were often financed by targeted loans from the central bank. The clearances, closures and write-offs reduced the economy’s stock of wealth, but did not interrupt the flow of fresh activity. Indeed, the combination of new money injected into the economy and old capacity removed from it lifted prices and quickened the growth of nominal GDP. That restored the gap between growth and interest rates, making debt levels easier to sustain.

Slum /slʌm/，贫民区，棚户区

Displaced household：无家可归的家庭，这里指拆迁户

This clean-up took advantage of some of China’s unusual strengths, including the reach of its regulators and the flexibility of its labour force. When the mix of activity changed, workers followed suit. But it also conformed to some economic principles that could apply anywhere. The deflationary pressure China faced in this dangerous period showed that there was room to stimulate the economy. And because interest rates were lower than growth rates, it could afford to roll over any liabilities it dared not write off.

roll over：翻滚；转存；延缓付款

Will China never pop? Safer to say there is little it cannot mop.

译文

Suppose, for example, that workers in every generation plough a portion of their income into an intrinsically useless asset, such as an empty flat, which they plan to sell when they retire. Because every cohort has the same plan, each will find buyers among their descendants for the asset they bought from their forefathers. Since another generation is “always coming along”, as Samuelson put it, this chain need never break.

举个例子，假设每一代工人都将自己收入的一部分投资在本质上没啥用的资产上，例如准备退休就卖的空房。因为每群人计划一致，将从祖先买下来的房子卖给后代。由于“下一代”源源不断，Samuelson说道，这链条将永远不会断掉。

If the economy is growing, each generation will have more income to spend on the asset than the one preceding it. That will allow the seller to earn a positive return. And if the economy’s growth rate exceeds the interest rate, this return will be higher than what other saving vehicles, such as bank deposits, can offer. This condition, known as dynamic inefficiency , was once thought to be rare. But in an era of near-zero interest rates, it has come to seem almost familiar. China’s dynamic inefficiency was documented in 2006 by economists at the Hong Kong Monetary Authority and has been confirmed by subsequent studies.

如果经济增长，每一代比上一代都有更多的钱投在这项资产上。这会让卖家获得正向回报（盈利）。但如果经济增长率超过利率，这项投资会比银行利率工具如储蓄利率回报高。这种情况，被称作“动态无效率”，同时被认为是比较少见的。但在接近零利率的今天，这种现象越来越普遍。2006年香港金融管理局的经济学家们第一次记录了中国的经济动态无效率，并被接下来的研究证实。

It may be that China’s interest rate understates the true return on capital in the country, thanks to lingering financial repression. But even so, a long-lasting bubble could arise, according to a 2014 paper by Kaiji Chen of Emory University and Yi Wen of the Federal Reserve Bank of St Louis. In their model, private capital earns impressive returns for as long as it can profit from cheap labour migrating from fields to factories and from state-owned enterprises to private firms. That gives entrepreneurs the financial means to venture large sums in the property market. At the same time, they know that the profitability of their businesses will eventually decline as labour becomes scarce. That gives them the motive to diversify their wealth into other stores of value, such as property.

因为持续的金融管制，有可能中国的利率并不能反映国家真实的资本回报率。但即使这样，根据2014年埃默里大学Kaiji Chen和圣路易斯联邦储蓄银行的Yi Wen的论文，一个长期持续的泡沫也可能出现。在他们的模型中，私人资本将获得可观的回报，只要他们能从农村转移到工厂的廉价劳动力中获利，或者从国企转型成私企中获利。这些为企业家们提供了金融手段，在房地产市场上进行大量风险投资。但同时他们知道自己的企业回报率最终会降低，因为劳动力会短缺。这些激励着企业对自己的财富多样化，比如房地产进行储值。

In this scenario, property prices will keep pace with the rate of return to entrepreneurial capital, which is even higher than the growth rate of the economy as a whole. Then, as workers become harder to find, the returns to capital and to property steadily diminish in tandem. The later chapters of Mr Orlik’s book explain how China managed this slowdown. It entered 2016 in a shaky state. Real-estate developers held daunting inventories of unsold flats and owed similarly daunting sums to shadow lenders. China also suffered from overcapacity in allied industries, such as steel, which threatened to plunge the economy into deflation.

在这种模式下，房地产价格会与企业资本的投资回报率同步，总体会比经济增长率高一些。随着人工短缺，资本回报率和房地产回报率也会协同降低。Orlik先生书的后几章解释说明了中国如何处理这种经济放缓。进入2016年，中国进入经济动荡时期，房地产开发商拥有让人畏惧数量的未售房产库存，欠了影子银行无法计数的贷款。同时还遭受重工业产能过剩的危机，比如钢铁，时刻准备将国家拉入通货紧缩的陷阱。

How did China cope? The answer is what you might call the five r’s: reflating and remixing the economy, as well as refinancing, rotating and writing off assets and liabilities. China remixed the composition of activity without reducing its pace, spending less on new mines and steel plants, and more on infrastructure. Projects financed with short-term high-interest bank loans were refinanced with low-yielding bonds issued by provincial governments. Some debt rotated from overstretched developers onto the cleaner balance-sheets of households who were given easier access to mortgages.

中国如何克服的？答案是5R：reflating（再通胀）并remixing（重组经济）、refinancing（重新融资发新债）、rotating（经济再轮转）及writing-off（注销资产与债务）。中国快速的重组了经济活动，减少煤炭、钢铁工业的投资，转而大量投入基础设施建设。银行高贷款利率的贷款被省政府发行低收益债券再融资。一些负债由不堪重负的开发商转移到债务清白的家庭，其抵押融资渠道变得更加容易。

Clean-up operation

China also wrote off bad loans (including shadow loans) and many physical assets. Old mines were closed. Slums were cleared. Displaced households were given money to help buy newer flats. These efforts were often financed by targeted loans from the central bank. The clearances, closures and write-offs reduced the economy’s stock of wealth, but did not interrupt the flow of fresh activity. Indeed, the combination of new money injected into the economy and old capacity removed from it lifted prices and quickened the growth of nominal GDP. That restored the gap between growth and interest rates, making debt levels easier to sustain.

中国也注销了不良贷款（包括影子贷款）和许多实体资产。老煤矿关闭、拆迁棚户区。拆迁的家庭获得补偿购买新的房子。这些经济活动主要由中央银行支持，提供特定贷款。这一套清除、关闭和注销措施减少了中国财富的存量，但却没有中断新经济活动的流动性。实话实说，给经济注入新资金和拔出旧产能的组合，抬高价格并加速了名义GDP的增长。该举措恢复了经济增长率与利率之间的差距，使得债务水平得以更容易持续。

This clean-up took advantage of some of China’s unusual strengths, including the reach of its regulators and the flexibility of its labour force. When the mix of activity changed, workers followed suit. But it also conformed to some economic principles that could apply anywhere. The deflationary pressure China faced in this dangerous period showed that there was room to stimulate the economy. And because interest rates were lower than growth rates, it could afford to roll over any liabilities it dared not write off.

这项整顿措施利用了不少中国的特有优势，包括监管者的可覆盖范围及劳动力的灵活性。当经济重组措施改变，其劳动力紧跟其后。但他也面临一些放之四海而皆准的经济规则。通货紧缩压力下的中国在疫情这危险期间的表现表明她还有刺激经济的余地。也因为其利率小于经济增长率，她可以玩转所有不敢注销的债务。

Will China never pop? Safer to say there is little it cannot mop.

中国经济泡沫永不破？更准确的说法应该是没有中国不能清扫的。