China: Borrowed TimeThe Chinese GeographyNorth has a wide broad plain

which took two millennia of civil wars to consolidate

Yellow River not navigableÞBeijing is the political/military capital

Yangtze is the only navigable river in the countryÞShanghai is the economic capital

South has good ports and is subtropicalÞGreatly retards northern controlÞEncourages foreign presence

China: Borrowed TimeGeopolitics Meets Development Policy• North: political unification• Yangtze: economic partnership• The Far South: military occupation• Everywhere: bribes

• Private capital pooled into state’s hands, which funnels it at sub-market rates to achieve national goals

• Maximize employment by maximizing firm size, market share and throughput at the cost of debt, profitability and return on capital

• Allows for endless bidding for inputs, while subsidizing price of outputs

China: Borrowed TimeGeopolitics Meets Financial Policy