Zhao Yanjing, Preface to The Great Rise

Zhao Yanjing, Preface to The Great Rise: China’s Economic Growth and Transformation[1]

Introduction and Translation by David Ownby

Introduction

Zhao Yanjing is a Professor of Urban Planning at Xiamen University and a feisty commentator on national and international affairs; I don’t know if he is famous or not, but I have translated several of his essays, not the least for their verve and wit – he clearly enjoys himself when he writes. The text translated here is the preface to his book which came out in January of 2023 (you can listen to a long and excellent interview with Zhao about his book here, in Chinese), and the book is the summary of the work he has done and the issues he has been thinking about over the course of his career.

The core ambition of the book is to pioneer a breakthrough in economic theory, based on the history and reality of China’s rise and on Zhao’s personal experience as an urban planner and a professor of urban planning. As a hands-on urban planner, Zhao was directly involved in the development of Shenzhen –something of a miracle in the history of urban planning – and of Xiamen, which I have not visited since the early 1980s, but which I imagine has been completely transformed by the efforts of Zhao and company. I am not completely competent to narrate what Zhao wants to say, because it has a lot to do with economic theory that I barely understand, but here is a simplified version (Zhao explains it perhaps a bit more clearly in this text, already translated).

In Zhao's view, China’s rise was basically created by local officials who used public land to create the capital to finance development. This was made possible by a series of measures taken by the central government beginning in the 1990s, with the purpose of financing local government (see the footnotes of this text if you need the details, or see here). Local officials used these measures to create a capital market: they sold (or leased – the details escape me) land to private developers, who built everything that China has become over the past 40 years – business, houses, factories. As development progressed, values went up, meaning that local government finances were the product of development, one leveraging the other. This gave local governments the power to direct development and to invest in the public services – water, schools, transportation, electricity, etc. – without which development cannot occur.

Chinese citizens who are not developers “bought in” to the process by buying houses, i.e., the property boom that had fueled Chinese development up until quite recently, a boom which involved not only housing, but everything you put in a house as well, or have delivered to a house, or use to repair a house. The housing boom created vast amounts of capital, as the credit accorded to the perceived increased future value of housing allowed China to bet on and invest in its future. Zhao’s central vision is that credit made China’s growth possible. China’s governments and businesses happily indebted themselves because they knew the future would make them good.

All of this was called into question by spiking housing prices – another, more negative, effect of the credit bubble Zhao describes – which squeezed consumers, particularly in China’s largest cities, where everyone wants to be, and by overbuilding, among other problems. The central government intervened essentially by imposing price controls and other measures designed to cool down the market.

For Zhao, this simply illustrated how out of touch the central government is; he basically portrays the central government as neoliberals, old farts who think that budgets have to be balanced and debts have to be paid, a vision which has little to do with what Zhao has witnessed in Shenzhen, Xiamen, and elsewhere, where credit and debt fueled miracles. His proposals, which were much talked about in China, were that the central government continue to bail out real estate (and local governments, if necessary) and at the same time, that the central government invest in public housing – instead of more airports or high speed trains – to help the millions of Chinese people who can’t afford an apartment now, a measure that would also slowly bring down housing prices in the private/luxury sector.

The purpose of Zhao’s book is to try to spell out his vision in larger terms. This may or may not work, but he is a smart guy, and I’m sure the book is interesting (you can get a Kindle version here; I bought it but it may be too theoretical for me). I hope it is an elaboration of what Huang Qifan sought to do in Chongqing with the Chongqing model, which no one seems to talk about since Bo Xilai’s fall from grace. Here, too, local officials were using debt and public finance to remake a city in ways that most Western governments cannot, because they are cash-poor and have to suck up to developers, not direct them. Zhao may be expanding on Henry George’s original vision – which inspired many at the time – of a world where public resources were managed for public and not private ends.

The preface is also interesting because Zhao tells at least part of his life story, illustrating how Chinese intellectuals navigate the world, which is pretty much the same way intellectuals do anywhere. You go to school, you get an idea, you change jobs, you write a book.

Given what appears to be happening with China's property markets today, it well may be objected that Zhao's ideas have come a tad too late, or that they describe a might-have-been world that exists only in the imaginations of urban planners. Stories like this one in today's New York Times tell the story in a more familiar way, and at some point, Zhao should address the widespread corruption and self-dealing the boom he champions has permitted. Perhaps he does at some point, I have not yet read his book. But at some level, it appears that Zhao may have committed the same error as those classical economists he castigates, that of spending too much time in the realm of pure theory.

Translation

The Academic Holy Grail

I struggled for a long time trying to decide on a title for this book, but ultimately chose The Great Rise: China’s Economic Growth and Transformation. My point was not to be showy, and the title is based on two things. The first is China’s lived reality. From the perspective of historical development, even if China's economy stops where it is now, the unprecedented scale of its growth earns it the name "great rise." The second is my faith, or confidence. I believe that having now entered this growth cycle, China's rise will not stop. Like the depressions that punctuated American’s rise over history, China's current difficulties are just a bump on the road in its own "great rise," and not the end of the journey.

Over the past four decades, China's economic growth has exceeded everyone's expectations, including those who were responsible for planning reform and opening.

"Abnormal" natural phenomena often lead to progress and even revolutions in the natural sciences, and the same is true for economic "abnormalities." China's economic growth is part of the explosion of human wealth that has occurred over the past few centuries, and the explanation of China's rise will inevitably become the "Holy Grail" pursued by scholars around the world (and not just economists).

As the economist Robert Lucas, Jr. (1935-2023) said of the growth problem: “The human welfare implications of these kinds of problems are so staggering that once you start thinking about them, it’s hard to think about anything else.”

To date, most explanations for China's economic growth are limited to the two black boxes of “reform” and “opening.” This suggests that China's growth is merely the inevitable result of the transition from a planned economy to a market economy, and that there is nothing special about it. After joining the WTO, all China did was to copy the success of Japan and the Four Asian Tigers on a larger scale. But this explanation cannot explain why those countries that implemented market economies and joined the WTO earlier than China did not achieve the same economic performance as China.

As a result, some people began to speculate that China's rise was just an "historical accident." Specious answers like this give people the illusion that growth is just common sense. The economist Steven N. S. Cheung (b. 1935) was the first to notice this problem. While many people had doubts about China's growth, he instead asked: "What has China done right?" But the answers and explanations he and other scholars gave for this, including "county-level competition 县域竞争," "fiscal federalism 财政联邦制," and "competitive promotions 晋升锦标" are all factors that need to be explained and not explanations in and of themselves.

We do not know whether China's growth is sustainable, nor can we see the opportunities and risks that China's growth may face in the future. Few scholars have realized that explaining China's growth may well be a key piece of the puzzle in cracking the growth code itself.

From Urban Planning to Economics

During the publishing process, my editor asked me: "What is the story behind this book?" In fact, many colleagues have asked me the same question, and everyone wonders how I became an academic. The answer to these questions, I came to realize, would provide the necessary context for readers to understand the organization of the book. I personally believe that the best way to learn any academic discipline is to trace its history, to see how the field has evolved. Similarly, before reading a book, you should first understand the historical context in which the book was written.

Thinking back to 1984, when I graduated from university as an architectural engineer, I could never have imagined that I would have spent so much time on the question of China’s growth. Looking back, this book is in fact just one "floating object" on the "great tide" of China's growth.
For me, as China's cities developed, they constantly ran into problems, and I constantly tried to solve these problems, and the result is this book.

My earliest contact with economic issues was in 1987 when I participated in the "Research on China's Urbanization Path," a joint project involving China’s National Science and Technology Commission and the American Western Center 美国西方中心.[2] Looking back now, I was very lucky to be able to participate in a high-level research project like this as a recent college graduate. The research results of the project were actually not particularly outstanding from today’s perspective, for the simple reason that China's urbanization level at that time was very low, even when compared with that of other developing countries. This meant that the level of research on China's urbanization was not very high, because there was little to study.

Through this project, nonetheless, I got to know many outstanding Chinese and American economists, including older ones such as Chen Jiyuan 陈吉元 (1934-2003) and Zhou Yixing 周一星 (b. 1941), and younger ones like Hu Biliang 胡必量. To write up the project results, I started to dabble in development economics, and was most impressed by the Sir Arthur Lewis’s (1915-1991), “dual sector model,” and by the national income model put forward by Simon Kuznets (1901-1985) and Hollis B. Chenery (1918-1994). The concept of "unlimited labor supply" – part of Lewis’s dual sector model - was also one of the most important features of the Chinese economy at that time.

Without World-Class Practice, There Can Be No World-Class Scholarship

What had the greatest impact on me during this period was Shenzhen, a miracle in the world history of city building. Whether in terms of the spatial structure of the city or the dynamics of its economic growth, Shenzhen broke through the rules of urban planning, and in so doing pushed China's urban planning to the forefront of the discipline worldwide. In the initial period, most of the important plans for Shenzhen’s development were drafted by the China Urban Planning and Design Institute, under the leadership of Zhou Ganzhi 周干峙 (1930-2014). As a member of this institute, I was fortunate to be deeply involved in the entire process of Shenzhen's rapid growth. For me, having been able to observe this process first-hand was an invaluable life experience, and Shenzhen's development model later became the main template for other cities in China.

It was also during this period that I began to read widely on the topic of institutions and growth, particularly the work of scholars such as Steven N.S. Cheung, Zhou Qiren 周其仁 (b. 1950), and Justin Yifu Lin 林毅夫 (b. 1952). Almost all my later research repeatedly returned to Shenzhen as a basic reference point.

Three intersecting experiences worked to shape my final academic direction. The first was my doctoral studies in the UK, the second was my stint as the director of the Xiamen Municipal Planning Bureau, and the third was teaching at Xiamen University. The first two experiences lasted for more than ten years, and added to my time at Xiamen University, which I joined in 2015, come to more than 25 years.

The first experience began in 1997 when I registered as a part-time, self-financed doctoral student at Cardiff University. In 2002, with the financial assistance of the China Urban Planning and Design Institute, I became a full-time doctoral student. By the time I defended my dissertation in 2009, 12 years had passed. The reason it took so long is because I actually wrote two theses. Before returning to China in 2004, my supervisor had already agreed that I could submit the first draft of my doctoral thesis. I joined the Xiamen Planning Bureau in the same year and kept rewriting my thesis on the basis of what I was learning in my work. By the time I submitted it again in 2009, it was already a new thesis, entitled "The Market Role of Government in the Process of Urbanization."

Although the program in which I completed my Ph.D. was “Urban and Regional Planning,” I was very fortunate to be working under the direction of Christopher Webster, one of the best professors in the UK in the field of planning and property rights. At the time, Professor Webster was Dean of the School of Architecture and Planning at Cardiff University, and he later became Dean of the School of Architecture at the University of Hong Kong.

An additional benefit of my extremely long Ph.D. experience is that it forced me to keep up with the various fields related to my work and to remain sensitive to the theoretical impact of the work I was doing on the ground. In fact, my academic focus continued to change throughout my Ph.D. studies, and the thesis I finally submitted was completely different from what I had planned when I enrolled. Fortunately, my advisor gave me almost unimaginable freedom in my research.

"Being in the Thick of Things"

My subsequent focus on land finance was due to my second experience - working in a government department. There are many academics who take advantage of the revolving door between research institutions and government agencies to change their career path, but not many can actually remain "in the thick of things." This is because the government is marked by a high division of labor, and there are only a few key departments that can truly grasp the entire picture. Where you are situated in this division of labor determines your depth of understanding and breadth of observation.

Two lucky things happened to me: first, I entered the local planning bureau; and second, I worked as the director of this planning bureau for 11 years. Before entering the government department, I thought that the Planning Bureau was just one of many government departments, but something later happened that changed my perception.

In 2005, a few months after I started working in the Xiamen Municipal Planning Bureau, a new secretary of the Xiamen Municipal Party Committee took office. In his first investigative tour of his new post, he decided to travel light and took with him only the leaders of four departments - the National Development and Reform Commission, the Finance Bureau, the Land Bureau, and the Planning Bureau. The Party secretary said that as long as there were no problems with these four departments, most projects would work out.

After this incident, I had a premonition that the role of the Planning Bureau in local government might be far more important than what I had originally thought. My later work experience completely confirmed this hunch. In an economy driven by land finance, the role of the local planning bureau is not that of the steering wheel that controls urban development as people usually think, but the very engine that drives urban growth! The Director of the Planning Bureau is the person in the position where he can observe urban development most directly, and I worked in this position for all of 11 years!

Urban planning work is complex and includes both the development of new cities and the renovation of old ones, dealing with issues of architectural style to the choice of the pipelines that pass under the roads…pretty much anything and everything you can imagine. But what is the core issue? The Party secretary told me that the Planning Bureau must control two municipal "high-voltage lines:" one is the floor area ratio,[3] and the other is land use.[4] This secretary has a doctorate in finance, and been director of a Finance Bureau, and had exceptional intuition about city operations.

The two points he raised immediately captured the core of land finance. He also required that the plan I submitted to the meeting have a rough input-output analysis. As a result, planning has been transformed, and its original function in project implementation now became project initiation. To this point, I had thought of urban planning as a typical science and engineering discipline—a lot of engineering and a little bit of economic geography.

It was while l was working in the Planning Department that I expanded my study of urban planning to include the field of economics. This was not simply because I had a thing for economics, but also because planning approvals happened to be at the core of land finance, and urban planning was unconsciously in the eye of the storm of the land finance debate. However, the number of planners and economists actually participating in this debate is totally disproportionate, with the latter far outnumbering the former. Some of the chapters in this book (e.g., Chapters 2 and 3) were shaped by this context.

"Staying out of Things"

The idea of trying to isolate the genes that caused the "mutation" leading to China's economic growth evolved as I was writing my doctoral thesis. But systematic work on a theory began when I entered Xiamen University in 2015. Xiamen University under President Zhu Chongshi 朱崇实(b. 1954) is one of the most liberal universities in China. There is no ranking by seniority, no pressure to publish papers, and teachers and students have the greatest academic freedom. Finding myself on the "outside" again has distanced me from the government, allowing me to reflect more objectively on a series of insights I developed while working in public service. The great domestic debate surrounding land finance made me realize that if the disputes cannot be resolved on the basis of economics and if I cannot generalize my insights, then my explanation of China's economic growth will not be convincing.

My doubts about neoclassical economics began early on, from reading articles by Ronald Coase (1910-2013), Xiaokai Yang (1948-2004) and others. During my Ph.D. studies in the UK, I encountered Hayek’s critique of neoclassical economics and Mark Blaug’s (1927-2100) history of economic thought, which further honed my thinking on the underlying issues. After moving to Xiamen University, I mainly focused on two projects: on the micro level, I expanded a paper - "Modification of Price Theory Based on the Coase Theorem" - based on the appendix of my doctoral thesis, turning it into Chapter 14 of this book; on the macro level, I proposed a two-stage growth model based on accounting identity[5] (Chapter 15 of this book).

The first project is based on the “Alchian-Allen effect,” which categorizes competition into "under-supply" and "over-supply" and replaces Marshall's "supply-demand equilibrium"-based competition with "Schumpeterian competition" (competition between optimal producers and suboptimal producers) and "Vickrey competition" (competition between optimal consumers and suboptimal consumers) - thus completely abandoning the "general equilibrium" system constructed by Léon Walrus (1834-1910).[6]

The second project basically involved reconstructing growth theory with the help of accounting identity. While working at the Xiamen Municipal Planning Bureau, the then Secretary of the Municipal Party Committee, in accordance with the principle of the "four balances" (local balance, tense balance, positive balance, and comprehensive balance)[7], achieved a balance of inputs and outputs by raising reasonable debt, “borrowing chickens to lay eggs,” and ensuring that development continued.
The idea of developing an urban economic theory based on finance has been lingering in my mind ever since.

Among the various branches of economics and management, accounting, which is closely integrated with practice, is one of the few disciplines that has not been "contaminated" by neoclassical general equilibrium theory. From balance sheets to accounting rules, from fluctuations in the capital cycle to the ebb and flow of currency values, the true logic of economic growth is hidden in accounting statements. From financial records, we can intuitively observe the economic evolution of countries, cities, companies and even families. The result of all these developments is real economic growth. Through the "clinical" window of accounting, we can observe the efficacy of policy prescriptions on the economy, thus helping economics to get out of its self-created "metaverse."

The Poverty of Theory

The explanation of China's economic growth will inevitably involve growth theory, so it is necessary to make a brief review of the progress of macroeconomics. In 1982, Robert Solow (b. 1924), one of the founders of neoclassical growth theory, wrote:

“I believe there are signs that (growth theory) is becoming active in a planned way, at least in its familiar form. Anyone working in the field of economic theory today knows in their bones that a good idea can change any discipline, and growth theory is a field that can change aspiring theorists."

Since then, however, economic theory has struggled to develop. Although one economist after another has won the Nobel Prize for proposing this or that macroeconomic theory, economics has done little to explain real economic growth.

In his article "The Dilemma of Macroeconomics," another Nobel Prize winner, Paul Romer (b. 1955), compared macroeconomic theory to a kind of physics which only works if "trolls, imps and ether (products of the physicists” imagination)" actually exist. Romer denounced macroeconomics as a science that has stagnated for 30 years; instead of improving, its ability to explain reality has deteriorated. The reason is not only because there are huge blind spots in economic theory itself, but also because the macroeconomic growth model itself has undergone tremendous changes in the past 30 years. The superposition of the two has caused what Romer calls "deterioration" of research in macroeconomics. What macroeconomics needs is not more models and parameters, but a return to common sense.

The reason why modern economics struggles to explain growth is because its underlying assumptions are seriously out of touch with the real world. Since Alfred Marshall (1842-1924) pioneered neoclassicism, modern economics entered a "metaverse" of "perfect competition-general equilibrium" constructed by these same economists. In this world, economists construct a logically consistent set of economic rules to play economic games, and then use this artificial "meta-universe" as a benchmark to measure real-world economic performance. The difference between the real world and the "metaverse" is attributed to the real economy having “deviated” from the ideal economy. The goal of economic policy is to achieve "potential" economic growth by eliminating this "deviation.”

On the surface, modern economics is very similar to modern medicine. It defines whether a person is "sick" by comparing various indicators of "healthy people." Once symptoms are discovered, medical intervention is used to restore the "patient" to "health." But the two are actually completely different. One major difference is that medicine’s definition of “health” is based on observations of existing healthy people, while the “metaverse” of economics is completely fabricated by economists. Although in their games, economists also simulate real-world "generals, soldiers, chariots, horses, and artillery," the games are doomed to deviate from reality from the beginning because the rules were self-created Only by repairing the underlying flaws in economics and extracting a growth model from the real world can we improve our understanding of the mechanism of economic growth.

The difficulties faced by growth theory lead us to suspect that there is something fundamentally wrong with modern economics (the neoclassical paradigm generally accepted and taught by professors in universities). Only by forgetting the "metaverse" that has penetrated into the marrow of modern economics can we find a new starting point for growth theory and reconstruct the benchmarks and framework of economic research. Only by finding this correct starting point can the truly great insights in neoclassical economics be translated from the "metaverse" to the real world. And this starting point is the financial account books from the real world.

Paradigm Shift

The shift from the neoclassical "supply-demand" paradigm to the "asset-liability" paradigm of accounting is a revolution in growth theory.

First, define an economy as a collection of business models. Secondly, use the production function (R-C=S) [Revenue – Costs = Surplus] proposed in Chapter 15 as the basic structure of all business models. Third, drawing on Marx’s surplus value formula to distinguish costs into fixed costs and variable costs, the two items of income and surplus are also expanded into capital income-operational income, and capital-type surplus-operational surplus respectively. The former corresponds to fixed costs, and the latter corresponds to variable costs. Finally, "revenue minus cost equals surplus" (R-C=S) is divided into two independent formulas to represent the two stages of each business model: capital growth (R0 - C0 = S0) and operational growth (Ri – Ci = Si). Compared with Solow's growth model, the two-stage growth model opens the black box of the growth mechanism, causing what we call "technological progress" to change from an explanatory variable to an explained variable.

Since the two equations in the two-stage growth model correspond exactly to the balance sheet and income statement in accounting, abstract growth problems can be transformed into intuitive financial problems. By basing growth theory on accounting theory, we can not only intuitively understand economic growth, but also predict economic recession in advance. Two-stage growth models, along with financial statements, can also be used to explain and analyze city growth or shrinkage.

According to the two-stage growth model, growth can be simply distinguished into traditional growth and modern growth - the former relies on past surplus to achieve capital accumulation; the latter relies on the discount of future earnings to complete capital accumulation. The capital discount formula R0 = kSi is the cornerstone of modern growth. This formula places "capital-credit" at the core of modern growth and explains why the capital market is not only the driving force of modern growth, but also the source of modern economic problems (crisis, cycles, wealth and poverty, unemployment...).

In traditional growth theory, money is irrelevant. In Chapter 15, money is regarded as an indispensable tool for capital discounting and division of labor, and therefore plays a key role in economic growth, and the quantity of money available has therefore become a key variable affecting economic growth. In order to solve the problem of insufficient money supply, humans have created two completely different currencies, and currencies are therefore divided into traditional currencies and modern currencies - the former is based on physical objects; the latter is based on credit. The essential difference between the two means that they have completely different effects on economic growth. The new monetary explanation provides a micro-foundation for the study of macro issues and unifies seemingly independent branches of economics such as price, competition, institutions, and growth into a mutually supportive framework.

In order to include government in growth analysis, it must also be "assigned" a defined economic role. The first chapter of this book was originally an article I wrote based on my direct observation of local government behavior while working in a local government department. In this chapter, I define the city as a collection of public goods, and the government as the "enterprise" that provides public goods. After reducing the government to an "enterprise," all models for analyzing enterprises, including balance sheets, can be used to analyze the government; after reducing the city to a "public product," we know that the local government is a "platform enterprise" - by providing heavy assets (water, electricity, roads, bridges, schools, etc.) that are essential for all economic activities, it allows other market entities (enterprises and residents) to operate with light assets, and public goods therefore become the key element of growth.

The relationship between the government and other market entities (enterprises and residents) is like the relationship between the "chessboard" and the "chess pieces." The two together constitute the system we call the "market." The rules of classical economics allow us to assume that the chessboard and chess pieces are irrelevant, and we are accustomed to ignoring the chessboard and studying just the chess pieces; but when we change these rules, the performance of the chess pieces change, and they are inseparable from the changes in the chessboard. The discovery of the essence of the market role of cities and governments exposes the fallacy of traditional economics that the government is an "institutional appendix" that has to be retained due to "market failure" and puts the government's market role back at the core of the entire process of economic growth.

Structure and Reading

I first thought to organize this book beginning with theory, from micro to macro, but later decided to follow the true context of how my thoughts evolved, starting from observations made while “being the in thick of things” followed by generalizations formulated while “staying out of things.” This is more consistent with how the book came to be. If the content of this book is regarded as a "tree", the first chapter is a "leaf." Starting from the discussion of land finance, which is most closely related to the city, the book directly points to the most cutting-edge practical issues. "Cutting-edge" itself means that it is still in a state of exploration. The second and third chapters are equivalent to two "branches." The first branch analyzes why China's economy is facing transformation, while the second extends the transformation issues, connecting them to the forces of globalization. The fourth chapter is the "stem" of the book, applying a new "coordinate system" to re-explain the wealth distribution problems China encounters in its growth process. The fifth chapter is the "root" of the book, digging into the underlying soil of economic analysis and generalizing China's great growth into a theory that can explain all growth.

Growth theory is the oldest academic branch of economics. This book does not claim to provide a systematic review of all growth theories, which does not mean that it ignores the contributions of those great pioneers in this field, but instead assumes that readers are familiar with their theories, so that this book can focus on the elaboration of original ideas in a limited number of pages. It should be pointed out that although the discussion around growth issues will inevitably involve the theoretical structure and research paradigm of economics, the purpose of this book is not to revise existing economics textbooks, nor to subvert economics as a whole. Economics must be transformed into a tool that can explain China's growth. If I can add one or two new footnotes to growth theory, it would be an unexpected benefit of this book.

Notes

[1]赵燕菁, “大崛起：中国经济的增长与转型”自序, published on Aisixiang on Dec. 3, 2022.

[2]Translator’s note: I have no idea what this is. An Internet search turns up any number of “Western Centers,” none of which looks likely to have engaged in this joint project. The name also can mean “Eurocentrism,” which also seems unlikely in this context.

[3]Translator’s note: Floor area ratio (FAR) is the ratio of a building's total floor area (gross floor area) to the size of the piece of land upon which it is built. It is often used as one of the regulations in city planning along with the building-to-land ratio. The terms can also refer to limits imposed on such a ratio through zoning (Wikipedia).

[4]Translator’s note: Land use planning is the process of regulating the use of land by a central authority. Usually, this is done to promote more desirable social and environmental outcomes as well as a more efficient use of resources. More specifically, the goals of modern land use planning often include environmental conservation, restraint of urban sprawl, minimization of transport costs, prevention of land use conflicts, and a reduction in exposure to pollutants. In the pursuit of these goals, planners assume that regulating the use of land will change the patterns of human behavior, and that these changes are beneficial (Wikipedia).

[5]Translator’s note: In accounting, finance and economics, an accounting identity is an equality that must be true regardless of the value of its variables, or a statement that by definition (or construction) must be true. Where an accounting identity applies, any deviation from numerical equality signifies an error in formulation, calculation or measurement. The term accounting identity may be used to distinguish between propositions that are theories (which may or may not be true, or relationships that may or may not always hold) and statements that are by definition true. Despite the fact that the statements are by definition true, the underlying figures as measured or estimated may not add up due to measurement error, particularly for certain identities in macroeconomics (Wikipedia).

[6]Translator’s footnote: I do not pretend to understand this paragraph, beyond the fact that Zhao is saying that neoclassical economics got many things very wrong.

[7]Translator’s footnote: 就地平衡、紧张平衡、积极平衡、综合平衡. As far as I can tell, this was a local development strategy used in Fujian, the idea being to achieve a balance of various factors.