Read "Immersed in the Matter"

This book has recently become popular. I saw several friends or strangers recommending it in October, so I started reading it during the National Day holiday and intermittently read it for a month. It was very rewarding.

In China, we have an idiom called "置身事外" which means to put oneself outside of things and not care at all. And this book is called "置身事内" (Immersed in Affairs), and I think the title is excellent.

Living in such a country, our daily life is inseparable from the government, and our work is inseparable from economic development. In our country, the government is involved in both the production and distribution of the "cake," so when we talk about the economy, we cannot ignore government actions, and when we want to understand government decisions, we cannot ignore economic analysis.

The book is divided into two parts. The first part explains the micro mechanisms, including basic affairs of local governments, income, expenditure, land financing and development, investment and debt, etc.; the second part explains the impact of these micro behaviors on macro phenomena, including urbanization and industrialization, housing prices, regional differences, debt risks, imbalanced domestic economic structure, international trade conflicts, etc.

There are a few points that left a deep impression on me, so I will quote them here:

To truly understand government actions, one must understand finance and taxation.

Don't just look at how others shout slogans, but look at how they act. The same goes for government actions. Today, a policy is announced, and tomorrow an announcement is made. Don't completely believe in these "empty" words, you have to look at some "real" things, such as understanding where the government is really investing money. The front is "sweet talk," and the back is "actual action."

In the real world, there are no definitions, only phenomena, and interconnected rights and responsibilities. Or as Zhang Wuchang said, there are only a series of contractual arrangements.

In the real world, there is no clear boundary between "market" and "government," only various combinations of interconnected interests.

These two sentences appear in the third and fourth chapters respectively, and they are very thorough and profound. Throughout history, between people and between countries, isn't it always like this? As the saying goes, "When the world is bustling, it is all for profit; when the world is in chaos, it is all for profit." I heard Liu Yandong's podcast before, and he also mentioned a sentence, "Technology changes rapidly, but human nature changes on a scale of thousands of years." This kind of interconnected rights and responsibilities and interest combinations are also the same.

Housing prices are connected to land prices, land prices are connected to finance, and finance is connected to infrastructure investment.

After the fiscal reform, many local government revenues have been handed over to the central government, but the fiscal indicators remain unchanged. What to do? Engage in land-based economy and create a land-based finance. The government attracts a large amount of investment, driving up land prices, and the prices of houses on the land keep rising. It's truly a chain of events. As a result, in the past few decades, the urbanization process has seen situations like "heavy production, light consumption" and "heavy land, light people's livelihood."

Diplomacy is an extension of domestic affairs, and trade imbalances are an extension of internal structural imbalances.

On one hand, there is insufficient domestic consumption. After China joined the WTO, the domestic manufacturing industry developed rapidly, but it concealed two problems:

  • Heavy production and light consumption, leading to insufficient domestic consumption and the need to export.
  • The instability of foreign demand and trade conflicts are uncertain factors.

On the other hand, the household savings rate is too high. The underlying reasons for this situation are complex. For example, after the implementation of the "one-child policy," the traditional concept of "raising children for old age" gradually lost its effect, causing elderly people to have savings anxiety. Also, inadequate government spending on people's livelihoods and high housing prices force young and middle-aged people to find ways to save money.

Therefore, in 2020, the country proposed a new development pattern: to focus on the domestic circulation as the mainstay and promote the mutual promotion of domestic and international circulations.

Due to limited space, I won't go into detail for now. There are many aspects of this book that are worth pondering. The recommended book lists behind each chapter are of high quality, and I wish I had time to go through all of them. Even if you are not interested in politics or economics, flipping through it casually and understanding the logic behind some of the government's actions is also great, after all, it is something closely related to oneself.


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