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Updated on 7 June 2016.After writing this very long answer (and got many upvotes ;), I decided to write a whole book about North Korea. The book has already been published in Hong Kong. Here’s the cover:北韓迷宮 (북한미궁) “The Labyrinth of North Korea”Author: Pazu Kong (Pazu薯伯伯)Paperback: 192 pages.Publisher: Enrich Culture, Hong Kong (May, 2016)Language: Traditional ChineseISBN: 9789888395095Categories:Politics & Social Sciences > Social SciencesHistory > Asia > Korea > NorthTravel > PictorialThe book is in Chinese only, there’s no plan to translate it into other languages yet.Nothing is craziest, because you can always find something crazier in North Korea.I visited the country in 2010, and here are some photos I took.1. Most cyclists you met in North Korea are men, not women. Some North Korean defectors claimed that Kim Jong-Il once said that it was so disgusting to see a lady riding a bike, and many North Korean's families warned their daughters not to ride bicycles for fear that it would "tear their cunts". (Source: Nothing to Envy: Ordinary Lives in North Korea by Barbara Demick, page 14.)2. It was actually quite okay for visitors to take photos, most people didn't care. I know some people will contradict me on this, but from my personal experience, I didn't get much trouble for taking photos, even for those guys in uniform.3. There were lots of portraits of the Kim's family, all showed that son Kim Jong-Il was almost as tall as his father Kim Il-Sung, but Kim Jong-Il was only 157cm (5ft 2in), while his father should be 173cm (5ft 8in). (Source: 50 fascinating facts: Kim Jong-il and North Korea and N.Korea Asks Chinese Wax Museum to Make Kim Il-sung Taller)4. Most North Koreans wore black or grey jackets except the more privileged class. It was not a dress code, probably just out of practicality.5. To take a snapshot of the statue of the Dear Leader Kim Il-Sung, one must take the whole body into the photo frame. It was not allowed to take just a part of the statue, so the photo below would be banned from displaying in the country, because it showed only half the body of the Dear Leader.6. Roads in Pyongyang and highways between cities were always almost empty, and in good condition.Road from Pyongyang to Panmunjom (border between North and South Korea).Road in Pyongyang, the capital city.7. I asked this lady if it was expensive to go to a hairdresser. She told me that they lived a country where all people were equal, all people could afford to go to hairdressers, and all people could receive equal chances to get everything they wanted. She let me take a photo of her hair style. I examined this photo carefully and found that she was actually wearing a wig, fake hair.8. Visitors were usually invited to see a performance at a local school, students performed so professionally as if they did nothing except rehearsing. It was the typical smiles I found on almost all performers.9. I asked my North Korean tour guide about the requirement of applying for a job as a traffic police. She said three:First, tall enough (fair enough).Second, good eyesight (fair enough).Third, beautiful (...)I asked why beauty was a part of the requirement.The answer? It was important to the images of the city and country!10. We were not allowed to wear jeans to go the Panmunjom, the border between North and South Korea. Because it would show a dirty, corrupted and fallen image of North Korea, as the propaganda shown in the US and the South, explained our tour guide.My North Korean tour guide told me that she was the only one in her family to have visited the border at Panmunjom, she was excited to see the South counterpart for the first time, but she felt sad to take foreign visitors here, "because it shows the scars of our people."The two photos below were the place where I was standing in North Korea, but taken from the South Korean side after a month. Of course I couldn't cross the border at Panmunjom, I went back from Pyongyang to Dandong (China), took a boat to Incheon (South Korea) and joined another tour to the same place on the opposite side again.The place we were standing was called Panmungak (판문각, 板門閣), the Pavilion of Panmun).11. Korean War has always been a big theme for all visitors coming to North Korea, even though it was ended in 1953. We were arranged to visit museums, memorials and statues relating to this war, North Koreans called this the "Fatherland Liberation War" (조국해방전쟁, 祖國解放戰爭, Joguk Haebang Jeonjaeng), this museum was named the Victory Museum. Yes, North Korea was presumed to have won the war against the US Imperialists.The brave North Korean soldier laughed at the US Imperialist who were escaping, the US soldier actually looked like Mr Bean.As for the North Koreans' attitudes towards the US Imperialists, there were no ways to find it out except from the words of our tour guides (yes, we actually had two tour guides, both North Koreans, both could speak perfect Mandarin, it seemed that they could monitor each other as well)."We don't hate the US people, provided that they show respect to our dear leader, our country and our people.""Have you ever met any Americans?" I asked."No, not personally, but I've heard that some Americans are nice and they are willing to learn the Juche Ideology," my tour guide replied."Are American tourists banned to visit North Korea?""No, there are many American tourists now!""How many?"She swiftly gave me an exact figure, "Six, there are six American tourists currently traveling in our country (in March 2010).""How can you know that figure so precisely?""Because all tourists must come through our working unit." She answered. We joined a tour organised by a private Chinese tour agency, but all people involving in this tour arrangement from the North Korean side were working for the state-run agency.Here is another photo taken at the Victory Museum, the miniature of the USS Pueblo (AGER-2), which is the only ship of the U.S. Navy still on the commissioned roster currently being held captive. (Source: USS PUEBLO)12. The metro system in Pyongyang has been rather well developed, yet you would find this message on every ticket machine at the entrance. The Korean text means, "Do not put your paper ticket into the machine." There's a ticket inspector at the entrance of every metro station.It seemed that the ticket machines were either broken, or they wanted to hire more employees to check the tickets. Unemployment rate was only 4.6% in 2003, better than most other countries. (Source: North Korea Unemployment Rate | 1991-2016 | Data | Chart | Calendar )13. Our tour guide put the word "devils" together with the word Japanese all the time, but you could find some North Koreans using Canon and Panasonic cameras, I have no idea if these were just normal civilians or actors. This photo was taken in the supposed wedding, at the Koryo Songgyungwan (성균관, 成均館), near Kaesong.14. We could also buy Japanese snacks at the State Department but was expired a few months earlier. It was the two-coloured Daifukumochi made in Hokkaido in Japan, the expiry date (賞味期限 shōmi kigen) was 8 December 2009 (we visited the place in 2010). The shopkeeper at the State Department happily gave us refund, and she put the unopened package back to the display shelf.15. North Koreans love reading, at least it was what our tour guide told us, it was very common to see North Koreans reading books almost everywhere. The literacy rate is claimed to be 99%. (Source: Country Studies, Library of US Congress )I do notice that one of our North Korean tour guides was extremely well informed about the world affairs, her memory was amazing and always gave me some surprise.One day she told me it was the first time that she received a visitor from Hong Kong (it was me), then she said that she understood the history of Hong Kong briefly, that Hong Kong was controlled by the British after the Opium War. Then our conversation carried on, as if it was a school test."I know there were two opium wars. The First Opium War ended in 1842, the Treaty of Nanking was signed... The Second one ended in 1860, and the Convention of Peking was signed..."I was honestly surprised that she remembered the details so well, I told her that most Hong Kongers couldn't remember the dates of the Opium Wars, she remained humble and said, "We learned it at school."A young student in our tour group studying history at a university in Beijing was very eager to discuss politics with our tour guide, sometimes too eager, once asked her what she knew about June Fourth Massacre. At the beginning, she said she hadn't heard about it, but when the student told her that it happened in 1989, lots of students were killed in Beijing, the tour guide immediately said, "Oh you mean the Tiananmen Square Incident? We called it the Tiananmen Square Incident."Note that most Chinese wouldn't call the Tiananmen Square Incident as June Fourth Massacre, the young student told me he read lots of materials from all over the world.16. Without doubt, food in South Korea is usually much better than those found in North Korea. Yet this is the only dish I really miss in the North, the famous Pyongyang raengmyeon (랭면, more common to be called naengmyeon 냉면 in the South, cold noodles). I've tried many cold noodles restaurants in Seoul, nothing could beat their rival in the North, this is one of the things that the Northerners should be really proud of...17. The official calendar used in North Korea is called the Juche Calendar, based on the birth date of the Great Leader Kim Il-sung (15 April 1912). So this year is supposed to be Juche which is based on Kim Il-sung's date of birth: 15 April 1912. Now it's 2016, so this is Juche 105.Juche ( 주체, 主體) means self-reliance and is the official political ideology of North Korea. One of the most prominent monuments in Pyongyang is the Tower of the Juche Idea, 170m (560 ft) tall. You may also notice that there were not any advertisements displayed in the city landscape.The flame on top of the Juche Tower was depicted throughout the country.One tip for those travelers going to North Korea, try to memorise the definition of Juche, it's the best way to impress your tour guide (and your group members).So what is the Ideology of Juche?Official answer:Everyone could control his own destiny and the power lies within his own body. (If it contradicts what you thought of North Korean's destiny, read on...)The Leader is head, the Party is body, the People are cells.Therefore, body and cells should listen to the command of the head. If there's no head, life will be lost."Your tour guide will definitely ask you, "if anyone knows anything about Juche?"Answer him, applause will be followed and you will be treated like a VIP!A poster in a school, the text means "Our country, Socialism System, Long Live!"At the train station in Pyongyang:A street sign propanganda:18. Yes, we could use the internet in North Korea in Yanggakdo Hotel, it cost only €2, not per minute or hour, but per 100kb in 2010! If you want to download 1GB, expect to pay €20972 (or US$22782) per GB, that's insane.So who would use this service?I personally knew a friend working for a news media in Hong Kong who stayed at this hotel because of the visit of the former China's premier Wen Jiabao in October 2009. My friend did use the internet and the speed was said to be quite acceptable. My friend saw the bill on the last day, the figure was 5-digit in US dollars (yes, they had to transfer video files!), her company was supposed to pay for it but a staff from the China delegates came and chatted briefly with my friend, then grabbed the bill and said, "We'll take care of it."19. We were confined to our hotel at night, we could only find some entertainment inside the hotel compound, the place is big enough and it was like a maze.20. Yes, they have a casino in North Korea, located at the basement of Yanggakdo Hotel. It was run by Stanley Ho, "King of Gambling", one of the richest guys in Macau, who had built a powerful gambling industry in Macau.The casino forbids all North Koreans to get in, whether as customers or employees. All people working there were from Macau or China (mostly from Dandong, Liaoning Province). I've heard that they could provide "special massage service" to those desperate (mostly Chinese) visitors.21. Some typical pairs of words in irreversible orders in CJKV languages (Chinese, Japanese, Korean and Vietnamese) are, for example, Man and Woman (男女), Black and White (黑白), South and North (南北), etc. These are called irreversible binomials (also known as "Siamese twins" in linguistics), it would sound weird to say "North South" (北南) in CJKV.Yet, in North Korea, it seems to be politically incorrect to say "South and North Korea" as I noticed our tour guide would explain some details as follows, "This is the statue of the reunification of the South Joseon and North... oh no, I mean, NORTH and SOUTH JOSEON!" The North must precede the South, perhaps it happened only in some sorts of political statement, not a generalisation of the daily conversation of North Koreans.Also, the tour guide explained everything in Mandarin, and never used the word "North Korea" (北韓) or "South Korea" (南韓), she used the term "North Joseon" and "South Joseon" instead. Joseon (조선) was a Korean kingdom founded by Yi Seonggye that lasted for approximately five centuries, from July 1392 to October 1897. It was officially renamed the Korean Empire in October 1897. (Source: Joseon)22. North Koreans love beer, and beer was always served at every meal we ate except for breakfast.Below is a photo of the famous Taedonggang beer (대동강맥주). Taedonggang (대동강, 大同江) is one of the largest rivers in North Korea (439km long), which also runs through Pyongyang, passes the Juche Tower and Kim Il-sung Square.For those who are interested in the North Korean TV advertising campaigns, which was rare in this communist state (okay, should be a state of the ideology of Juche), take a look at this TV ad of Taedonggang beer launched in 2009, a worker in uniform was having a good time after taking a mug of frothy beer, with a typical satisfactory smile afterwards. The beer was praised as the "Pride of Pyongyang".So how did the North Korean make their highly praised beer? They bought a brewery in Trowbridge (Wiltshire, England) in 2000, then rebuilt it on a cabbage patch in Pyongyang! You can read the fascinating story here: How a Wiltshire brewery produced Pyongyang's number one beerThe less famous Ponghak Beer. It tasted rather bad to us because of the rusty bottle cap, perhaps just one bad egg... the quality control in North Korea shouldn't be too bad.23. Most of my friends thought we must have been starving in North Korea, not really. While I wouldn't say the food was great, definitely foreign visitors were not going to starve to death, far from it, we were actually fed quite well, especially compared to the standard of the average people in this country.Utensils laid out elegantly...A splendiferous banquet.Hotpot was provided, we were happy!We could even try the famous Samgyetang (ginseng chicken).Traditional cuisine at Kaesong.24. Some foreigners found it revolting to bow to a dictator, but it seemed that many North Koreans wholeheartedly expect all foreigners would really want to do bow to their great leader wholeheartedly.The huge statue of Kim Il-Sung at Mansudae, Pyongyang. The statue of the son Kim Jong-Il was later installed at the same place after he passed away on 17 December 2011 .Two young North Korean boys suddenly came from nowhere and bowed to the Dear Leader.Then walked away with a satisfactory smile.There was a huge crowd waiting at the Mansudae, waiting to give their respect to the great leader.In North Korea, it was the custom to bow once to the elderly or people of higher ranking, or bow thrice to the dead. It would be more appropriate to bow thrice to the Great Leader who passed away in 1994, but many North Koreans still prefered to bow only once to the statue or portrait of the Dear Leader, as they thought he was still "alive in their hearts", explained my tour guide.25. There was a huge aquarium in the Yanggakdo International Hotel, the glass was exceptionally clean and almost transparent, it seemed that the staff spent a great effort to maintain it, perhaps important to the image of the country and people of North Joseon.24. There's a 105-storey pyramid-shaped skyscraper building named Ryugyong Hotel (류경호텔, 柳京飯店), which has been always under construction in the city centre of Pyongyang. Construction began in 1987, halted in 1992, started again in 2008. We visited DPRK in 2010 and the tour guide told us that it would be finished soon, but it was then stopped again in 2013.Here are some more photos of the Ryugyong which were rarely seen on the internet.26. The actual border between North and South Korea didn't exist on some maps in North Korea, this map was found at a local school.Most people referred to the border between the two countries as the 38th parallel, but the 38th parallel in question is a circle of latitude 38 degrees north of the equatorial plane. This line divides the Korean peninsula roughly in half (leaving about 56% of Korean territory on the northern side). The actual border between North and South Korea slants across this circle of latitude, finishing some distance north of it on the east coast. Nonetheless people often loosely refer to the border between the two Koreas as the “38th parallel”. (Source: Why is the border between the Koreas sometimes called the “38th parallel”?)25. There's at least one Buddhist Temple in North Korea, one of our group members asked the monk if he could pray for us, he said something in Korean, not sure if it was real praying or chanting. The temple we visited was Pohyonsa (보현사, 普賢寺), very close to Myohyang Mountains (묘향산, 妙香山).According to my tour guide, "North Koreans could practice whatever religion they like, provided that they also respect the Juche.""It was different from what I read from the news..." We could actually talk to our guide rather freely.She promptly replied, in a calm tone, "It was all lie on the western media."27. From left to right, this is me (wearing a Tibetan jacket), my friend WC, and my friend KH. Photo taken at Panmunjom, the border between South and North Korea... oops, I mean North and South Joseon. The big characters written at the back were "Jaju Dong Il" ('자주통일, 自主統一), which means "unification made by ourselves" (without any interference from other countries, which probably include China as well).Note that the word "reunification" in the Korean script shown in this photo was obsolete, the third character is usually written as 통 now.This is the longest post I have written on Quora so far, I hope you will like it! :)I woke up this morning and saw more than 4000 upvotes to this answer, wow, thank you for everyone, especially those who helped me to clarify some points. I can see why people spent their precious time to write long answers on Quora, unlike other forums, Quora users are really reading what you wrote, it gave me lots of satisfaction!You can also see my other photos (mostly in Tibet) on my Instagram: http://www.instagram.com/pazu

In 2009 I bought a derelict old house! It had not been lived in for 15 years. The roof had been eaten out by termites and had fallen in over part of the property. It was really a knock-down proposition. But I loved the old stone walls and I felt with a lot of effort, I could bring this old lady back to life again!*I was coming home one day around lunch time and there was a woman in the street taking photos of the front of our property. I pulled in the driveway, into the garage and got out of the car. The woman with the camera came up the driveway and said to me….“My name is Elizabeth Tape, my father Ron and mother June built this house in 1952. I spent my first 12 years in this house and they were some of the nicest times of my life. So every time I come back to Mt Barker I come around to have a look at the old house. I have seen a few things changing lately and I thought I would take a few photos to show Dad”!My first reaction was….”My God, is he still alive?”………She said yes both of them were still alive but, June had dementia and Ron was in very poor health and on oxygen all the time.I invited Elizabeth in to see the changes we had made to the house. She took lots of photos and said, “Oh I wish Dad could see what you have done here!” I said he was always welcome to visit if he felt up to it.Three months went by and I never heard anything further and thought the old guy must have passed on! Then, one Sunday morning a couple of cars pulled up out the front, containing the entire family…..they had all come to see the old house. My God, Ron was so frail and weak, but his eyes just beamed as I showed him through the place and what we had done with it.He told me, the two of them had spent the first 18 months on the grass out the front of the property chipping the stone that would go into the wall construction by hand, with nothing but an old combing hammer. I didn’t want to belittle Ron and June’s work but, there were times when I seriously wondered how big a challenge I had taken on, but I persevered! Now, listening to Ron talk with such passion, I am so glad I did.At one point where I put in a doorway in the stone wall, I put in a perspex panel to show the way Ron and June had built the house, I wanted it to look like what archaeological restorers do in an ancient dig, and when Ron saw it he started to cry, because I had included behind the perspex the very combing hammer they used all those years ago which had been left on the property.They built the house like a medieval fort and threw all the stone bits and rubbish in the large perimeter wall cavity.Ron told me all about his dreams when he built the house and how proud they both were when they could move the family in.June, as I said, had dementia and had no idea where she was or what they were doing there, it was all just foreign to her until I showed them what I had done with the old sheds up the back of the block. I relocated an old wood stove from what is now our guest cottage (which they lived in while they built the main house) up to my workshop, as I felt it was a bit good to just throw away.As soon as June saw the stove she went into an uncontrolled state of excitement….pointing to it she kept saying, “That’s my stove, that’s my stove” over and over again! That was the only thing on the property she recognised!*We had a lovely couple of hours with Ron and June and the rest of the family and, having them here gave me a renewed feeling of vigor. I wanted to honour what Ron had built and everything I have done here since I have done with Ron at my shoulder, hoping that he approves!He’s gone……..but neither we or this house will forget him. Thanks Stefan for the question!Cheers……Rob*EDIT: Wow, 3,500 up-votes in 16 hours…..to me, that is quite something and has made me realise two things…..1/.. Everyone loves a nice ‘feel good’ story, particularly when it’s fact, not fiction.2/…Everyone has a nice feel good story in them, it just needs the right question to drag it out.Thank you all.Cheers…..RobEdit2: Can I please ask for no editing suggestions! I write the way I do for a reason, I am aware of the technicalities of my language, can we please just leave it at that!EDIT 3: I am amazed that something I have loved for the last decade should suddenly get me 10,000 up-votes in the course of 25 hours! At the risk of undoing the good work this post gained me, here are a few photos that showed the property transformation…..Purchase day…..don’t you always love the way gloomy winter days bring out the worst in a photographed subject!A few months later……Two years later…..And now….today!And the rear of the main house as it was……and once again a year later….and that cottage they lived in while they built the house. The flue sticking out through the tiles was connected to June’s stove……I have loved every moment of this …..I don’t know quite what to call it! It’s not a project, it’s not a redevelopment , it’s the re-birthing of a great idea.Ron, I am still at it mate!Cheers……RobEdit 4: Wow 20,500 up-votes in 4 days, I would never have conceived that I could be responsible for that.My feeling is, we are the product of who we are! Sounds a silly statement but, think about it for a minute! Aggressive people have aggressive dogs. Petrol heads have outrageous cars. Rules are for those who break them. Loud arrogant people ride the noisiest motorbikes. The way we act is an extension of our personality!Nice people are attracted to nice things and this is where a site like Quora shines, it brings nice people together to speak with a communal voice. In all the comment that this answer has generated there has been only one critical one.Thanks to all of you, thanks for being nice people….and thank God there are so many of you!Cheers……RobEDIT: July27 2020.Someone early in comments for this thread said….”I hope you get 50,000 upvotes”! Well, I thought that was a bit far fetched at the time but here we are, got up the 50K. Thank you all so much for your lovely comments, there are literally thousands of them and I just can’t respond personally to them all but you have all touched me with your words.Just another few photos to show the transformation …..The service area which had been outside the house became part of the kitchen.The other end of this area which was the laundry and toilet…..I put in a large window and became the main part of the kitchen.The rear part of the property went from this…..to this…..from thisto this…….I have hundreds of photos along the way but possibly my favourite is the Airbnb cottage in the evening with my newly acquired lead-light glass door windows!When I look back on that when I started……I realise how far I have come.Thanks again, you have all given me the inspiration to keep going till I have it finished!Cheers…….Rob

Barron’s: China’s Slowdown Is Only Just BeginningThe article starts by laying out its message in clear, unequivocal terms:“China’s long boom is over. Persistent weaknesses in productivity growth and a looming demographic catastrophe will hobble the country for decades to come.”It goes on to make some bold and fairly extraordinary statements and predictions:“According to an estimate from Harry Xiaoying Wu of Japan’s Hitotsubashi University, China’s underlying efficiency has not improved at all since the mid-1980s. In fact, he estimates Chinese businesses are now 15% less productive than they were in 2007.”“China’s vibrant pockets of private innovation have been squeezed for political reasons. While it is possible the political situation could change, and therefore lead to a renewed burst of productivity growth, as in 1978, that is not the likeliest outcome. Zero productivity growth, or even continued declines, are far more likely.”Over the years, I have developed certain views and mental models in topics that I am interested in, China’s economy being one of them. These views and models have evolved over time as I collected new experiences, data, anecdotes, insights and learnings. An important part of my learning process is seeking out dissenting and alternative views and trying to understand where they come from.So when I encounter a view or claim that is diametrically opposed to an existing worldview, my ears perk. Especially when they come from relatively reputable sources such as Barron’s (vs. anonymous or otherwise unverified sources).I was too young to have a good sense of what China was like in the mid-80s but I do remember the time my father made his first trip back to China since fleeing the war-torn country four decades earlier for Hong Kong (followed by Canada and then finally America). A hard-working, mid-level civil engineer who had helped build and maintain airports and highways in the Tri-State area since the early 70s, he was invited to China in 1986 to give a talk about something called “Fly ash”[1]. I still remember the handwritten paper and slides he put together in preparation for the trip.Fly ash is a byproduct of burning coal and a critical ingredient in improving the strength and durability of concrete. The technique of adding fly ash to concrete to improve building structures had been around since the early 20th century. Indeed, the Romans had figured out the benefits of adding volcanic ash to concrete nearly two millennia earlier.Now stop here and ponder this thought for a second: In the mid-80s, Chinese builders were trying to figure out how to utilize fly ash in concrete, a relatively basic technique that others had figured out decades or even centuries earlier.Source: Dad’s photo archives. Beijing, 1986.While this is just a simple anecdote, it remains a visceral reminder to me of exactly how undeveloped China was in the “mid-1980s”.So when a writer at Barron’s makes such a bold and unequivocal statement about how the Chinese economy today — in 2019 — is essentially operating at the same level of fundamental efficiency as it was when Dad gave his lecture in 1986, I am really, really curious about how he came to that conclusion.As Carl Sagan once quoted, “extraordinary claims require extraordinary evidence” and this aphorism is quite applicable here.This means rolling up our sleeves and doing a deeper dive into the article, to see if the evidentiary standards hold up to the high standards demanded by the extraordinariness of the claims.The article’s claims around China’s historical productivity (or lack thereof) rely almost exclusively on the work done by Harry X. Wu, the economics professor referenced in the earlier quote. The article specifically links to a paper released by Professor Wu in December 2017[2] that challenged mainstream views that something called “Total Factor Productivity” accounted for around 40% of China’s growth since the early 1980s.This was not the first time Professor Wu made this claim. If you go back and review his body of work, you will see how it is a recurring theme that goes back to the mid-90s. But before we get into Professor Wu’s analysis, let me try to explain some of the basic ideas behind this concept of economic productivity.Economists believe that there are three fundamental factors or inputs that go into growing an economy:Labor — the number of available workersCapital — machines, equipment and investmentsProductivity — the efficiency of labor and capitalIn other words, economies can grow by (i) adding more people, (ii) investing more in capital that delivers future benefits and (iii) getting more efficient use out of the same labor and capital inputs.Labor growth is really easy to measure — you just need to count the number of productive workers in an economy.Capital growth is a bit harder to measure — because this involves some level of judgment. For example, machines wear out or “depreciate” over time. Eventually, they break down completely and need to removed from the aggregate pool of capital stock. Estimates on “depreciable life” are not always the most accurate.Productivity is the most difficult one to measure directly. It is hard for individuals to accurately track how productive they are on a year-over-year basis. Imagine how difficult it is to do a bottoms-up productivity assessment for an entire economy.That is why economists have historically measured productivity as the residual or “plug” number after measuring the aggregate output of an economy (i.e. GDP, or gross domestic product) and stripping out the pieces that are attributable to labor and capital. In other words, even though it is supposed to represent an input factor — representing technological or process improvement — it is usually calculated indirectly as an output of the first two.Despite the difficulty inherent in measuring it, productivity is actually by far the most important part of economic development. On its own, growth via labor pool increase does not improve individual quality of life (i.e. on a per capita basis). Growth via capital has limits due to diminishing marginal returns on incremental investment — over-investing can actually harm long-term economic growth. Productivity growth — i.e. getting better at producing stuff with the same inputs — is ultimately the difference between economic success and failure.Robert Solow, the Emeritus Institute Professor of Economics at MIT, won a Nobel Prize in Economics in 1987 for his pioneering work on this topic of the relationship between labor, capital and productivity. This “Solow” model is one of the fundamental Big Ideas in modern Economics.Over time, others have built on top of the “Solow” model. Professor Harry Wu was one of them.In his December 2017 paper, Professor Wu tries to explain how productivity growth has lagged in China, particularly if you try to isolate out the impact of ICT (Information and Computer Technology).After parsing through all of the economics jargon, fancy-looking formulas and a cursory review of the underlying datasets, I found two major issues with the analysis:Professor Wu uses a non-standard set of data that has been “adjusted”, rather arbitrarily it appears. This results in overall growth that is around 3% lower than official GDP measures.Professor Wu then takes this lower GDP figure, and following the basic premise of the “Solow model” subtracts out capital and labor input growth to arrive at a low or even negative residual. This “Solow residual” approximates productivity’s contribution to growth.When most economists look at the Chinese economy from the lens of the “Solow” model, they get to around 12% growth per year over the first three decades of reform, with 2% from labor pool increase, 6% from capital and the residual 4% from productivity improvements.Professor Wu is saying that he doesn’t trust official numbers and according to his data China’s actually only grown at 9% per year. So if you subtract away the 2% labor pool increase and 6% contribution from capital, productivity contribution was a mere 1%. And by the way, most of this productivity contribution happened in the first decade of reform — hence the idea that China’s economy has relied on only labor and capital since the late-80s.But this logic is circular in nature. Professor Wu prepares adjusted data to “prove” that China’s growth lags the official figures. Much of the adjustment is coming up with his own assumptions for certain key variables — for example, as per the quote below, he makes a “far-reaching yet apparently arbitrary” assumption that reforms in the 1990s added only 1% to services growth.In other words, by making some basic up-front assumptions that are extremely conservative, you have back-solved the original hypothesis in a circular and non-convincing way. This is a classic case of “garbage in, garbage out”.On top of this, he makes the assumption that the entire growth gap is attributable to the productivity variable in the Solow model. Moreover, the logic of attributing the entire gap to productivity shortfalls — as opposed to also making adjustments to capital measurements — remains unexplained.And it is not just me. Others have questioned the validity of Professor Wu’s research over the years. From an Economist article in 2014[3]:At the pessimistic end of the range is Harry Wu, an economist who has devoted much research to the shortcomings of China’s official economic data. He finds that since 2007 TFP has actually been a drag on the economy, denting growth by about 0.9 percentage points a year …… but the process requires several accounting somersaults. Assumptions are needed about, among other things, the size of the capital stock, the rate of capital depreciation and the level of workers’ education. Mr Wu does not trust official GDP figures and so constructs his own. Because his estimate of average annual growth for 2008-12 (6.5%) is dramatically lower than the official figure (9.3%), his calculations yield a negative Solow residual. Productivity, in other words, appears to have gone into reverse.This conclusion looks too gloomy. For one thing, there are problems with Mr Wu’s own numbers. He relies on a selective sampling of official data and applies far-reaching yet apparently arbitrary adjustments to them, assuming, for instance, that reforms in the 1990s added only 1% to services growth. Many other economists see problems with Chinese data—lumpy growth figures are often smoothed, for instance—but not enough to justify such extensive revision, especially during the past decade when there has been a proliferation of data from China’s trading partners that can be used to verify the Chinese numbers.Carsten Holz, an economics professor at Hong Kong University of Science & Technology, used to work closely with Professor Wu but no longer does after repeated intellectual disagreements[4]:Mr Wu initially mentored Mr Holz but their intellectual dispute later caused the two to fall out with each other.“It got to a point where Harry Wu wasn't talking to me and wasn't citing my work,” says Mr Holz. “I didn't agree with his work. It just didn't convince me. I thought it was actually wrong.”Regardless of where you stand on the reliability of Chinese GDP growth figures (some of my own thoughts here[5][6]), at a minimum it is clear that there is controversy around Professor Wu and his approach. His methods and conclusions tend to fall on the very extreme end of the spectrum when it comes to consensus views on Chinese economic growth. To me, his work does not qualify for the extraordinary standards demanded of such extraordinary claims.That is why it is quite shocking to see a seasoned journalist make such bold statements on the basis of such a wobbly foundation, without providing any context or background. Instead, Professor Wu’s paper is taken as definitive “proof” of the main point of the article — that China’s growth has been a mirage of favorable demographics and extreme capital allocation, not productivity, and because of this it is close to running out of steam.In the article, there is no mention of the debate, the controversy or the fact that Professor Wu represents a rather extreme, minority view. There does not appear to have been any effort made to questioning the underlying assumptions that went into the paper. Instead, it has been packaged for Barron’s readers as unvarnished “truth” from a credible, academic source.This illustrates one of the big problems in journalism today. It is very easy to find somebody out there with believable credentials to say something that supports any view, no matter how extreme. Indeed, there is a veritable cottage industry of academics and analysts that specialize in offering their extreme views. It is much harder to get to the bottom of what is going on, because the truth is often much more nuanced, complex and unclear.That is why the challenge of getting to that truth rests on us, the readers. We have an obligation to not just take everything we read (my stuff included) as unvarnished truth, but to dig into the story, the analysis and the logic. This means diving deeper into sources, questioning the key points and trying to improve our understanding of complex topics so we can ultimately form our own informed views.Tying things back to the original question: Yes, the claim that Chinese economic growth since the mid-1980s has been driven entirely by labor and capital increases with zero productivity improvement is ludicrous and qualifies as an “extraordinary” claim, one that requires extraordinary evidence to back it up.This is not one of those things that you really need to over-analyze. By simply looking outside the window and seeing what China looks like today vs. thirty years ago should be self-evident enough.Source: Dad’s photo archives. Beijing, 1986.Actually, we don’t even need to go that far back. Just looking at how life has changed for the average Chinese person in the last ten years is sufficient:Putting a connected device in the pocket of the vast majority of China’s population that is millions of times more powerful than NASA’s entire computing power in 1969[7]Moved from a cash-dominated economy to a digital-payment dominated economy — massive reduction in transaction costs + high-quality data that can be used for BI and other applicationsBuilt the world’s largest online e-commerce market and all of the associated logistics infrastructureConnected all the major cities with a high-speed rail system and building modern metro systems in most large onesBuilt out hundreds of gigawatts of solar and renewable electricity capacityEtc.Are you really going to sit here and essentially claim that none of these things had any positive impact on Chinese economic productivity?My response to the article is, “Sounds like an interesting thought, but you’re really going to have do a lot better and find evidence that is far more extraordinary than what you have presented to convince me”.Footnotes[1] Fly ash - Wikipedia[2] China’s productivity performance revisited[3] Unproductive production[4] Subscribe to read | Financial Times[5] Glenn Luk's answer to How widespread is “data inflation” in Chinese economic statistics?[6] Glenn Luk's answer to Are China's economic statistics reliable?[7] Your smartphone is millions of times more powerful that all of NASA's combined computing in 1969