I don't agree with all of it... I think he misunderstands some of the Keynesian statements about stimulus... or at least doesn't take the question of a slump in demand seriously...

However, I found this part very interesting:

Our Next Economic Plague: Japan Disease_English_Caixin

An economy ages in many ways. The most common are tied to the exhaustion of factors such as production-labor, capital and resources. When an economy begins to develop, labor is the abundant resource. Hence, it makes sense to develop labor-intensive industries. When labor surplus is exhausted, it makes sense to develop capital intensive industries. When capital stock is high enough, investment cannot drive growth anymore. Economists call it diminishing returns, or more of the same yields less output. This type of aging doesn't worsen. Economists say a steady state equilibrium emerges when consumption and investment are balanced just right, sort of like permanent middle age.

Moreover, youthfulness is possible for a mature economy. Through innovation, an economy can produce more with the same inputs. This so-called total factor productivity (TFP) is an elixir for a mature economy. It determines how fast a rich economy gets richer. A 1 percent TFP is considered mediocre, 2 percent is good, and 3 percent is super.

Many economists argue for freer and cheaper economic structure to stimulate innovation. But, in the Internet era, innovations rapidly disseminate around the world. It's not clear if innovation benefits can be contained in any country anymore. For example, even though the United States is more innovative than Europe, it hasn't outperformed by much. Its celebrated prosperity during the Greenspan era turned out to be an old-fashioned bubble, not a reflection of superior innovation.

Diminishing returns define the aging of an economy in relation to capital accumulation. Population aging, now a more popular concern, is a relatively new phenomenon. Merely decades ago, life expectancy was not high enough for a society to have a large population of retired people. The world is transiting from the old equilibrium of a small retirement population to the new equilibrium of the retirement population similar in size to the working population. The transition is an aging process. When the new equilibrium is reached, i.e. the ratio of retired to working populations is stable, it is an aged economy.

I think it highlights interesting questions about the assumptions at work in defining "productivity." And the point that innovation no longer stays inside national bounds suggests that it's less and less meaningful to analyse economies in isolation.

Globally, we have an oversupply of labour... but we also have lots of capital unused... What Xie's piece puts in my mind is that we may have, in the West hit the limits of "capital availability" in spurring growth.

i.e. We've passed beyond the historical moment where throwing more capital at the economy automatically generated good rates of growth...

Now that might be a temporary moment because labour is so oversupplied and the regions where demand should require industries that capital helps build are just not buying much yet...

Still... one wonders if things have not changed slowly, such that capital is much less important for productivity than before...