It's appealing intellectually; I like small and simple models. I suppose if we see a major dislocation in the Chinese economy in the next 2-3 years, his model will be extra-confirmed. (That's a major point he makes on his blog.)
Pettis doesn't really give a primer; he discusses lots of different issues through the same lens, and his target audience appears to be readers with at least an undergraduate understanding of economics and a passing familiarity with balance sheets (I had neither). Frankly, I picked it up via muscle memory (and lots of context-Googling; Wikipedia helps, and StackOverflow has a surprising amount of basic economics info).
I think the bottom line is this: if you're willing to devote a few hours (maybe low tens of hours) to slogging through his posts, occasionally re-reading them a few times and searching elsewhere for explanation of terms, you'll start to understand his balance-sheet theory of macro. And it doesn't require much context, to be honest: one of the beauties of his framework is it glosses over so much of the complexity of an economy by dealing with clear and clean abstractions at the national level. (It's only an okay source for understanding the internal dynamics of an economy; the blog really mostly focuses on international macro.)
I hope that helps... though acknowledge it might not! (My interest was driven by a burning desire to understand WTF just happened!?! circa 2008; that motivation is probably hard to conjure without context, to be honest.)
Isn't that only necessary in nominal currency ?
That is, theoretically a country could introduce some factor that caused their currency, held by their trading partner, to increase in value to match their new export output ?
The balance sheet would pencil out nominally, but there could still be an imbalance relative to some other value ...
Isn't this difference between nominal and real values on the balance sheet what causes the tension between what dollar assets the Chinese hold vs. what they set their currency to vs. what our trade balance is ?
It seems all these excellent answers actually agree that it's not true unless the money is deposited and re-lent.
That's certainly likely in practice, but far from the implied "Oh silly layman, foreigners can't invest in your business without your country's debt going up, it's physically impossible."
The stronger point, that it's true in all cases, is made by Pettis somewhere deep in his blog... and it boils down to the idea that other edge cases diffuse the allocation of debt, investment, capital -- but the identity must still hold true at the level of abstraction of the nation / currency area. Those edge cases tend to look starker (and harder to explain) in toy models, though.
I can't really do his argument justice, though. Sorry! I'm simply nowhere near sophisticated enough.
But... the case where it's not re-lent, there is still exchange-rate pressure, but the 'missing' capital (say it's not stuck under a mattress, but is instead burned in a furnace) effectively deflates the remaining capital in the economy. The identities still balance. Again, the exact allocation of debt etc doesn't matter to the identity, and it's easy to construct a situation where the capital somehow disappears, or the underlying mechanism (or lack of mechanism) obscures the overall identity.
This all works because currency is effectively meaningless, it's a derivative of actual 'value' in an economy, as measured by the total output of goods and services. I'm going to stop here before I butcher it any worse; but if you find this at all interesting, Pettis is a much better source than I.