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Policy Analysis

Scholars Gather for Roundtable to Analyze Causes, Prospects, and Challenges of China’s Common Prosperity Program

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 ROUNDTABLE SYNOPSIS     FULL REPORT 

 

The Asia Society Policy Institute (ASPI) is a “think-and-do” tank designed to incorporate the best ideas from global thought leaders into the work of policy makers who can integrate and put those ideas into practice. Stanford Center on China’s Economy and Institutions (SCCEI) is joining forces with ASPI to convene private roundtables comprised of social science experts who conduct data-intensive research into timely issues confronting China’s economy. Conducted in closed-door settings to ensure free-flow of ideas, the collaboration kicked off with a virtual roundtable on January 26, 2022, analyzing the contours and implications of President Xi Jinping’s common prosperity program -- its underlying motivators, prospects, and challenges.

First introduced in the beginning of 2021, Xi Jinping’s common prosperity campaign has become the Communist Party of China’s signature initiative, potentially signaling a fundamental shift in the party’s policy platform. Many aspects of this incipient program, however, remain under-defined. A small panel of academic scholars focused on China’s economy and politics met to discuss the initiative across multiple dimensions, including its deeper aims that lie alongside its more nominally distributive goals as well as their short- and long-term implications.

More specifically, among the questions posed to the roundtable participants were the following: What is the common prosperity program in practice? What are the drivers and motivators of the political campaign being waged in its name? Where is the initiative headed, and will it be able to accomplish its goals? 

The roundable synopsis and full report of the  discussion provide additional detail. 

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SCCEI joins forces with the Asia Society Policy Institute (ASPI) to convene private roundtables comprised of social science experts who conduct data-intensive research into timely issues confronting China’s economy.

U.S.-China Relations in the Age of Uncertainty, a Conversation with Yasheng Huang

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Heather Rahimi
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On April 22, 2022, Professor Yasheng Huang, Epoch Foundation Professor of International Management and Professor of Global Economics and Management in the Sloan School of Management at Massachusetts Institute of Technology, joined Scott Rozelle, co-director of Stanford Center on China's Economy and Institutions and Helen F. Farnsworth Senior Fellow at the Freeman Spogli Institute for International Studies and the Stanford Institute for Economic Policy Research, for a lecture and discussion on current U.S.-China relations.

Watch the Recording:

Huang shared his thoughts across three major areas: the current fundamentals of U.S.-China relations, how we got where we are now, and what we might do to change the dynamics between the two countries.  

Opportunities for Collaboration and Complementarity Between the U.S. and China
Huang began by describing the fundamentals of U.S.-China relations and opportunities for collaboration and complementarity between the two countries. Huang noted, for instance, that “if we look at innovations vis-à-vis applications markets and product scaling, [although] China is catching up in terms of innovations [and] inventions, it is still the case that the U.S. is the powerhouse.” Even though the U.S. has the capability to scale technology, U.S. policies and regulations make it challenging to do so. For that reason, Huang asserts that “China is the ideal place to scale technology,” highlighting technology innovation and scaling as an opportunity for joint collaboration.

Huang also outlines other opportunities for collaboration within academia, both through government funding opportunities and through labor. He explains the complementarity between what he calls “Republic of Government,” where the government spends money proactively on furthering academic research and “Republic of Science,” an idea introduced by Michael Polanyi stating that academic research is driven by collaborations and academic freedom. While China’s academic ecosystem operates primarily under the “Republic of Government,” the United States’ operates primarily under the “Republic of Science.” Huang notes, “you can have all the collaborations you want [and] all the academic freedom you want, but science is extremely expensive – you need the government.” In contrast to the U.S., China’s government has directed ample R&D funding toward science over the last decade. Huang explained that this could be another area for joint collaboration: China could fund scientific research in areas of bilateral interest that U.S. academics may otherwise not have had the resources to pursue.  In addition to high costs, he notes that science is also labor intensive. Chinese visiting students and scholars are critical to achieving the scientific research agendas within U.S. academic institutions. 

So, What Went Wrong? 
After outlining numerous opportunities for the U.S. and China to collaborate and complement one another, he turned to explore how and why relations have declined over the last decade. In short, Huang argues that “bad and deteriorating political fundamentals” over the last 5 to 10 years and the failure to address these political fundamentals led to extreme tensions between the two countries.

[The U.S.] systematically ignored the small changes that cumulatively could lead to meaningful flexibilities in the Chinese system down the road.
Yasheng Huang

Looking only at U.S. policy toward China, Huang shares examples of such failures:

  • A disconnect between academics and politicians. While academics might talk about trade in economic terms, politicians talk about trade in political terms. This “language barrier” leads to politicians making decisions on economic engagements on political grounds rather than empirical, academic grounds.
  • The U.S.’s absence of an explicit political strategy toward China. The U.S. “believed that economics automatically would change China.”
  • The U.S.’s unrealistic and grandiose aspirations for China. The U.S. wanted democracy, human rights, and rule of law to be instilled in China, but didn’t develop a strategy to link the areas it was firmly able to influence, like trade and investment, to effectively achieve these idealistic aspirations. 
  • The U.S.’s failure to acknowledge gradual change. According to Huang, the U.S. “systematically ignored the small changes that cumulatively could lead to meaningful flexibilities in the Chinese system down the road.”


The Long-Neglected Principle of Symmetry
Huang continued by sharing examples of failures in U.S. policy toward China and offered suggestions on how the U.S. could pivot to foster more symmetrical bilateral relations. Regarding academia, for example, he notes that China’s students and scholars are welcome on U.S. campuses and that Confucius Institutes are free to operate in the U.S. In return, the U.S. should demand unfettered access by U.S. academics to China. Business operations also offer an opportunity for a more symmetrical relationship. Alibaba has two cloud computing centers in the U.S. and can operate free of equity and data restrictions. Huang believes that to achieve more symmetrical relations, the U.S. ought to demand the same treatment Alibaba has in the U.S. for Google or Amazon’s cloud computer operations in China. Rather than the U.S. demanding more than what they are giving China, Huang insists on the same treatment – a symmetrical relationship. 

How Can We Fix our Existing Relationship?
Huang suggests the U.S. adopts a bottom-up approach and advocates for 4 areas of change:

  1. Seek symmetry. Demand the U.S. receives the same treatment the U.S. gives to China from China.
  2. Pivot away from a China-specific approach. Enforce and make policies without singling out China.
  3. Start hard conversations with China but with humility and mutually acceptable grounds. The U.S. should not try to simply impose its values on China (e.g., human rights and democracy), but rather should find acceptable and agreed upon terms by both sides.
  4. Invest in a U.S. knowledge base of China. The U.S. needs to invest in empirical research that increases our knowledge on China. 
Our policy community needs to move beyond basing their decisions on typecasting and pre-conceived judgments, and instead turn to data-based, factual, and analytical discussions on China.

A Need for Data-Based, Factual, and Analytical Discussion on China
Huang concludes his discussion by suggesting that our policy community needs to move beyond basing their decisions on typecasting and pre-conceived judgments, and instead turn to data-based, factual, and analytical discussions on China. This is exactly what we, the Stanford Center on China’s Economy and Institutions, advocate for through our mission and empirical research aiming to advance public understanding on China’s economy and its impact on the world. 
 

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MIT professor Yasheng Huang joined SCCEI for a conversation on the fundamentals of U.S.-China relations and shared his thoughts on how the U.S. can disrupt current bilateral tension and advocated for more data-based, factual, and analytical discussions on China.

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China Chats with Stanford Faculty: From Education to World Development with Professor Eric Hanushek

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China Chats with Stanford Faculty event header by the Stanford Center on China's Economy and Institutions

China Chats with Stanford Faculty 

Friday, May 13, 2022          6 - 7 PM Pacific Time 
Saturday, May 14, 2022    9 - 10 AM Beijing Time

From Education to World Development

Ensuring that every child in the world achieves basic skills is a key development goal emphasized in the UN's Sustainable Development Goals. But how far is the world away from reaching this goal? And what would achieving Sustainable Development Goal 4 mean for world development?  This talk will outline the development of an achievement data base for all of the countries of the world along with estimation of the economic gains from educational improvement. 

This Stanford alumni event will feature Eric Hanushek, the Paul and Jean Hanna Senior Fellow at the Hoover Institution of Stanford University. He will be joined by Scott Rozelle, the Helen F. Farnsworth Senior Fellow and the co-director of Stanford Center on China's Economy and Institutions in the Freeman Spogli Institute for International Studies and Stanford Institute for Economic Policy Research at Stanford University, who will moderate a discussion about the major themes of the research. A question and answer session with the audience will follow the discussion.

About the Speakers
 

Eric Hanushek
Eric Hanushek is the Paul and Jean Hanna Senior Fellow at the Hoover Institution of Stanford University. He has been a leader in the development of economic analysis of educational issues, and he was awarded the Yidan Prize for Education Research in 2021. His widely-cited research spans many policy-related education topics including the economic value of teacher quality, the finance of schools, and the role of education in economic growth. His latest book, The Knowledge Capital of Nations: Education and the Economics of Growth, identifies the close link between the skills of the people and the economic growth of the nation. He has authored or edited 24 books along with over 250 articles. He is a Distinguished Graduate of the United States Air Force Academy and completed his Ph.D. in economics at the Massachusetts Institute of Technology. 
 

 

Scott Rozelle
Scott Rozelle is the Helen F. Farnsworth Senior Fellow and the co-director of Stanford Center on China's Economy and Institutions in the Freeman Spogli Institute for International Studies and Stanford Institute for Economic Policy Research at Stanford University.  For the past 30 years, he has worked on the economics of poverty reduction. Currently, his work on poverty has its full focus on human capital, including issues of rural health, nutrition and education. For the past 20 year, Rozelle has been the chair of the International Advisory Board of the Center for Chinese Agricultural Policy, Chinese Academy of Sciences (CAS). Most recently, Rozelle's research focuses on the economics of poverty and inequality, with an emphasis on rural education, health and nutrition in China. In recognition of this work, Dr. Rozelle has received numerous honors and awards. Among them, he became a Yangtse Scholar (Changjiang Xuezhe) in Renmin University of China in 2008. In 2008 he also was awarded the Friendship Award by Premiere Wen Jiabao, the highest honor that can be bestowed on a foreigner.

Questions? Contact Debbie Aube at debbie.aube@stanford.edu

Watch the recording: 

Scott Rozelle

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Eric Hanushek Paul and Jean Hanna Senior Fellow at the Hoover Institution Stanford University
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Charting the Ideological Spectrum and Public Opinion in China

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In the ever-growing gulf between the U.S. and Chinese governments, what can often be lost are the citizens of the two superpowers. More difficult to sum up in a news article than the platform of a politician, public opinion is a nevertheless immensely important barometer of the U.S.-China relationship.

From an American perspective, gaining an understanding of what people in China really think can be a difficult task; with a completely different system of governance, a complex ideological history, and a social media and information ecosystem largely separate from that of the U.S., public opinion in China cannot necessarily be grafted neatly onto American perceptions of right and left.

Join the Stanford Center on China's Economy and Institutions (SCCEI) for a conversation on understanding the Chinese ideological spectrum with leading scholars in the field of contemporary Chinese politics and political communication, the first in a series of collaborations with Asia Society Southern California.

Joining us for the first feature, “Charting the Ideological Spectrum and Public Opinion in China,” is Jennifer Pan, Assistant Professor of Communication and, by courtesy, of Political Science and of Sociology, at Stanford University, and Rory Truex, Assistant Professor of Politics and International Affairs at Princeton University. Senior Adviser and Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies Scott Kennedy will moderate.

 

WATCH THE RECORDING

SPEAKERS

Headshot of Dr. Jennifer Pan

Jennifer Pan is an Associate Professor of Communication at Stanford University. Her research focuses on political communication and authoritarian politics. Pan uses experimental and computational methods with large-scale datasets on political activity in China and other authoritarian regimes to answer questions about how autocrats perpetuate their rule; how political censorship, propaganda, and information manipulation work in the digital age; and how preferences and behaviors are shaped as a result.

Her book, Welfare for Autocrats: How Social Assistance in China Cares for its Rulers (Oxford, 2020) shows how China's pursuit of political order transformed the country’s main social assistance program, Dibao, for repressive purposes. Her work has appeared in peer reviewed publications such as the American Political Science Review, American Journal of Political Science, Comparative Political Studies, Journal of Politics, and Science.

She graduated from Princeton University, summa cum laude, and received her Ph.D. from Harvard University’s Department of Government.

Rory Truex headshot

Rory Truex is Assistant Professor of Politics and International Affairs at Princeton University. His research focuses on Chinese politics and authoritarian systems. His work has been published in the American Political Science Review, British Journal of Political Science, Journal of Politics, Comparative Political Studies, Perspectives on Politics, and The China Quarterly, and featured in the Wall Street Journal and The New York Times. In 2021 he received the President’s Award for Distinguished Teaching, the highest teaching honor at Princeton. He currently resides in Philadelphia.

 

MODERATOR

Scott Kennedy headshot

Scott Kennedy is senior adviser and Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies (CSIS). A leading authority on Chinese economic policy, Kennedy has been traveling to China for over 30 years. His specific areas of expertise include industrial policy, technology innovation, business lobbying, U.S.-China commercial relations, and global governance. He is the editor of China’s Uneven High-Tech Drive: Implications for the United States (CSIS, February 2020) and the author of The State and the State of the Art on Philanthropy in China (Voluntas, August 2019), China’s Risky Drive into New-Energy Vehicles (CSIS, November 2018), The Fat Tech Dragon: Benchmarking China’s Innovation Drive (CSIS, August 2017), and The Business of Lobbying in China (Harvard University Press, 2005). He has edited three books, including Global Governance and China: The Dragon’s Learning Curve (Routledge, 2018). His articles have appeared in a wide array of policy, popular, and academic venues, including The New York Times, Wall Street Journal, Foreign Affairs, Foreign Policy, and China Quarterly. He is currently writing a report tentatively titled, Beyond Decoupling: Winning the Hi-Tech Competition Against China.

From 2000 to 2014, Kennedy was a professor at Indiana University (IU), where he established the Research Center for Chinese Politics & Business and was the founding academic director of IU’s China Office. Kennedy received his Ph.D. in political science from George Washington University, his M.A. in China Studies from the Johns Hopkins School of Advanced International Studies, and his B.A. from the University of Virginia.

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A Liberal Silent Majority in China? A Big Data China Event

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Big Data China logo
The CSIS Trustee Chair in Chinese Business and Economics and the Stanford Center on China’s Economy and Institutions (SCCEI) launch a new collaboration, Big Data China, to bridge the gap between cutting-edge quantitative academic research and the Washington policy community. Through regular multimedia features, written analysis, and public events, Big Data China identifies, analyzes, and introduces top academic research on China and then teases out the most relevant findings for today’s policy issues.


Please join the CSIS Trustee Chair in Chinese Business and Economics for the launch of the inaugural feature, “Public Opinion in China: A Liberal Silent Majority?” which highlights the work of Stanford professors Jennifer Pan and Yiqing Xu on recent trends in Chinese public opinion. CSIS Trustee Chair Scott Kennedy and SCCEI co-director Scott Rozelle will offer opening remarks and moderate the panel discussion. Jennifer Pan and Yiqing Xu will present the main findings of their research. Panelists include Carla Freeman of the U.S. Institute of Peace, Suisheng Zhao of University of Denver, Bruce Dickson of George Washington University, and Jessica Chen Weiss of Cornell University and the U.S. Department of State.

Watch the recorded event:

FEATURING

Jennifer Pan
Associate Professor of
Communication, Stanford
University		Yiqing Xu
Assistant Professor of Political Science, Stanford University
Carla Freeman
Senior Expert for China, United
States Institute of Peace & Senior
Fellow, SAIS Foreign Policy Institute		Suisheng Zhao
Professor & Director, Center for China-U.S. Cooperation, University of Denver
Bruce Dickson
Professor of Political Science and International Affairs, George Washington University		Jessica Chen Weiss
Professor of Government, Cornell University; Senior Advisor, Secretary's Policy Planning Staff, U.S. Department of State
Scott Rozelle
Helen F. Farnsworth Senior Fellow,
FSI and SIEPR, & Co-director, SCCEI, Stanford University		Scott Kennedy
Senior Adviser and Trustee Chair in Chinese Business and Economics, CSIS

 

EVENT PARTNERS
 

SCCEI and CSIS logos

Scott Kennedy
Scott Rozelle

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Bruce Dickson
Carla Freeman
Jennifer Pan
Jessica Chen Weiss
Yiqing Xu
Suisheng Zhao
Panel Discussions
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China Chats with Stanford Faculty: Information Flow Between Global and Chinese Social Media with Professor Jennifer Pan

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China Chats with Stanford Faculty event header by the Stanford Center on China's Economy and Institutions

China Chats with Stanford Faculty 

Friday, March 4, 2022          5 - 6 PM Pacific Time 
Saturday, March 5, 2022    9 - 10 AM Beijing Time

Information Flow Between Global and Chinese Social Media

Despite the connectivity of social media, the Chinese government has been extremely successful in using controls such as firewalls and filtering to restrict the transnational flow of information into China. Does information from global social media flow into China? What types of information are transmitted and by whom? In this talk, Professor Jennifer Pan will share answers to these questions based on on-going research where she analyzed 14 million tweets to identify viral Twitter content pertaining to the COVID-19 outbreak and China during the first quarter of 2020. She developed a system that combines deep learning and human annotation to determine whether these viral tweets appear in a corpus of 8.3 million Weibo posts related to COVID-19 from the same period.

This Stanford alumni event features Stanford professor Jennifer Pan, Associate Professor of Communication, and Associate Professor, by courtesy, of Political Science and Sociology at Stanford University. She is joined by professor Hongbin Li, co-director of Stanford Center on China's Economy, and Senior Fellow at the Stanford Institute for Economic Policy Research (SIEPR) and Freeman Spogli Institute for International Studies (FSI), who moderated a discussion about the major themes of the research. A question and answer session with the audience follows the discussion.

About the Speakers
 

Headshot of Dr. Jennifer Pan

Jennifer Pan is an Associate Professor of Communication, and an Associate Professor, by courtesy, of Political Science and Sociology at Stanford University. Pan received her Ph.D. in Government from Harvard University and her A.B. from Princeton University's School of Public and International Affairs.

Her research resides at the intersection of political communication and comparative politics, showing how authoritarian governments try to control society in the digital age, how the public responds, and when and why each is successful. Her book, Welfare for Autocrats: How Social Assistance in China Cares for its Rulers (Oxford, 2020) shows how China’s pursuit of political order transformed the country’s main social assistance program, Dibao, for repressive purposes. Her work has appeared in peer reviewed publications such as the American Political Science Review, American Journal of Political Science, and Science. 

Dr. Hongbin Li

Hongbin Li is the Co-Director of the Stanford Center on China's Economy and Institutions (SCCEI) and a Senior Fellow of Stanford Institute for Economic Policy Research (SIEPR). Hongbin obtained his Ph.D. in economics from Stanford University in 2001 and joined the economics department of the Chinese University of Hong Kong (CUHK), where he became full professor in 2007. He was also one of the two founding directors of the Institute of Economics and Finance at the CUHK. He taught at Tsinghua University in Beijing 2007-2016 and was C.V. Starr Chair Professor of Economics in the School of Economics and Management. He also founded and served as the Executive Associate Director of the China Social and Economic Data Center at Tsinghua University. He founded the Chinese College Student Survey (CCSS) in 2009 and the China Employer-Employee Survey (CEES) in 2014.

Hongbin’s research has been focused on the transition and development of the Chinese economy, and the evidence-based research results have been both widely covered by media outlets and well read by policy makers around the world. He is currently the co-editor of the Journal of Comparative Economics.

Questions? Contact Debbie Aube at debbie.aube@stanford.edu

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SCCEI Launches New Impact Initiative with the China Briefs

Authors
Claire Cousineau
Heather Rahimi
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On November 15, 2021, the Stanford Center on China’s Economy and Institutions (SCCEI) launched its new impact initiative:  the SCCEI China Briefs.  The briefs translate data-driven social science research into accessible insights for those interested in China and U.S.-China relations.  Released twice a month, the briefs cover timely issues that inform policy and advance public understanding of China and its role on the global stage.

This initiative targets one of SCCEI’s primary objectives: to inform public debates on U.S.-China relations with empirically-driven social science research.

This initiative targets one of SCCEI’s primary objectives: to inform public debates on U.S.-China relations with empirically-driven social science research.

On Monday, SCCEI released its first three China Briefs spotlighting findings central to China’s economy, U.S.-China trade competition, and their implications for U.S.-China relations:   

In “Did ‘China Shock’ Cause Widespread Job Losses in the U.S.?” Stanford's own Nicholas Bloom and his co-authors find compelling evidence that import competition from China did not, in fact, cause aggregate employment loss in the U.S. – a finding that contradicts prevailing views. Read our brief for a fuller picture of how “China shock” impacted U.S. employment dynamics and how this might impact regional inequality and political polarization in the U.S.

Only a handful of countries have escaped the middle-income trap since 1960. In “Invisible China: Hundreds of Millions of Rural Unemployed May Slow China’s Growth,” SCCEI’s co-director Scott Rozelle finds that approximately 70% of China’s labor force – 500 million people – concentrated in rural areas do not have a high school education. Our SCCEI China Brief sheds light on why these statistics matter – not only for China, but for the rest of the world.

In “Rise of Robots in China,” SCCEI’s co-director Hongbin Li presents strong data revealing China’s global leadership in the use of industrial robots. What is driving this relentless growth of automation in China? What future trends and implications can we glean from China’s use and production of robots? Read our SCCEI China Brief to find out more.

Read the Briefs

 

Shipping container ship docked.

 

 

 

Did "China Shock" Cause Widespread Job Losses in the U.S.?
Findings in this brief challenge prevailing views regarding net jobs lost in the U.S.
 

 

Invisible China feature image

 

 

 

Invisible China: Hundreds of Millions of Rural Underemployed May Slow China's Growth
Education is the key for China to realize its goal of moving from a middle-income to high-income economy

 

Robotic arm in a factory

 

 

 

Rise of the Robots in China
Data representative of China’s manufacturing sector reveals China’s global leadership in the use of industrial robots

 

Join our mailing list to receive SCCEI China Brief email announcements. The briefs are also posted on our SCCEI China Briefs homepage every other week. 

Read the Briefs

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Findings in this brief challenge prevailing views regarding net jobs lost in the U.S.
 

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Education is the key for China to realize its goal of moving from a middle-income to high-income economy

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The SCCEI China Briefs are short features that translate top-quality academic research into evidence-based insights for those interested in China and U.S.-China relations. Released twice a month, the briefs will cover timely issues that inform policy and advance the public understanding of China and its role on the global stage.

The Summer of 2021: Consolidation of the New Chinese Economic Model with Professor Barry Naughton

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Matthew Boswell
Heather Rahimi
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Barry Naughton, Scott Rozelle, and Matt Marostica speak on Zoom during the 2021 Dr. Sam-Chung Hsieh Memorial Lecture.
Barry Naughton, Scott Rozelle, and Matt Marostica speak on Zoom during the 2021 Dr. Sam-Chung Hsieh Memorial Lecture on September 28, 2021.

On September 28 Stanford Libraries and the Stanford Center on China’s Economy and Institutions welcomed Professor Barry Naughton, the So Kwan Lok Chair of Chinese International Affairs at the School of Global Policy and Strategy at UC San Diego to give the 2021 Dr. Sam-Chung Hsieh Memorial Lecture.

Professor Naughton offered his thoughts on how to make sense of what he called China’s “summer blizzard” of regulatory actions and crackdowns that have spanned a dozen industries in recent months, including finance, real estate, energy, education, online consumer platforms, videogaming, and more.

“The summer of 2021 is going to be something that we will be assessing and evaluating for many, many years…I think what we're going to see from these changes is an increasingly aggressive effort on the part of the Chinese Government and the Chinese Communist Party to shape the way the economy is developing, and I argue that it creates substantial medium run costs for the Chinese growth process.”

I think what we're going to see from these changes is an increasingly aggressive effort on the part of the Chinese Government and the Chinese Communist Party to shape the way the economy is developing.
Barry Naughton

Rooted in Industrial Policy
According to Professor Naughton’s analysis, the policies of summer 2021 emerge from a decade-long series of industrial policies that, among other things, aimed to develop technology as a driver of growth.

While interventionist in nature, Naughton points out, “the policies were carried out in ways that, while wasteful, did not impost enormous costs on the economy.” This is because “they used market conforming financial instruments like government guidance funds, government run commercial and investment bank lending, tax and depreciation breaks, low land and utility charges, etc.” If successful, Naughton points out, private firms could become “national champions.”

Beneficiaries such as Alibaba, Huawei, Tencent and Didi were seen as, “members of the national team,” Naughton explained. “China was a ‘venture capital state,’ and the government’s impact was comparable to that of Softbank or a venture capital firm.”

Steering More Industries More Intensively
In contrast, Naughton interprets the events of summer 2021 as a major departure from the past, for two main reasons.

First, with the implementation of many of these policies, Naughton sees an activist “steering” approach appearing in many more sectors and with an intensity unseen in decades, all in order to promote a vaguely defined “common prosperity.”

According to Naughton, one impetus for the changes is China’s looming demographic problem.

“The government now suddenly seems to be displaying something near panic about falling birth rates, and we see a sudden determination to stress the idea that life for families with children, especially urban families with children, should be less stressful,” to promote more childbearing.

Whatever the reason, Naughton notes the assortment of policy objectives aiming to steer the economy has expanded tremendously.

“Instead of pursuing one or two simply defined objectives like new high-tech development as a growth driver,” says Naughton, “China has a portfolio of 10 or more objectives.” These span data security, enhancing control of the financial system, raising the birth rate, building new cities, keeping housing prices low, and reducing carbon emissions, among others.

Instead of pursuing one or two simply defined objectives like new high-tech development as a growth driver, China has a portfolio of 10 or more objectives.”
Barry Naughton

A Changing Toolkit
The second reason these newer plans represent a departure from the past is that as the policy objectives have expanded, the instruments deployed to reach them have lost their “market-conforming” character, Naughton explains.

“The instruments used so far are very clumsy. Abolish the private tutoring industry. Punish [big private firms like] Ali, Ant, Didi, and Tencent. Encourage charitable donations from large corporations. What we haven’t seen is the utilization of much more effective policies that are known to work and have been applied in scores of countries around the world, in particular income tax policy.”

A Gap Between Intent and Impact
Naughton sees this haphazard roll out of directives as having unintended consequences that may weigh on future growth.

“What’s happening is that there are many built in conflicts between the different objectives and the different instruments and the way those instruments are deployed … without consideration for what their implications are going to be in other areas.”

Naughton points to the education sector as one example.

“Some of the policies that come from the desire to lower burdens on families in order to encourage them to have children,” – like the reduction in homework and elimination of cram schools – “But now a highly educated, high skilled labor force, which was always considered to be a part of the high-tech push, is suddenly in question.”

Naughton sees a similar contradiction at play in the real estate sector.

“[Embattled real estate giant] Evergrand is clearly caught between Chinese policies that are trying to push down the price of housing [for the middle class] and other policies that are trying to de-risk the financial environment by reducing leverage to property firms.”

In light of these contradictions, “you really have to wonder in any specific arena what's the particular outcome is going to prevail,” Naughton says. “And in the meantime, they have very substantial costs, particularly costs on private business.”

A Major Turning Point
Naughton concludes that the summer of 2021 is a turning point where China has begun to attempt to shape and steer China’s society and economy far more aggressively than what has been seen for the last 40 years.

Without a doubt the policies are ambitious. But the proliferation of ambitions has outrun the instruments that are available to actually achieve them, and as a result we’re already seeing increased conflicts, contradictions and difficulties.
Barry Naughton

“Without a doubt the policies are ambitious. But the proliferation of ambitions has outrun the instruments that are available to actually achieve them, and as a result we’re already seeing increased conflicts, contradictions and difficulties. I think that is going to continue…and will have extremely important ramifications that will ripple out not just in China, but on a world scale.”

 

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During the summer of 2021, a “regulatory storm” shook markets in China. While the crackdown had its most immediate effects on private education, internet business, and finance, the government has also rolled out new policies to shape manufacturing and infrastructure, and even household fertility and income distribution.

The Summer of 2021: Consolidation of the New Chinese Economic Model with Professor Barry Naughton

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Stanford Libraries and the Stanford Center on China’s Economy and Institutions hosted the 2021 Dr. Sam-Chung Hsieh Memorial Lecture featuring Professor Barry Naughton speaking on The Summer of 2021: Consolidation of the New Chinese Economic Model.

Read the event recap and watch the recording on demand. 

During the summer of 2021, a “regulatory storm” shook markets in China.  While the crackdown had its most immediate effects on private education, internet business, and finance, the government has also rolled out new policies to shape manufacturing and infrastructure, and even household fertility and income distribution.  In this talk, Naughton interprets these actions as an extension of the ongoing Chinese government effort to exercise “grand steerage” of the economy.  The new policies of summer 2021 in fact represent the consolidation of a new model, in which the Chinese government decisively steers a predominantly market economy.

Watch the Recording

 

About the Speaker

Photo of Barry Naughton giving a lecture.
Barry Naughton is the So Kwan Lok Chair of Chinese International Affairs at the School of Global Policy and Strategy at UC San Diego. He is one of the world’s most highly respected economists working on China. He is an authority on the Chinese economy with an emphasis on issues relating to industry, trade, finance and China's transition to a market economy.

Naughton’s recent research focuses on regional economic growth in China and its relationship to foreign trade and investment. He has addressed economic reform in Chinese cities, trade and trade disputes between China and the United States and economic interactions among China, Taiwan and Hong Kong.

Naughton has written the authoritative textbook “The Chinese Economy: Transitions and Growth,” which has now been translated into Chinese. His groundbreaking book “Growing Out of the Plan: Chinese Economic Reform, 1978-1993” received the Ohira Memorial Prize, and he most recently translated, edited and annotated a collection of articles by the well-known Chinese economist Wu Jinglian. Naughton writes a quarterly analysis of the Chinese economy for China Leadership Monitor. 

Read more about Professor Naughton.

The family of Dr. Sam-Chung Hsieh donated his personal archive to the Stanford Libraries' Special Collections and endowed the Dr. Sam-Chung Hsieh Memorial Lecture series to honor his legacy and to inspire future generations. Dr. Sam-Chung Hsieh (1919-2004) was former Governor of the Central Bank in Taiwan. During his tenure, he was responsible for the world's largest foreign exchange reserves, and was widely recognized for achieving stability and economic growth. In his long and distinguished career as economist and development specialist, he held key positions in multilateral institutions including the Asian Development Bank, where as founding Director, he was instrumental in advancing the green revolution and in the transformation of rural Asia.

Read more about Dr. Hsieh.

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Barry Naughton
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Spring Seminar Series: Institutional Genes: Confucianism vs. Christianity with Prof. Chenggang Xu

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Tuesday, May 25, 2021 | 11:00am-12:15 pm Pacific Time

Institutional Genes: Confucianism vs. Christianity

This talk was based on a chapter of my ongoing book project titled “Institutional Genes: A Comparative Analysis of Origins of China’s Institutions.” Confucianism / Imperial-Exam-System is one of three what I called institutional genes of China's institutions. As a comparison, Christianity is an institutional gene for other institutions, including constitutional democracy (in the West) on the one hand and totalitarianism (in the Soviet Union), which is implanted into China on the other hand.  In this talk, I’ll explain how Confucianism/  Imperial-Exam-System is created and evolved, and why it is an institutional gene that affects today’s institutions in China.   

Watch the Recorded Event:

Headshot of Dr. Chenggang Xu.
About the Speaker

Chenggang Xu is Visiting Professor at Finance Department, Imperial College London. He is one of the first recipients (joint with Yingyi Qian) of China Economics Prize for contributions in understanding government and enterprise incentive mechanisms for the transition economy of China. 

Dr Xu received his PhD in Economics from Harvard in 1991. He is currently a board member of the Ronald Coase Institute (RCI) and a research fellow of the CEPR. He has previously taught at the London School of Economics (1991-2009) as a Reader, at the University of Hong Kong (2009-2016) as Chung Hon-Dak Professor in Economic Development and as Quoin Professor in Economic Development (2008-2016), and as Special-Term Visiting Professor at Tshinghua University (2002-). He has also taught and worked at Harvard (1992-2002), the IMF (1997-1999) and the Chinese Academy of Social Sciences (1982-1992). He was the President of the Asian Law and Economics Association (2010-2012) and World-Class University Professor at Seoul National University (2009-2013). He won the Sun Yefang Economics Prize in 2013. In 2016, he was the joint winner of the China Economics Prize.

Seminar Series Moderators:

Headshot of Dr. Scott Rozelle

Scott Rozelle holds the Helen Farnsworth Endowed Professorship at Stanford University and is Senior Fellow in the Food Security and Environment Program and the Shorenstein Asia-Pacific Research Center, Freeman Spogli Institute (FSI) for International Studies. For the past 30 years, he has worked on the economics of poverty reduction. Currently, his work on poverty has its full focus on human capital, including issues of rural health, nutrition and education. For the past 20 year, Rozelle has been the chair of the International Advisory Board of the Center for Chinese Agricultural Policy, Chinese Academy of Sciences (CAS). In recent years Rozelle spends most of his time co-directing the Rural Education Action Project (REAP). In recognition of this work, Dr. Rozelle has received numerous honors and awards. Among them, he became a Yangtse Scholar (Changjiang Xuezhe) in Renmin University of China in 2008. In 2008 he also was awarded the Friendship Award by Premiere Wen Jiabao, the highest honor that can be bestowed on a foreigner. 

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Hongbin Li is the James Liang Director of the China Program at the Stanford King Center on Global Development, and a Senior Fellow of Stanford Institute for Economic Policy Research (SIEPR). Hongbin obtained his Ph.D. in economics from Stanford University in 2001 and joined the economics department of the Chinese University of Hong Kong (CUHK), where he became full professor in 2007. He was also one of the two founding directors of the Institute of Economics and Finance at the CUHK. He taught at Tsinghua University in Beijing 2007-2016 and was C.V. Starr Chair Professor of Economics in the School of Economics and Management. He founded the Chinese College Student Survey (CCSS) in 2009 and the China Employer-Employee Survey (CEES) in 2014.

Hongbin’s research has been focused on the transition and development of the Chinese economy, and the evidence-based research results have been both widely covered by media outlets and well read by policy makers around the world. He is currently the co-editor of the Journal of Comparative Economics.

 

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