Texts: Will Update With 1-2 more

  • Peter Hessler, 2010. Country Driving. NY: HarperCollins. ISBN 978-0-06-180409-0 but also in other formats.
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Winter 2017: MWF 2:30-3:25 pm

This course is targeted at students who have had Economics 101 and 102 (the “Principles” sequence) though in the past motivated students with an interest in China but little economics background have done well.

China’s growth is slowing from real GDP growth of a heady 10+% pa to (officially) between 6%-7%. Why, and so what? Until now there were three combined drivers: the emptying out of the countryside — farm-to-city migration — combined with favorable demographics and a steady increase in labor productivity that reflected heavy investment in infrastructure, housing, and production capacity. The first inevitably peters out, and while the demographics story is more complicated, the conditions that produce a “positive” dividend inevitably give way to an era of negative benefits. Finally, technology catch-up and the investment that underlies it face diminishing returns.

Growth in GDP is paralleled by growth in incomes. Of course that is good for China’s workers, but it does mean that they no longer constitute cheap labor, despite the public persistence of that image. That is reflected in shifting trade patterns, as higher incomes affect both the structure of exports and of imports. Furthermore, higher levels of economic activity — transport, electric power generation and the like — entail negative externalities.

This course will be restructured from previous years, with only a small portion devoted to agriculture, and correspondingly more on international topics. That will be reflected in a significantly different set of readings.

Formal output will consist of several short papers and two quizzes. I have yet to decide whether there will be a final paper or a final exam.

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Heaven of Earth: Hangzhou, Zhejiang

*Hangzhou is my hometown but not many people in the U.S. have heard about it so I decided to write a third blog on it.

Hangzhou, the capital and largest city of Zhejiang Province in Easter China, is famous for its West Lake and other surrounding attractions. The permanent population was 8.9 million at the end of 2014. The city proper accounts for 4,876 square kilometers and the municipality is spread over to 16,596 square kilometers. It was also the capital of Song dynasty in 1132. The economy has been booming since 1992 when the main industries were light, agriculture, and textiles. Hangzhou has rich land, subtropical climate, lakes and mountains so it is renowned as the “Land of Fish and Rice”, “Tea Capital” and “Home of Silk.” Now e-commerce plays a vital role in Hangzhou as it is the birthplace of Alibaba, the largest e-commerce company in China. Jack Ma, a native of Hangzhou, became the richest person in the world at one point in 2015.

The West Lake.

The West Lake

There are several economic and technological development zone divided in Hangzhou. My family is from Xiaoshan development zone, where there is a strong export-oriented model based on machinery, textile and garment industries. The village my mom comes from is famous for its textile industries. Some of my mom’s friends have textile companies. However, because of the chemicals released in textile production, Xiaoshan is also severely polluted. When we go back to the village to visit my grandparents, I can tell the air smells different. For a long time, Hangzhou was considered as “second-tier city” in China. However, as my comment to Ruili’s post mentioned, it is now “new first-tier city” because of its strong economic potentials. This year G20 summit, a premier forum for international economic cooperation, is happening in Hangzhou this September.





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PM2.5 and Public Health

According to New York State Department of Health, PM 2.5 are tiny particles in the air that reduce visibility and cause the air to appear hazy when levels are elevated. It is believed to post the greatest health risks, which includes “respiratory and cardiovascular morbidity from lung cancer, such as aggravation of asthma, respiratory symptoms”. The sources are motor vehicles, power plants, wood burning, and certain industrial processes. In Beijing, from 2008 to 2015, 49% of the days were considered as unhealthy to go out. 4% was considered hazardous.

However, not many people in China really knew about the danger of it even though people in big cities live with it until a CCTV journalist Chai Jing released the documentary “Under the Dome” to the public online, talking about how serious the issue is in China. Just the first day it came out, the film had more than 150 million viewers. One thing Chai did at the end of the film was to call out for actions. She wants Chinese citizens to “stand up” whenever they see violations of environmental laws and demand changes. Considering the great effect and panic it caused to the public, in three weeks, the documentary was censored and blocked by the Chinese government.


It is true that Chinese government has been doing things to solve the problem, such as shutting down some steel firms. However, it is clear that stopping these pollutant sources is also slowing down the Chinese economy.


Work Cited:



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The Designation of 1st, 2nd, 3rd tier cities in China

When thinking about meeting designations, there is just about every type and size: from major convention hubs to smaller, boutique style cities. The key for meeting planners, is finding the right fit for their specific meeting. Often times, you might hear a planner say that their annual meetings are only held in 1st tier destinations. Or that a specific destination is a 2nd tier city. How is the designation of different tier cities in China like?

National and Provincial Capitals of China

National and Provincial Capitals of China

While various criteria exist for defining a particular tier, the tiers of cities in China usually refer to key characteristics of the city, including its economic development, provincial GDP, advanced transportation systems and infrastructure, and historical and cultural significance. China’s first-tier cities usually refer to Beijing, Shanghai, Guangzhou, and Shenzhen which make “The Big 4.” Second-tier cities include capital cities of each province or coastal cities like Tianjin, Chongqing, Chengdu, Wuhan, Xiamen. Third-tier cities are usually medium-sized cities of each province. However, even third-tier cities have populations in the millions and represent a promising potential market for your business.

Tier 1 cities were the first to be opened to competitive economic development by the Chinese government.  These cities are recognized for being densely populated as well as culturally and economically influential.  Tier 1 Cities attract the attention of foreign enterprises given their large middle class representation and income levels well above the national average.  Cities that fall within this category represent China’s most developed markets in terms of consumer behavior.  First tier cities register total retail sales of around 30 billion RMB ($4.75 billion USD), and an annual per capita income of around 11,000 RMB (1,774 USD).

Tier 1 Cities are:  Shanghai, Beijing, Shenzhen, and Guangzhou.   These cities are known for being important political, cultural, industrial and financial centers in China as well as key hubs for the greater East-Asia region.

cities tier designation

cities tier designation

The rapid economic growth and rising incomes in 2nd tier cities has caught the attention of foreign investors over the past several years.  The markets in Tier 2 cities are a lot less competitive and the labor costs are substantially cheaper compared to Tier 1 cities.  A rapid increase in consumer spending in second tier cities is creating more demand for foreign brands.  However, the income of consumers in second, third, and fourth tier cities has been reported to be less than half compared to those in first tier cities.  At the end of 2011 around 60 cities in China qualified as second tier cities (China Sourcing).

There are approximately 200 county-level cities in China that fall within the category
of a 3rd tier city (China Sourcing).  Within third tier cities there is also a categorical subdivision like I mentioned above. Third tier high cities include Zhongshan and Shantou.  Third tier medium cities include cities like Xining and Baoding.


Work Cited:

“China’s City Tier System”, The Adventure of OSIO in Shanghai, China, Web. 16. Nov. 2012. https://osio-china.com/2012/11/16/chinas-city-tier-system/

“What is meant by first tier, second-tier, and third-tier cities?” SME Center, Resources and Referrals for Small Business. Web. http://sme.amcham-shanghai.org/en/faq/what-meant-first-tier-second-tier-and-third-tier-cities

“1st, 2nd, 3rd Tier Cities: What do the Designations Really Mean?” blog empower Mint. Com, http://blog.empowermint.com/site-venue-selection/meeting-destination-tiers/

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Chinese Manufacturing Employment

Since China’s economic reforms under the leadership of Deng Xiaoping, Chinese steel production has increased greatly and in 2015 produced 803.8 million tones of steel, over 50% of the world’s total production (World steel). Various large state-owned groups such as Baosteel, Angang Steel Company, Tangshan, and Hebei Iron and Steel lead the Chinese steel industry. However, due to lowered demand and the 2015-2016 Chinese stock market crash, the Chinese government announced large-scale closures and downsizing of China’s steel industry.

One of the first areas to be hit by steel production downsizing was the Tangshan district, which itself produces more steel than the US (abc). As a result, production is to be cut by two thirds resulting to a loss of 7,000 jobs and many workers who now have no livelihood. While these workers are owed salarieschn1 by the government, they have seen none of their money and fear for their future.

Altogether, Chinese authorities announced 400,000 people are expected to lose their jobs by 2020 but estimates go as high as 2 million (abc). With further downsizing on the horizon, mass unemployment and social unrest may ensue until the Chinese government is able to find suitable solutions for those who lost their livelihood from the downsizing.




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The Panama Papers

There is a fascinating web site put up by the consortium of journalists working with the Mossack Fonseca papers. The home page is at panamapapers.icij.org with a signup page for new updates. The files they have go back 40 years, and the information contained in them has already led to the resignation of the Prime Minister of Iceland and yet one more FIFA scandal/resignation/set of police raids.

The law firm was quite happy to assist big-time thieves (helping launder the proceeds of the $200 Heathrow Airport gold heist), jailed sex offenders and political leaders. Their papers open a window into the web of banks and other players in the big-buck game of foreign shell companies that allow money laundering and tax evasion, as well as merely hiding wealth from public scrutiny, which is not illegal. The data includes 210,000 companies, many open only briefly. Wealth management is a big business, and top European banks are active in this area. Prominent among them are the private bank arms of HSBC (the Hong Kong Shanghai Bank Corporation).

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Lishui, located in the Zhejiang province, houses 2.5 million citizens. Within the province, Lishui ranks first in the natural resources: timber, waterpower, mineral deposits and wilderness. However, more recently, Lishui’s economy has been characterized by rapid industrial development. The main industries include wood and bamboo production, textiles, pharmaceuticals, like herb medicines, and electronic machinery. The commercialization of bamboo and natural products contributes to the development of a comprehensive agricultural program. Their economy thrives on the production of 180 brand name products, which are sold both domestically and exported to over 100 foreign countries.
Screen Shot 2016-04-06 at 10.31.05 PM

In 2010, Lishui’s foreign trade equaled 1.5 billion U.S. dollars, which represented a 38% from 2009. Thus, demonstrating the rapid and increasing influence of cheap exports on the city’s economy. However, with this increasing industrialization, many people may be out of work. As a country, China announced that 5 to 6 million workers will be laid off in the coming years to “curb industrial overcapacity and pollution” (HKFP). Thus, it is worth questioning whether the movement towards an industrial manufacturing economy will displace workers in Lishui. In addition, Lishui is filled with beautiful landscapes and scenic attractions. However, we can infer from its isolated location that the city attracts more Chinese than foreign tourists.


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China’s National Highways

China has a series of “trunk roads” that run all across the mainland connecting high populated cities to one another.  Citizens oftentimes refer to these roads as highways, however they are not necessarily freeways due to their traffic control measures. China_National_Highway_Plan_(2013-2030)

There is an accepted speed limit on the highways of 100km/h, but rarely do drivers heed these limits as there is a lack of speed detection cameras and police officers enforcing the speed are few and far between.

The highways are named using a descriptive numbering system.  Each highway name begins with the letter G and is followed by three numbers.  The original 12 highway routes (5 vertical and 7 horizontal) are labelled using a 000 series.  Highways in the 100 series all begin in Beijing and spread throughout the country in all directions.  Highways in the 200 series travel from north to south, and 300 series highways from east to west. Finally, 500 series highways are roads that connect larger, national highways.

The rapid growth in highway construction across China has been noted as one of the key factors in accelerating infrastructure construction.  In 2004, China’s highway length ranked second in the world with 1.871 million kilometers of highways open to traffic.  More recently, in 2013 China’s Ministry of Transport announced the “National Highway Network Planning” program which will result in 119 total highways by the year 2030.  It will be interesting to observe the effect the Ministry’s new program will have on infrastructure development across the country.

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Chinese Steel Production Slowdown

Since China’s economic reforms under the leadership of Deng Xiaoping, Chinese steel production has increased greatly and in 2015 produced 803.8 million tones of steel, over 50% of the world’s total production (World steel). Various large state-owned groups such as Baosteel, Angang Steel Company, Tangshan, and Hebei Iron and Steel lead the Chinese steel industry. However, due to lowered demand and the 2015-2016 Chinese stock market crash, the Chinese government announced large-scale closures and downsizing of China’s steel industry.

One of the first areas to be hit by steel production downsizing was the Tangshan district, which itself produces more steel than the US (abc). As a result, production is to be cut by two thirds resulting to a loss of 7,000 jobs and many workers who now have no livelihood. While these workers are owed salaries by the government, they have seen none of their money and fear for their future.

Altogether, Chinese authorities announced 400,000 people are expected to lose their jobs by 2020, but estimates go0023ae606c3e1362ff4d06 as high as 2 million (abc). With further downsizing on the horizon, mass unemployment and social unrest may ensue until the Chinese government is able to find suitable solutions for those who lost their livelihood.

Wordsteel data
ABC Australia on job losses

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Chinese New Year

Chinese New Year is celebrated annually at the beginning of the lunisolar Chinese calendar. The New Year is a huge event in China, and festivals occur for fifteen straight days beginning the evening before the turn of the month. The first day ochinese_new-year_traditionsf the New Year is decided by the new moon between January 21st and February 20th, meaning that this year’s Chinese New Year began on Monday, February 8th. It is typical for many traditional Chinese dishes such as porridge to be served during festival meals in the days following the turn of the New Year.

The New Year is a several hundred year old tradition, beginning as a festival to honor deities and ancestors. Despite the name, the Chinese New Year is also celebrated in several neighboring countries such as Taiwan, Singapore, Thailand, Cambodia, and Indonesia among others. In the evening prior to the New Year, Chinese families will traditionally clean their house in order to rid away with any misfortune or pain lingering from the previous year.

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Chinese Virilocal

There is no institution in any culture more significant than the family. China, of course, is no exception—and its traditions of family structure have been historically ingrained in Chinese culture. One of the defining characteristics of Chinese familial structure is virilocality.

Virilocality means that once a husband and wife are wed, they live with the groom’s family. This living situation is not surprising, considering the country’s patrilineal outlook (that is, calculating descent through the lineage of a family’s men). Once a woman was married, she was essentially removed from her family tree and placed in the husband’s family tree. To keep this male lineage going was very important. If a man failed to produce male offspring, he was looked down upon—and upon death considered dangerous ghosts.

Dingle132-smallAlso, the Chinese family was traditionally patriarchal. The head of the house was the most elderly male, and males of the same generation were always superior to women. Considering the male-dominated mentality evidenced by the patrilineal, and patriarchal outlook on family structure, it is therefore no surprise that virilocality was the traditional family structure.

Virilocality was viewed as “normal” from both ends: the wife’s family expected her to leave, and the husband’s family welcomed the newly married couple into their family estate. This was a defining point in a woman’s life—rife with sorrow for having to leave her family home. This could occasionally be offset by the sense of adventure of starting a new life in a new location with the status of being a married woman. There are long-standing traditions on this theme of sorrow—which includes musical lamentations and ritualized sorrow sessions with the wife’s unmarried friends or younger sisters. But sometimes virilocality was not feasible. If the head of the male’s household was a poor farmer with little income, other alternatives had to be considered.

In about 20% of all Chinese families, the husband was forced to live with the wife’s family. This is a uxorilocal structure. Sometimes this was for purely economic reasons. Other times it was because the wife’s family had no sons. The son-in-law, therefore, would be a stand-in son for the wife’s family, and sometimes took one of the wife’s parent’s surnames. This, however, was a slap in the face to the son’s biological parents, if they were living.

But overall, uxorilocality broke the social mold and was looked down upon—uxorilocal husbands were viewed in scorn or suspicion. Such marriages were viewed as a “backward-growing sprout” (dǎozhù miáo 倒住苗) and husbands viewed as “superfluous husbands” (zhuìxù 赘婿).

Urbanization has caused an overhaul of this familial tradition. But I wonder: for rural families, is this tradition still observed? And what are the expectations for two you people who are married in the city?

Sources: http://pages.ucsd.edu/~dkjordan/chin/familism.html#virilocal;


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Recent IMF resources

March 21, 2016 Press Release: IMF Managing Director Concludes Visit to China
March 20, 2016 Opening Remarks at the 2016 China Development Forum: China in the New Five-Year Plan
March 20, 2016 Accelerating Reforms to Establish a Risk Prevention System
March 17, 2016 Tax Administration Reform in China John Brondolo | Zhiyong Zhang: Series: Working Paper No. 16/68
March 15, 2016 China’s Slowdown and Global Financial Market Volatility: Is World Growth Losing Out?
Paul Cashin | Kamiar Mohaddes | Mehdi Raissi: Working Paper No. 16/63
March 09, 2016 Dynamic Connectedness of Asian Equity Markets Roberto Guimarães-Filho | Gee Hee Hong: Working Paper No. 16/57
March 07, 2016 China’s Imports Slowdown : Spillovers, Spillins, and Spillbacks A Kireyev & A Leonidov: Working Paper 16/51
March 04, 2016 Demographic Change and Economic Well-being: The Role of Fiscal Policy, By Christine Lagarde
March 04, 2016 Sharing the Growth Dividend: Analysis of Inequality in Asia Sonali Jain-Chandra | Tidiane Kinda | Kalpana Kochhar | Shi Piao | Johanna Schauer: Working Paper No. 16/48
August 14, 2015 People’s Republic of China: 2015 Article IV Consultation
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Followup on Ghost Cities

See this 2013 snippet in which the author is visiting a “ghost city” publicized on 60 Minutes. He shows the program segment to bemused residents – the same day it first aired! It’s not just an exercise in debunking, because it includes the “why” of new but deserted cities, and the track record of what happens once they’re built. I’m curious now to read the Ghost Cities of China book (Wade Shepherd, ISBN 13 978-1783602186, published by ZED Books 2015 – that’s the publisher of our China’s Urban Billion, a publisher that wants short, readable but quality books with a promise of a very short time space between receipt of the completed digital manuscript and when the book goes on sale).

Curious enough in fact that I just ordered it as an Amazon Prime customer, using smile.amazon.com to see that the associated donation to a non-profit goes to a local organization, the United Way of Rockbridge, which raises funds for Campus Kitchen and many other local organizations. {I now have the book, but yet to read any of it.}

Note that JT uses Shepherd for the final paragraph of his post. Once I glance through the book I’ll have a better sense of how strong the evidence is that ghost cities are an apparition, whose specter does not in fact haunt the Chinese economy.

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Forced Labor

Hong Kong, the previously British colony located in southeastern China, has a shockingly high percentage of domestic workers that are being forced into labor. The Justice Centre Hong Kong (JCHK) recently conducted a survey that found 17% are engaged in forced labor. That is more than one out of every six.

Women working in a factory

The JCHK defines forced labor: “As per the ILO guidelines, an individual is counted as being in forced labour if they are experiencing both involuntariness and menace of penalty in any one of these three dimensions of forced labour: unfree recruitment, work and life under duress and impossibility of leaving.” The organization goes on to note that recent events inspired the survey. One possible example: a worker in Masanjia, China managed to smuggle a letter explaining the labor situation into a product, which reached a consumer in Oregon (Jacobs).

The JCHK’s findings echo the Masanjia worker’s conditions: “Close to 72% were paid less than the minimum wage of $529.58 (HK$4,110) a month” (Zheng). Forced laborers are consistently underpaid and undervalued. They are not given proper working or living conditions. The JCHK continues with the fact that “nearly 40% do not have their own room and 35.2% share a room with a child or elder person” (Zheng). And this aspect is in addition to other abusive conditions felt by many. One Indonesian maid in China was raped by her employer’s brother-in-law, but she had nowhere to turn (Price).

These employees are forced. Their passports are often taken upon arrival, and debts are incurred during training. These people looking for opportunity to help their families are facing seriously dark times, restricted to long hours and little pay. The JCHK’s survey and findings will hopefully incite some change at the governmental level. Regulations can be set, but they must be truly enforced. If China wants to be more developed, it’ll have to get rid of these injustices by holding all citizens and companies accountable.


Works Cited:

“Coming Clean: The Prevalence of Forced Labour and Human Trafficking for the Purpose of Forced Labour amongst Migrant Domestic Workers in Hong Kong.” The Justice Centre Hong Kong. Web. 20 Mar. 2016. <http://www.justicecentre.org.hk/framework/uploads/2016/03/Coming-Clean-The-prevalence-of-forced-labour-and-human-trafficking-for-the-purpose-of-forced-labour-amongst-migrant-domestic-workers-in-Hong-Kong.pdf>.
Jacobs, Andrew. “Behind Cry for Help From China Labor Camp.” The New York Times. The New York Times, 11 June 2013. Web. 20 Mar. 2016. <http://www.nytimes.com/2013/06/12/world/asia/man-details-risks-in-exposing-chinas-forced-labor.html?_r=0>.
Price, Deb, Chester Yung, and Sara Schonardt. “A Maid’s Fight for Justice.” WSJ. Wall Street Journal, 13 Oct. 2014. Web. 20 Mar. 2016. <http://www.wsj.com/articles/maid-in-hong-kong-fights-for-justice-against-abuser-1412231262>.
Zheng, Anjie. “17% of Hong Kong’s Domestic Workers Are Engaged in Forced Labor, Study Says.” China Real Time Report RSS. Wall Street Journal, 15 Mar. 2016. Web. 20 Mar. 2016. <http://blogs.wsj.com/chinarealtime/2016/03/15/17-of-hong-kongs-domestic-workers-are-engaged-in-forced-labor-study-says/>.
Photo: https://anewwe.files.wordpress.com/2013/11/0822_deathbychina_630x420.jpg.


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