It’s an exciting time to study the world’s largest economy – China has 1.4 billion people and a middle/upper class double the size of those of the US or Europe. If you’re a global company such as GM or VW, there’s a good chance you make more money in China than anywhere else. China is a geo-economic force across Asia, rubbing up against India and Russia with its Belt-Road (一带一路) initiative. Of course in trade with the US they’re rubbing up against Trump’s ego, but then who isn’t? Still, these topics need analysis. Fortunately for us, Barry Naughton published an excellent text earlier this year, which will help us understand China’s dynamic economy.
Your lifetimes have also witnessed a transformation of the lifestyle of the average Chinese. When you were born, the country was still predominantly both rural and poorer. Over the last 20 years 250 million people have left the farm for the city. What was once viewed as a “floating population” (流动人口) of seasonal and circular migrants are now firmly ensconced in their urban homes – China has 200+ cities with a population over 1 million people. In 1998 people were still worried about food; now the problem is diabetes. In 1998 people’s social network did not extend much beyond their natal village; it now stretches across China’s 800 million smartphone users. Alec Ash’s 2018 book, Wish Lanterns, provides us with poignant vignettes of this transformation, as seen through the eyes of 6 young college graduates.
Rapid growth produces distortions – investors financed entire cities in locations that today no longer make sense. There’s a lot of bad debt out there, and it’s one of the flashpoints for the economy. Here we have Dinny McMahon’s China’s Great Wall of Debt, recommended by an alumnus who runs the China Beige Book analytics firm. Schedule permitting, he’ll skype in at some point this fall.
Obviously there’s little available on the looming trade war, and nothing in our readings. As an upper-level class we do need to read a few economics research papers. Work on this topic, and on migration, will serve to that end. In addition, there’s the “China 2025” initiative to secure a position in various high-tech industries. That would be a natural outcome – as the graphic illustrates, China is a natural magnet for ventures in ride-hailing, autonomous vehicles and electric cars, and is no longer just a manufacturer of low-tech products. Indeed, China’s labor-intensive manufacturing sector is shrinking, as firms find Vietnam and Ethiopia and Bangladesh better places for sewing garments and gluing shoes. That is the tip of the iceberg: China’s working-age population is shrinking. In the long run policymakers must “rebalance” growth from “hard” construction & manufacturing to “soft” services-led consumption. This course should prepare you to observe how that goes over the next 20 years.
- understand the structure and size of China’s economy
- be able to sketch the factors behind China’s rapid growth, the structural transformations that accompanied it, and the economy’s potential for continued growth
- be able to trace individual and social aspects of China’s evolution towards a middle-income urban economy
- recognize distortions that stemmed from rapid growth, such as lagging institutions, environmental degradation and inadequate urban services
- gain sophistication about China’s role in the global economy, and the impact of trade and finance on China’s economy
First and foremost, we will work through the Naughton text. Barry is the leading specialist of his generation working on the Chinese economy in the US/Europe. He began studying China as an undergraduate, and was in the first cohort of graduate students who was actually able to go to China to undertake research, in the late 1970s/early 1980s. With only 12 weeks we won’t have time to cover everything in the book in depth, but we will at least be able to touch upon why the material in each chapter is important, and develop key models that lie behind the core claims of the book. The syllabus lays out the sequence, and the midterms and final will hold you responsible for the content.
Economics is ultimately a social science that focuses on the structures in which people live and work. We need to be careful not to view China as “other” but we also need to recognize that not everything is just like what we know from our personal experience. China is in some respects still a developing country, where much of the population has low incomes, poor housing and challenges in accessing healthcare and education. At the same time, young people aim for a college education, are glued to their phones, worry about careers and significant others, and otherwise share many of the concerns of Americans of a similar age. The Ash book is a good introduction, thoughtful and approachable. You will write a paper on it, which will serve as a point of departure for class discussion.
Of course China is and will remain in the headlines. One looming set of topics revolve around the adjustment to slower growth. As we will see, investors and local governments were bewitched by urban growth of 15% per annum, where things doubled in 5 years – even if they “know” about diminishing returns, they effectively factored continued rapid expansion into their behavior. China managed to avoid most of the effects of the Great Recession; many Chinese have no memory of anything but double-digit GDP growth. Now the economy is expanding at a mere 6%, and will slow further. Lots of decisions will look foolish in retrospect. Ordinary Chinese have thrown money into Ponzi schemes, companies have invested in castles in the sky – Dinny McMahon’s book provides vivid anecdotes of such excesses, and tries to analyze what will happen as reality intrudes. Again, you will write a paper, which will undergird class discussion.
There is now a large body of formal academic research on China, with high-quality empirical work. We will spend time on how to read such papers: how do economists present empirical results? how can we focus on the core findings without getting mired in the technical details? To that end we will jointly read a paper or two, looking at how to “read around” the technical parts and cull the key empirical results. From your end, you will explore two papers on your own, comparing and contrasting them, drawing upon the literature on migration. I help you in that process with a bibliography of 80+ papers that I’ve scanned for quality and clarity.
China is in the news, and we’d be remiss not to discuss what’s going on. For that purpose I will post to the course blog about once a week, and ask you to engage in an online discussion. We can then briefly summarize that discussion at the end of each week of classes. Those topics aren’t predetermined; you can propose a topic. This is a good way to keep up with trade issues, with international finance and foreign exchange markets, and with foreign policy and industrial policy.
All writing assignments are due as hard copies, printed in a standard font with 1″ margins. Concise writing is critical – most of what you do over your career, emails and memos, will be constrained in length. I have writing guidelines. Avoid passive voice, don’t use indefinite modifiers such as “a lot”. Include specific examples when you make a claim. And get someone else to proofread your work! But above all practice – to that end I attach a lower weight to the first paper. Good writing has a collaborative component. To that end I encourage you to use the resources of the Williams Communication Center to help you structure your paper, refine your argument, and edit your exposition. Acknowledge those with whom you work – it’s common courtesy, but also is what is expected under our Honor Code. Cite sources – I will introduce you to Zotero. The library provides Zotero resources – it’s a wonderful tool for organizing notes and generating bibliographies.
On most days I will post class notes to the course schedule. See the appropriate entries.
The blog will be on this W&L WordPress site. Feel free to pitch a topic to me. If the class is small enough, I will ask you to co-author a blog post with me.
The two midterms are open-book takehome exams. I will distribute them early in the week for you to hand in during a Thursday class. That way you should have flexibility to attend to them despite athletic events and so on. The final will be a standard 3-hour Blue Book exam, comparable in scope to the midterms. To help you focus your end-of-term review I will distribute one essay question topic in advance.
See the texts post tab. The screenshots link to the relevant Amazon page, though they may not be the least expensive source.
I have perhaps 8 varieties of Chinese tea in my office, and a hot water pot and teapots. I’m happy to serve tea in class, if you help set up and (because I have another class right away) clean up. That involves carrying things to/from my office, Huntley 125B adjacent to the front handicap entrance.
See the Office Hours tab. My office is Huntley 125B, on the lower floor of the building, adjacent to the handicap entrance. Sometimes I hold office hours at Lexington Coffee Shop; in my office I serve tea. (I run a tab at LexCo, tell them to charge yours to the prof…) Note that if I’m with someone, I won’t know you’re waiting unless you let me know you’re there. And you don’t have to have a particular concern, chatting is fine. Inevitably the hours I chose won’t work for one or more of you. Contact me! – we can always find a feasible time. Note though that I prefer email at email@example.com, rather than texting, as I normally silence my phone, and (horror!) may not see a message until hours after the fact.
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You’re upperclassmen and know the routine. Pledge all exams and papers. Acknowledge editors and proofreaders. Cite sources (see “Writing” above).
Please contact me in private, as per the university policy quoted below. Note that you will need to work in advance with me for the final exam if you need a separate room or extra time.
Washington and Lee University makes reasonable academic accommodations for qualified students with disabilities. All undergraduate accommodations must be approved by the Title IX Coordinator and Director of Disability Resources. Students requesting accommodations for this course should present an official accommodation letter within the first two weeks of the term and schedule a meeting outside of class time to discuss accommodations. It is the student’s responsibility to present this paperwork in a timely fashion and to follow up about accommodation arrangements. Accommodations for test-taking must be arranged at least a week before the date of the test or exam, including finals.