China!

It’s an exciting time to study the world’s largest economy, with 1.4 billion people and a middle/upper class almost 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 in the world. China is a geo-economic force across Asia, rubbing up against India. Of course they’re rubbing up against Trump’s ego, but then who isn’t? Still, that provides a set of topics crying out for analysis.

Indeed, as someone who does research on the auto industry, understanding China is important enough that I have written a journal article and a book chapter on China’s industry, and have learned to read enough to be doing a project on the industry’s geography. I have not put those on the syllabus/schedule.

Your lifetimes have also witnessed a transformation of the lifestyle of the average Chinese. When you were born, the country was still predominantly rural and rather poorer. Over the last 20 years 250 million people have left the farm for the city, public health now has to address diabetes rather than undernourishment, and society has shifted from a network that likely did not extend much beyond one’s natal village to a disparate community among China’s 800 million smartphone users. We’ll read about that in a just-published book by Alec Ash.

Fortunately Barry Naughton just published an excellent text to anchor our study of the economy. Rapid growth produces distortions – investors have put up 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 also have a book that’s just out by Dinny McMahon, recommended by an alumnus who runs the China Beige Book, a very successful data analytics startup. He’ll skype in to talk to us all.

Obviously there’s little available on the looming trade war, and nothing in our readings. Yet as the graphic illustrates – it’s about a ride-hailing company, an autonomous vehicle venture and an electric car battery plant – China is no longer just a manufacturer of low-tech products. Indeed, the manufacturing sector in China is shrinking, as firms find Vietnam and Ethiopia and Bangladesh better places for sewing garments and gluing shoes. China’s working-age population is shrinking, so an ongoing theme will be the efforts of policymakers to “rebalance” growth from “hard” construction/manufacturing to “soft” services-led consumption.

Texts – I ordered mine online on Aug 27th, all at a fraction of the cover price, from (variously) Abe Books, eBay but (as it happens) not Amazon or Barnes and Noble.

About Mike

Prof of Economics, Wms School of Commerce, Washington and Lee University, Lexington VA
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