2015 (Winter) Syllabus

China’s Modern Economy
Economics 274 Winter 2015

Section 1: MWF 11:15 am – 12:10 pm Huntley 324
Section 2: MWF 2:30 pm – 3:25 pm Huntley 324

Prerequisites: Economics 101 and 102.
Speak to me if you want to take the course but have not had “Principles”.

China’s economy is roughly the size of those of the EU and the US, and almost three times larger than India and Japan. This reflects a population of 1.35 billion multiplied by 30 years of 10% per annum growth. GDP is abstract; rapid growth transforms lives. In 1980 most people lived on the farm; today half are urban – China has 100+ cities with a population over a million. Twenty years ago there were virtually no private cars in China; today it is the world’s largest market, and very profitable for the leading firms, VW and GM.

Of course China remains a developing country, with PPP per capita GDP of $11,000, or about the level of South Africa or Peru, but poorer than Thailand or Mexico. Contrasts abound; in the coastal metropolises of Shanghai and Guangzhou, incomes are twice those of the country’s interior. Institutions remain young, with financial institutions that lack the staff and management systems to be able to lend to small firms, inchoate accounting systems, and little ability to consolidate the information that might undergird a credit report. As in much of the developing world, China remains a one-party state, though the “Communist” in the name of the ruling party is anachronistic, as market mechanisms and not government planning drive the economy. Similarly, despite images of a strong state, China is dominated by centrifugal forces, and Beijing remains remote. That is particularly apparent in the treatment of pollution, where local commercial interests trump regional and national concerns.

Many of the themes of this course are those of development economics: household decision making, migration, the roles of infrastructure and education. We also examine the growth process – something that is applicable to any economy – and the challenge of building a fiscal system that can provide education, healthcare and other local services.

Themes:

• modeling production and incentives in a developing country context.
• the rural sector, as an exemplar of shifting incentives at the producer level;
• migration, fertility and social transformation, as exemplars of household-level decision-making;
• the growth process at the macro level, including interactions with population dynamics;
• barriers to future growth, including the weak fiscal foundations of regional and local government, negative externalities such as pollution, and less-than-fully-developed markets for finance

I assume that you have no background on China, and so have chosen texts by a journalist/anthropologist, by a historian, and by business consultants that provide vignettes of rural and urban life. (There is no such thing as a “textbook” on China – or for that matter on the US…) These books introduce key topics as well, and provide concrete illustrations – “data” – for the models that we will develop in class. I also ask you to watch 2 documentaries, available on YouTube.

Format:

While I will devote part of some classes to the presentation of theory and basic background, most days will be devoted in part or in their entirety to the discussion of the readings, from the four books we use and select academic papers that complement them. That requires doing the assigned readings in advance. On a periodic basis I will choose a class member to lead off class discussion of readings – what are the main points, is there a core underlying model, what jargon is used, and why is it important for understanding the Chinese economy. We will also devote class time to the discussion of the the topic of the (short) papers I assign, on the day they are due. Extenuating circumstances aside, I thus do not grant extensions.

I emphasize writing. You are responsible for blogging and commenting course blogs on a regular basis, at least 3-4 times a week. I will also ask you to write the occasional one-page memo or reading response, and will assign you to lead class discussion at least once during the term. You will also be responsible for a four short papers on specific readings; I will provide detailed guidance in class. At present I specify all of the topics. If however you want to write a paper on a topic of your choice, or do a longer term paper in lieu of two of the short papers, see me! (One possibility is to do a longer policy paper drawing on one of the chapters of the World Bank eBook, Urban China.) For the last two weeks of class we read a book, In Line Behind a Billion People, on challenges to China’s growth. The final exam focuses on the topics of that book, which provides an opportunity to pull together what you learned this term. (There are no midterm exams.)

Complementing papers will be blogging, which is an opportunity to keep current on business and economic news, and to write in a manner more concise than in our short papers. I will make each of you an “author” for this W&L-hosted WordPress site, so that you can both post and comment. You should be posting once a week (10 times, that is all but the first and last week of the term) and commenting on several blog posts a week. I will track the number of posts and comments regularly, and will disable posting the week before final exams. In other words, I won’t let you do all of your posts in one sitting. I will conduct an in-class tutorial on using WordPress, overwhelmingly the most popular software for blogging and basic web site development. See the course web site for my own short guide to WordPress specific to the course web site. I do not remove posts from previous terms, so there are 500+ there. If you’ve never blogged, you have plenty of examples written by your peers. The course web site also hosts the syllabus, schedule, links to readings, links to China resources, paper guidelines and syllabi from previous years.

We will have 4 guest speakers this term, two of them in the evening. Attendance is mandatory – put the dates on your calendar NOW!

Written Work:

I ask that all written work be submitted in printed form, in a cover along with previous (graded) papers. Papers should be (i) double-spaced with 1″ margins in 11pt Times Roman, (ii) use in-line citations and a final bibliography, (iii) be proofread. Writing well and concisely is important – papers should have a (single) clear introductory paragraph, should avoid the passive voice and indefinite modifiers (“some” “very”), should utilize economic jargon and provide concrete examples (ideally, both statistical data and quotes from readings), should indicate relevant models (hand-drawn graphs/equations are fine), and should have a conclusion that is not a mere repetition of the introduction. All work is presumed pledged.

I strongly urge you to take advantage of the professional writing consultants who staff the Williams School Communication Center. Note however that you need to make an appointment in advance, and take a draft with you.

To help you learn to write better, I provide you the option to rewrite one paper during the course of the term; I only record the grade of the revised paper. If you wish to do a revision – on occasion I mandate it – you must tell me that promptly, you must set a hard deadline for getting the revision to me, and you must attach your original paper.

Schedule:

The schedule for the course is available online on this WordPress site (as are all other course materials). I will update the schedule if we have a snow day (as happened last year) and with links to specific readings. Please refer to it regularly.

Attendance:

Because of the emphasis on discussion – and the lack of a “textbook” – I expect you to attend all classes. Note that we have two classes on Thursday evenings, on March 25th and April 2nd. Put those on your calendar. Reschedule potential conflicts now!

Office Hours:

My preferred means of communication is email. In addition, I will give all of you my cell phone number, but please text only when necessary (eg if you’re running late, or if I’m running late = not [yet] there). Leave a voicemail if I don’t answer – I frequently don’t, for instance if I am meeting with one of you.

I hope that all of you will avail yourselves of office hours at least once during the term. However, I have no set scheduled office hours; please make an appointment (though if my office door is open, I’ve declared myself fair game) I will however suggest preferred slots once the term is underway; please do contact me if those slots don’t work for you.

Course Materials

Texts:
• Hessler, Peter. Country Driving. HarperCollins, 2010. ISBN 9780061804090
• Li, Huaiyin. Village China. Stanford, 2009. ISBN 9780804776578
• Miller, Tom. China’s Urban Billion: The Story Behind the Greatest Migration in Human History. Zed Books 2012. ISBN 9-781180-321417
• Ma, Damien and Adams, William. In Line Behind a Billion People. Pearson FT Press, 2013. ISBN 978-0133133899

Downloadable supplements:

• Development Research Center of the State Council and The World Bank. Urban China: toward efficient, inclusive, and sustainable urbanization. Washington, DC: World Bank Group, 2014.
• IMF 2014 China Article IV Consulation.

Films:

• All assigned films/documentaries appear to be available on YouTube.

Grading:

Good attendance and regular participation are expected of everyone.

Class conduct:

Please have cell phones silenced and out of reach and your laptop put away. Chide me if I’m guilty at some point.

Honor Code:

All work is governed by the honor code. Note that I expect all of you to seek assistance on your papers (peer editors, the Williams communications center); duly acknowledge them.

Special Accommodations

As per university policy, please contact me in private regarding special accommodations.