China Studies Working Papers


The China Studies Working Papers Series has been discontinued and transformed into the China Studies Review. The Series showcased research conducted by MA candidates in China Studies classes and was published from 2009 until 2013.

This website holds the Series archives.

Spring 2014 Working Papers

China's Middle Class: Content in the "Middle Income Stratum" or Seeds of Political Change?
By Rufino Hurtado
Abstract: This paper examines the rise and political implications of a middle class in China. It explores the difficulty of defining such a class in China, though its emergence is indisputable. The primary factor of commonality across this group is its impulse to preserve newfound wealth and affluence. In seeking to secure recent and rapid enhancements in quality of life, and in the absence of a coherent, unified political agenda. China's middle class, however unintentionally, has therefore served as a stabilizing socio-economic group from which the Chinese Communist Party derives legitimacy.

Fall 2012 Working Papers

The Policy Process Perspective of the Residential Property Tax: Shanghai, Chongqing and Beyond
By Napat Jatusripitak
Abstract: The policy process of China's first residential property tax presents interesting centerlocal bargaining dynamics. In 2011, the Chinese government introduced a residential property tax in Shanghai and Chongqing in a concerted effort to curb high housing prices. The bubble inside the housing market that accounted for more than 10 percent of China's GDP in 2009 not only put the whole economy at risk but also exposed the inequitable housing situation where the upper class speculated the housing market while the middle class could not afford quality living space. Since a residential property tax can affect different entities differently though multiple channels, it creates conflicts of interest that put intense frictions on the policy process, potentially widening the gap between the desired policy outcome and the actual outcome through extensive bargaining. This paper analyzes the policy interests and bargaining strategies of the central government and the Shanghai and Chongqing governments and evaluates the policy outcome. Using Dr. David M. Lampton's work on bargaining strategies in policy implementation in an authoritarian state, this paper concludes that the residential property tax represents an unlikely case of coalition building and benefit sharing between the central government and the Shanghai and Chongqing governments achieved through bargaining. Although the resulting policy was left noticeably less stringent than originally proposed, the policy still achieved its main goal of reducing housing prices without being dangerously deflective due to bargaining.

Not Just a Bill Sitting on Capitol Hill: International Repercussions of the Currency Exchange Rate Oversight Reform Act 2011
By Matt Chitwood
Abstract: China maintains a growing trade surplus with the U.S. It reached US$273 billion in 2010 and the IMF projects that the current account surpluses are to increase to US$874 billion by2016. In response to increasing surpluses, the U.S. Senate passed the Currency Exchange Rate Oversight Reform Act of 2011 (S.1619) on October 11, 2011. If enacted, this "currency bill," which is tabled in the House of Representatives, would place further pressure on China to appreciate its currency or face economic consequences such as countervailing duties on U.S. imports from China. The issue is politically charged, but analysis from an economic perspective can inform better policy and hopefully better politics. Through reviewing the history of the bill and analyzing the potential effects of the bill, this paper finds that the currency bill would neither reduce the trade deficit nor raise employment in the U.S. Rather, it would have a negative economic impact overall and lead to a decrease in real wealth and real wages. Evidence suggests that international trade law supports China's case and there would also be significant political costs. This paper concludes that the U.S. should not pursue the currency bill, but that China must make continued credible signals of currency reform in order to prevent U.S. domestic politics from interfering in Chinese economic development.

What Caused China's Trade Surplus? An Analysis into the Factors that Led to China's Phenomenal Growth in Merchandise Trade Beginning in 2000 and the Growth of the Trade Surplus Beginning in 2005
By David Fenton
Abstract: Three factors led to China's overall growth in both imports and exports beginning in 2001, and caused exports to outpace imports by 2005. The first factor is China's economic reforms beginning in the mid-1990s created dramatic productivity gains. Tens of thousands of state-owned enterprises (SOEs) were sold or closed, allowing room for a vibrant industrial private sector to grow. The second factor is China's exchange rate policy of pegging the RMB to the US dollar. China's industrial reforms led to explosive growth in total trade, though imports and exports grew at roughly the same pace until 2005. At this point, exports outpaced imports, indicating the RMB was undervalued. A strong US dollar up until 2002 helped China to maintain balanced trade, though as the US dollar weakened after 2002, the RMB weakened along with it, causing exports to exceed imports. The third factor is China's growing role as the center of world processing trade. China has two trade imbalances, a deficit with East Asia and a surplus with the West. Beginning around 2000, FDI from Japan, South Korea and Taiwan established processing centers for components to be processed and assembled in China and re-exported. A significant portion of this processing trade is made up of cell phones, televisions and computers, and processing trade accounts for over half of China's exports with the world. This paper discusses these three factors influence on the trade surplus, puts them in context and discusses future implications.

Risks to China's Financial System from Local Government Borrowing and Land-Based Public Finance
By Scott Viohl

Fall 2010 Working Papers

The East (Wind) is Red: A Survey of China ' Wind Energy Policy and Development
By Mark Hanson
Over the past 5 years, China has installed over 40,000 megawatts (MW) of wind power capacity, and with thousands more MW worth of projects to be completed in the coming years, it will continue to be the largest wind power market in the world. Yet despite this exponential growth unprecedented in both pace and scope, China ' emerging wind industry remains poorly understood beyond the headline growth numbers, as studies from just a few years ago are wildly out of date. This paper provides a survey of China ' wind energy development, examining changes in policy and industry over recent years to seek key factors for its success. This paper finds that by clearly defining the government ' commitment to renewable energy and forcing the state-owned grid to purchase all renewable energy produced, Chinese policy has provided the income certainty necessary for large scale business investment. State-owned power generation firms have moved to develop large scale wind projects while domestic firms with strong industrial backing have taken advantage of technology licensing and acquisitions to quickly expand their wind turbine production. Chinese firms are likely to continue to dominate domestic production, but the implications for the international wind industry remains unclear. All major wind producers are closely involved with overseas firms and full turbine exports remain virtually non-existent. 

Spring 2010 Working Papers

China ' Strategic Rare Earths Industry: China ' reforms and the U.S. response
By Sharon Nakhimovsky
As one of China ' strategic industries, rare earths have been a focal point for Chinese officials since Deng Xiaoping referred to them as China ' oil. Supplying 97% of the world ' rare earths, China currently dominates the international market. Recently China has introduced management reforms of the industry which target the twin problems of overcapacity and environmental exploitation. Corresponding export quotas and import taxes have sparked debate in the U.S. about the significance of China ' dominance in the rare earths market; where some believe that the U.S. government should be more proactive in lessening dependence on China, others say that market forces and continuing innovation will win the day.

Private Equity in China: Current Trends and Developments
By Henrik Blute
The Chinese government has in the recent years actively encouraged and promoted private equity as a distinct asset class. Government support, strong economic growth, massive private savings and an underdeveloped financial sector have put China at the forefront of private equity development in emerging markets. Even throughout the financial crisis total fundraising and investment remained relatively strong. The newest trend is a rise in RMB denominated funds taking advantage of the ever increasing domestic capital base. Also, in late 2009, the government undertook a measure to end the strict separation between domestic and foreign funds, allowing international GPs to raise or manage domestic funds. Although the new legislation suffers from the absence of a clear and central regulatory environment and uncertainties regarding taxation rules, it will clearly help to position private equity to remain an important asset class in the future. 

Fall 2009 Working Papers

From People's Money to International Currency: Internationalization with Chinese Characteristics
By Meredith Champlin
China has responded to the international financial crisis with two principal policy thrusts: the internationalization of the RMB and reform of the international financial architecture. China ' approach mirrors that of all its economic reforms, namely incremental steps coupled with experimental phases and pilot schemes. The lessons learned by China in both the Asian financial crisis and the current global financial crisis are shaping its vision of financial regulatory reform and the international financial system.

Seeking Truth from Facts: The Institutionalization of Economic Reforms in China
By Jefferson Finch
What enabled a Marist-Leninist-Maoist party to transform a planned economy into a market-oriented one without undermining the very legitimacy of the party itself? The institutionalization of the reforms was not the cause-and-effect result of the success of the initial rural Household Contract System reform, though that success certainly buttressed support for further reforms. Rather, it was the result of a wide range of dynamic processes, including ideological wranglings, the interplay between the strategies of politically differing revolutionary elders, decisions and actions taken by different leaders at critical junctures, and the initiative taken by leadership at the local level to spur reforms that were later formally endorsed in Beijing.

China's Energy Sector: Challenges to Reform
By Mark Hanson
Energy is a sector that naturally requires significant non-market intervention to reach its socially optimal form. Governments routinely create state energy monopolies, engage in national-level long term planning, and regulate numerous aspects of the energy markets. It is surprising to find then that China, a country often praised for the management of its economy, has struggled for decades to create the institutions necessary to effectively manage its energy policy.

The Prospects for Consolidation in China's Steel Industry
By Adam Jarczyk
When the state-owned enterprise system was dismantled in 1998, the Party began to lose its grip on the steel industry. Small mills started to spring up across China, responding to a growing domestic demand for basic materials. The explosion in demand as the country began to modernize its cities and build its infrastructure completely changed the dynamics of China ' steel sector; it drove an expansion of supply that fragmented the steel industry and took control over steel production out of the hands of the government, placing it the hands of thousands of independent Chinese entrepreneurs.

Does the Middle Class Call for Government Accountability? The Progressive Era American Middle Class versus the New Chinese Middle Class
By Lani Marsden
The rise of the middle class is widely considered a potent agent of the sociopolitical transition toward democracy and the basis for a democratic government's continued existence. China, however, seems to present an example in which middle class formation is not leading to more accountable government. This puzzle may be explained to some extent by differences between the new Chinese middle class and the middle class that organized the American Progressive Movement, namely the dissimilarities between the two nations' traditional culture of relationships, the history and background of the members of the middle class, and motivations of the middle class.

Landlords, Peasants and Communists: Land Reform and Ownership in Pre-Collectivization Rural China 1949-1955
By Jason (Young) Park
Pre-collectivization landownership destroyed much of China ' traditional landownership system, but was ultimately an imperfect socialist policy because it was still a form of private ownership. Neatly classifying a massive population into several distinct classes for the purpose of land redistribution was also a difficult task, and the policy did not always have support from local peasants. Defects in land reform policy combined with other reasons to ultimately bring forth Mao Zedong ' collectivization in the mid-1950s and on.

A Housing Bubble with Chinese Characteristics
By Miljana Vujosevic
China ' government, through various administrative controls, is creating as much a cooling bubbles in the housing market. Current housing data suggests that the Chinese housing market is fast approaching a bubble, thus making it essential for the government to explore additional policy options in 2010. Although the PBoC is steadfastly implementing controls to target potential speculators in the real estate market, the real source of financial instability lies in overleveraged real estate developers. 

Spring 2009 Working Papers

The Long March: Reebok's Role in Advancing Labor Rights in China
By S. Elizabeth Rowland
In 2001, Reebok became the first known multinational corporation to facilitate trade union elections in a Chinese supplier factory. Following initial success, Reebok expanded the experiment to other factories as well. Although these elections and other Reebok worker representative experiments, such as worker health and safety committees, failed to achieve their purported goals of increasing worker representation and sustainable code compliance in Reebok ' Chinese supplier factories, they sparked important changes toward improved labor rights and working conditions.