Publications

    The Chinese Economy: Sectors and Prospects

    Hao Chen, February 2024

    The future of the Chinese economy has sparked extensive discussions in both academia and the policy community. Opinions among China specialists are varied; some believe the economy is in the midst of a severe cyclical downturn, while others maintain that a sharp decline is unlikely. There are also those who believe it is still too early to tell.

    Indeed, China is experiencing a trend of economic slowdown. After joining the World Trade Organization in 2001, China’s economy grew at a dazzling pace; the average growth rate of China’s gross domestic product from 2001 to 2012 was 10.25%. However, since Xi Jinping came up in spring 2013, the average annual growth rate has dropped to 6.22%, plummeting to only 3% in 2022. So, which sectors have been most affected by this economic slowdown? And what are the future prospects of the Chinese economy?

    Institutional Change and Adaptive Efficiency: A Study of China's Hukou System Evolution

    Tony Saich and Kunling Zhang, December 2023


    Since the 1990s, neo-institutionalists have posited that "institutions matter". However, they overlook one important issue: the ways institutions change also matters. Numerous academic studies have identified "good" and "bad" institutions, but little has been written about effective methods of transforming "bad" institutions so that they enhance economic performance. To fill this gap, this book reframes the approach of neo-institutional economics to analyze institutions' role and evolution, focusing on the interaction between the household registration (hukou) system evolution and economic transformation.

    The authors apply an endogenous and dynamic perspective. First, the theory of endogenous institutional change illustrates how the drivers of hukou system evolution differ in the pre-reform and reform eras. Second, the theory of adaptive efficiency evaluates the evolution of the system's institutional efficiency. Finally, the authors were able to test the impact of the hukou reform on urban economic growth by examining local experimentation, helping explain the current "stickiness" of the system.

    At the heart of hukou reform lies the question of how to deal with the link between hukou and welfare provision. This book will offer policymakers a better understanding of institutional change in dynamic economic contexts, helping them enhance economic performance.

    Read the introduction
    China’s Most Generous: Examining Trends in Contemporary Chinese Philanthropy (2020 Update)

    Edward Cunningham and Yunxin Li, August 2023

    This report on elite philanthropy presents the latest findings from the Harvard Kennedy School Rajawali Foundation Institute’s China Philanthropy Project and provides insight into current trends among China’s major donors and recipients.

    The China Philanthropy Project research team reviewed reports and articles covering over 7,000 foundations, over 1,200 charitable organizations, and nearly 3,000 universities in China. Throughout this process, they collected data on more than 17,000 donations made in 2020, accounting for 44 percent of China’s total estimated national giving. In the report, they then focus on the nearly 6,000 donations valued over RMB 1 million (USD $0.14 million), resulting in over 4,000 unique donors analyzed.

    Vietnam: Navigating a Rapidly Changing Economy, Society, and Political Order
    Perkins, Dwight, and Borje Ljunggren, ed. 2023. Vietnam: Navigating a Rapidly Changing Economy, Society, and Political Order. Cambridge: Harvard University Press. Learn more on the publisher's site Abstract

    Börje Ljunggren and Dwight Perkins, June 2023 

    In the late 1980s, most of the world still associated Vietnam with resistance and war, hardship, refugees, and a mismanaged planned economy. During the 1990s, by contrast, major countries began to see Vietnam as both a potential partner and a strategically significant actor—particularly in the competition between the United States and an emerging China—and international investors began to see Vietnam as a land of opportunity.

    Vietnam remains a Leninist party-state ruled by the Communist Party of Vietnam that has reconciled the supposedly irreconcilable: a one-party system and a market-based economy linked to global value chains. For the Party stability is crucial and, recently, increasing economic openness has been combined with growing political control and repression.

    This book, undertaken by scholars from Vietnam, North America, and Europe, focuses on how the country’s governance shapes its politics, economy, social development, and relations with the outside world, as well as on the reforms required if Vietnam is to become a sustainable and modern high-income nation in the coming decades.

    Despite the challenges, including systemic ones, the authors remain optimistic about Vietnam’s future, noting the evident vitality of a determined society.

    Read the introduction 
    China's Most Generous: Examining Trends in Contemporary Chinese Philanthropy (2019 Update)

    Edward Cunningham and Yunxin Li, March 2023  

    This annual report highlights leading results from the most recent data analysis of the Harvard Kennedy School Ash Center’s China Philanthropy Project. Our team gathered 2019 data on over 20,000 donations from 7,166 foundations, 1,220 charitable organizations, and 2,597 universities in China. To focus on elite giving, we further refined our analysis to 4,434 donations of over RMB 1 million (US$0.14 million), given by 4,070 unique donors. The resulting report on top individual, corporate, and organizational philanthropy provides an important view into current trends among China’s major donors and recipients.

    In 2019, elite Chinese giving:

    1. was dominated by large organizations (most commonly corporations) rather than individuals,
    2. supported in large part central government policy priorities in the areas of education and poverty alleviation, and
    3. remained fairly local in scope.
    The World’s Best-Kept Financial Inclusion Secret Revealed: The Untold Success Story of BRI Microbanking Since 1895

    Jay Rosengard, November 2022 

    Bank Rakyat Indonesia (BRI), Indonesia People’s Bank, has been the most successful promoter of financial inclusion in Indonesia since the country declared independence in 1945. 

    BRI’s first major financial inclusion initiative was the 1970 creation of a nationwide network of BRI “unit desas,” or village units, for channeling Bimas (Mass Guidance) agricultural credit. The primary objective of Bimas was to promote national self-sufficiency by bringing the Green Revolution to Indonesia. However, by the 1983–84 planting season, successful rice farmers no longer needed Bimas support, leaving only marginal and failing farmers in the program.

    BRI thus began its microbanking metamorphosis and rebirth with painful adjustment and slow adaptation, subsequently laying the foundation for dramatic growth and rapid expansion. Three principal policy changes turned unit desas from marginally useful, extremely costly entities that had outlived their initial mission into profitable rural banks providing vital financial services: 1) transformation of unit desas from Bimas conduits to full-service rural banks; 2) internal treatment of unit desas as semi autonomous units of account (discrete profit/loss centers); and 3) evaluation of unit desas based primarily on their profitability rather than on hectares covered or money lent. BRI has built on its successful commercialization of microbanking in the mid-1980s to grow, broaden, and deepen its microbanking business over the past three decades. 

    BRI faces two significant future challenges if it is to remain a profitable and effective global leader and national driver of financial inclusion. First, it must continue to evolve and adapt amidst an increasingly difficult political and economic environment. This is indeed a formidable challenge but one BRI has successfully met since Indonesia declared independence in 1945. However, the second challenge facing BRI is even more daunting. While continuing to navigate the treacherous waters of well-intentioned but counterproductive national policies that threaten to undermine past accomplishments in financial inclusion, BRI must also manage a transition back to sustainable, market-based microbanking.

    What to Expect from the 20th Congress of the Chinese Communist Party

    Tony Saich, September 2022

    On October 16, the Chinese Communist Party (CCP) will convene its 20th Party Congress. Held every five years, the Congress is a critical event. While nothing is seriously debated there, the symbolic function of the Congress is extremely important. It summarizes past achievements and sets out future objectives, all while displaying an outward power and unity. The Congress brings together just over 3,000 delegates from the provinces, the People’s Liberation Army (PLA), and some central agencies for about a week to approve the report of the General Secretary, amendments to the party statutes, and any other documents placed before them. In theory, this sets in motion the appointment of a new leadership by electing candidates to the Central Committee (around 200 members and 150 alternates). In reality, the Congress approves the slate proposed by the outgoing Political Bureau (Politburo) and senior leader- ship. In turn, the Central Committee elects members of the Politburo, its Standing Committee, and the Secretariat, again based on lists provided after the Party leadership has finished haggling.

    This Congress will be special, as General Secretary Xi Jinping seeks a third term as political leader (either as general secretary or party chairman), confirms his place and ideas even more concretely within the party statutes, and seeks to appoint a leadership cohort drawn from his associates. Below, I provide my best guesstimates on his chances of reappointment, the leadership structure, and indications for future policy trends.

    Taiwan: A Risk Analysis Through the Lens of Hong Kong
    Kwok, Dennis W. H., and Johnny Patterson. 2022. “Taiwan: A Risk Analysis Through the Lens of Hong Kong”. Read full text Abstract

    Dennis W.H. Kwok and Johnny Patterson, May 2022

    This paper aims to provide an overall risk analysis of the Taiwan Strait situation by using Hong Kong’s experience over the past three decades as a point of comparison. The authors focus on three areas where those watching Taiwan can learn from Hong Kong. Since Deng Xiaopeng’s rule, Hong Kong and Taiwan have been inextricably intertwined, with China intending to reunify both territories using the “one country, two systems” formula. There are, of course, fundamental differences between the situations in Taiwan and Hong Kong. But there are also many similarities from which one can draw useful lessons. In the past three decades, Hong Kong tried to preserve its liberal democratic values whilst coexisting under an authoritarian regime. Hong Kong’s experience proved that a liberal democratic society cannot survive alongside an increasingly aggressive and authoritarian Chinese Communist Party (CCP) regime. Taiwan essentially faces the same dilemma.

    Hong Kong offers four key insights: First, Hong Kong provides a window through which to understand the modus operandi of Xi Jinping’s CCP. Political priorities trump all others —while CCP actions make sense within the system, they may confuse outsiders. Ultimately, Xi’s words should be taken literally and seriously. Second, the failure of the “one country, two systems” formula and Hong Kong’s collapse should not be lost on Taiwan. The so-called “United Front” tactics and the political polarization that occurred in Hong Kong are being emulated in Taiwan, with the Kuomintang’s (KMT’s) platform feeling increasingly untenable and anachronistic, especially in light of Hong Kong’s experience. Third, the infiltration of Mainland capital into Hong Kong over the past two decades has changed the underlying structure of Hong Kong as a business and financial center. The effect of ‘red’ capital made local Hong Kong and international business voices irrelevant. The authors saw their ability to influence and thereby moderate government policies waned over the years—leading to disastrous consequences for Hong Kong. Finally, Hong Kong has changed the geopolitical landscape in ways that have profound ramifications for Taiwan and how the international community perceives the CCP. The CCP openly walked back on an international treaty registered with the United Nations. The response of the international community and businesses reveals important lessons about the West’s vulnerabilities to this kind of geopolitical shock should the situation over the Taiwan Strait worsen.

    The Risks for International Business under the Hong Kong National Security Law

    Dennis W. H. Kwok and Elizabeth Donkervoort, July 2021 

    Hong Kong, a former British colony, has been a special administrative region of the People’s Republic of China (PRC) since 1997. The National People’s Congress promulgation of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (Hong Kong National Security Law, HK NSL) on June 30, 2020, has a substantial impact on Hong Kong’s constitutional structure known as “One Country, Two Systems.” Enshrined under the Basic Law (Hong Kong’s constitution under the Sino British Joint Declaration), One Country, Two Systems guaranteed that Hong Kong would exercise a high degree of autonomy—with its own political, economic, and legal systems—based on the rule of law. The HK NSL has been in operation for one year. This article analyzes the impact of the HK NSL on Hong Kong’s legal system and, in particular, its civil law jurisprudence. The article also explores the new legal risks and challenges international businesses face when dealing with PRC businesses or matters impinging on national security in mergers and acquisitions, commercial transactions, and civil disputes. These issues will be examined against the current geopolitical landscape and rising tensions between the PRC and other nations.

    From Rebel to Ruler: One Hundred Years of the Chinese Communist Party

    Tony Saich, July 2021 

    Mao Zedong and the twelve other young men who founded the Chinese Communist Party in 1921 could hardly have imagined that less than thirty years later they would be rulers. On its hundredth anniversary, the party remains in command, leading a nation primed for global dominance.

    Tony Saich tells the authoritative, comprehensive story of the Chinese Communist Party—its rise to power against incredible odds, its struggle to consolidate rule and overcome self-inflicted disasters, and its thriving amid other communist parties’ collapse. Saich argues that the brutal Japanese invasion in the 1930s actually helped the party. As the Communists retreated into the countryside, they established themselves as the populist, grassroots alternative to the Nationalists, gaining the support they would need to triumph in the civil war. Once in power, however, the Communists faced the difficult task of learning how to rule. Saich examines the devastating economic consequences of Mao’s Great Leap Forward and the political chaos of the Cultural Revolution, as well as the party’s rebound under Deng Xiaoping’s reforms.

    Leninist systems are thought to be rigid, yet the Chinese Communist Party has proved adaptable. From Rebel to Ruler shows that the party owes its endurance to its flexibility. But is it nimble enough to realize Xi Jinping’s “China Dream”? Challenges are multiplying, as the growing middle class makes new demands on the state and the ideological retreat from communism draws the party further from its revolutionary roots. The legacy of the party may be secure, but its future is anything but guaranteed.

    The Chinese Population Implosion: An Unparalleled Demographic Challenge with Global Consequences

    Borje Ljunggren, June 2021 

    In late May, the Politburo of the Chinese Communist Party (CCP) announced that couples would be allowed to have three children. As late as 2015, CCP finally gave up its draconic one-child policy, in force since 1979, for a two-child policy, but the number of births soon kept falling. In spite of the two-child policy the fertility rate has in the last few years actually fallen to just 1.3, well below 2.1 births per woman, the level required to maintain a stable population.

    The Party is experiencing the recoil effect of its biopolitics. At the turn of the century, China’s population, according to UN World Population Prospects (2019) medium variant, will have fallen to just over 1 billion. The population in 55 countries is expected to decrease during the next few decades, but no other country, with the exception of Iran, has undergone such a rapid and compressed demographic transformation as China, with a rapidly aging population and a diminishing labor supply. The causes are deep-rooted, beyond just launching a three-child policy. The one-child policy also had a tragic impact on the nation’s gender ratio, resulting in an extreme predominance in birth rates for boys and tens of millions of “missing women.” Technological developments with robots and AI will dramatically reduce the effects of China’s declining supply of labor but is seems clear is that the country is facing unique demographic challenges, with global consequences. The shadow that China is casting is growing in complexity!

    Why the Trans-Pacific Partnership and Immigration Are Needed for the Middle Class

    David Dapice, June 2021 

    The US population aged 20–65, according to US Census projections, will grow by 355,000 a year this decade, and of that number, only 225,000 new entrants a year will likely be working and increasing the labor force. Yet, even after prepandemic employment is reached later this year or early in 2022, labor demand will continue to grow by millions of jobs far more than will be supplied by new entrants. If immigration policy and automation adjustments are not enough to make up for the deficit, there will be shortages and inflation, forcing the Federal Reserve to raise interest rates and perhaps cause a recession. Such a recession hurts middle- and working-class families. 

    The US has indicated it wishes to compete with China. China has already formed a large trade bloc in Asia, and the obvious alternative—the Trans-Pacific Partnership (TPP)—was negotiated by the US but was never even put up for approval, lacking support from politicians on both sides of the aisle. Given all this, it is worth asking: is the TPP actually bad for labor and the middle class?

     

    Risk Mitigation and Creating Social Impact: Chinese Technology Companies in the United States

    Wenchi Yu, April 2021

    Chinese technology companies have become a topic of interest to not only the business and investor communities but also increasingly the national security and intelligence communities. Their scale and level of innovation present new possibilities and new competition as well as shape global trends. Yet the relationship of such companies to the Chinese government is often opaque. As a result, their growing integration into the global telecommunications system also casts doubt on their intentions and legitimacy.

    This paper reviews key US policy developments under the Trump administration, both broadly toward China and more narrowly relating to trade and technology, and examines the business strategy of four Chinese technology companies operating in the United States. It outlines the benefits of a corporate risk mitigation approach that incorporates social impact creation as an integral part of business and nonmarket strategy for Chinese technology companies, in the United States, and elsewhere. However, this paper also argues that corporate actions can only go so far. Because technology necessarily involves concerns of national security, the role of government—and government cooperation—is essential. It is only through a combination of more locally engaged corporate actions and internationally agreed upon sectoral rules and standard settings that we will be better able to improve transparency and trust-building across borders.

    Chinese Regional Planning Under Xi Jinping: The Politics and Policy Implications of the Greater Bay Area Initiative

    Jason Jia-Xi Wu, April 2021

    This paper seeks to explain the logic of Chinese regional planning pertaining to the Guangdong-Hong Kong-Macao Greater Bay Area (粤港澳大湾区 , hereafter GBA) and the challenges it entails for spatial development. Three questions guide the inquiry of this research: First, what are the institutional underpinnings of the GBA initiative, and how is the path dependency of regional integration in the Pearl River Delta (PRD) unique compared to that in China’s other coastal macroregions? Second, how does Beijing’s changing strategy toward Hong Kong inform the costs and limits of the GBA initiative, and what are their policy implications for the future development of the PRD? Third, why is regional planning uniquely favored by the Chinese Communist Party (CCP) central leadership, and what does this tell us about the changing policy parameters that govern center-local relations in China?

    This paper argues that the GBA initiative is an overly ambitious plan with very few policy instruments and little regulatory flexibility. It contends that the tensions between the GBA’s intended goals and the means of policy implementation are jointly resulted by three factors:

    1. Beijing’s emerging inclination toward using regional planning as an instrument to police center-local relations and cement its national security interests rather than using it as a mere instrument of economic governance.
    2. The declining room for policy experimentation at the local level, which reduces the state’s responsiveness to local demands and capacity to learn from mistakes.
    3. The historical and strategic importance of the Pearl River Delta to the People’s Republic of China (PRC), which causes Beijing to prioritize the political interests of PRD integration much more than its pursuit for regional development in China’s other macroregions.

    These changes are reflective of a broader paradigm shift in Beijing’s regional developmental strategies, under the climate of power centralization in the Xi Jinping era (2012–present). Finally, this paper demonstrates that such changes in the CCP’s regional planning in relation to the GBA initiative will engender both the decline of adaptive governance and premature deindustrialization.

    Disciplining of a Society: Social Disciplining and Civilizing Processes in Contemporary China

    Thomas Heberer, August 2020

    In this paper, we specifically focus on the social disciplining process in China since 2012, i.e., in the Xi Jinping era, although we also briefly touch upon historical aspects of disciplining (Confucianism, Legalism, New Life Movement” in the 1930s political campaigns in the Mao era, etc.). The approach adopted in this paper is to conduct an analysis of the disciplining/civilizing top-down project of the state.
     
    We argue that the function of the current Chinese state as a disciplining and civilizing entity is the connecting link tying policies such as the state’s morality policies, its anti-corruption drive or the so-called “social credit system” together under a specific governance logic: to discipline and civilize society in order to prepare the people to become modernized. In fact, modernization and modernity encompass not only a process of economic and political-administrative modernizing but concurrently one related to the organization of society in general and the disciplining of this society and its individuals to create people with “modernized” minds in particular.
     
    Our principal research questions in this paper are twofold: (1) How should disciplining and civilizing processes in general and in contemporary China in particular be understood? (2) What kind of policies and tools does the Chinese state use to pursue and implement its disciplining objectives?
     
    A Turbulent Decade: The Changes in Chinese Popular Attitudes toward Democracy

    Yinxian Zhang, August 2020 

    In light of the increasingly aggressive policies and rhetoric of the Chinese government, many came to believe that China may pose a severe threat to democracy and the international order. However, less attention has been paid to Chinese popular attitudes toward democracy and authoritarianism. How does the Chinese public think of democracy in the changing domestic and international environment?

     

    This paper uses a novel data set of Chinese social media posts generated between 2009 and 2017 and investigates the changes in popular attitudes toward democracy in the past decade. Results show that online discussion around democracy has decreased and voices questioning democracy have become pronounced since 2013. While tightened state control is a critical factor shaping popular attitudes, this paper demonstrates that people’s increasing exposure to two types of foreign information has also played into this trend. These information lead to a perception of dissatisfying performance of other countries and an awareness of racial attitudes of the West. Lastly, increasing doubts about democracy are not necessarily translated into a strong authoritarian legitimacy. Instead, online discussion presents a sense of ambivalence toward the two models, and the Chinese regime has continued to face a predicament of legitimacy.

     

    Cunningham, Edward, and Philip Jordan. 2020. “Our Path to “New Normal” in Employment? Sobering Clues from China and Recovery Scores for U.S. Industry.” Ash Center for Democratic Governance and Innovation. Read the full report Abstract

    Edward Cunningham and Philip Jordan, July 2020 

    The US National jobs reports for May and June exceeded expectations, and for many, this signaled that April was the true peak of American job losses and real recovery may be underway. Yet mounting evidence suggests that a job recovery is a long way off and that many jobs may not return.

    Part of the analytic disconnect stems from the fact that the global pandemic is a novel challenge for policymakers and analysts. We lack current, useful benchmarks for estimating the damage to the labor market, for estimating what recovery would look like, and for measuring an eventual recovery in jobs. Given this paucity of models, one place to look for patterns of potential recovery – particularly relating to consumption and mobility – is China.

    The Chinese economy is driven largely by consumption, urban job creation is driven by small and medium-sized companies, and China is several months ahead of the US in dealing with the pandemic’s economic and labor impact. An analysis of China’s experience may, therefore, offer important clues about our recovery here at home, and inform new models of thinking about American job recovery.

    Understanding CCP Resilience: Surveying Chinese Public Opinion Through Time
    Cunningham, Edward, Tony Saich, and Jessie Turiel. 2020. Understanding CCP Resilience: Surveying Chinese Public Opinion Through Time. Ash Center for Democratic Governance and Innovation. Read the full report Abstract

    Edward Cunningham, Tony Saich, and Jessie Turiel, July 2020

    This policy brief reviews the findings of the longest-running independent effort to track Chinese citizen satisfaction of government performance. China today is the world’s second largest economy and the Chinese Communist Party (CCP) has ruled for some seventy years. Yet long-term, publicly-available, and nationally-representative surveys in mainland China are so rare that it is difficult to know how ordinary Chinese citizens feel about their government.

    We find that first, since the start of the survey in 2003, Chinese citizen satisfaction with government has increased virtually across the board. From the impact of broad national policies to the conduct of local town officials, Chinese citizens rate the government as more capable and effective than ever before. Interestingly, more marginalized groups in poorer, inland regions are actually comparatively more likely to report increases in satisfaction. Second, the attitudes of Chinese citizens appear to respond (both positively and negatively) to real changes in their material well-being, which suggests that support could be undermined by the twin challenges of declining economic growth and a deteriorating natural environment.

    While the CCP is seemingly under no imminent threat of popular upheaval, it cannot take the support of its people for granted. Although state censorship and propaganda are widespread, our survey reveals that citizen perceptions of governmental performance respond most to real, measurable changes in individuals’ material well-being. For government leaders, this is a double-edged sword, as citizens who have grown accustomed to increases in living standards will expect such improvements to continue, and citizens who praise government officials for effective policies may indeed blame them when such policy failures affect them or their family members directly. While our survey reinforces narratives of CCP resilience, our data also point to specific areas in which citizen satisfaction could decline in today’s era of slowing economic growth and continued environmental degradation.

    China's Most Generous: Examining Trends in Contemporary Chinese Philanthropy

    Edward Cunningham and Yunxin Li, March 2020 

    This annual report highlights leading results from the most recent data analysis of the Harvard Kennedy School Ash Center’s China Philanthropy Project, capturing over one-quarter of estimated national giving in China. We focus on elite giving by building an annual database of the top 100 individual donors, top 100 donors from corporations and other organizations, and also top university recipients of philanthropic giving.

    In 2018, such Chinese giving:

    • was dominated by large organizations (most commonly corporations) rather than individuals,  
    • supported in large part central government policy priorities in the area of poverty alleviation,
    • revealed an intriguing new philanthropy-driven educational model in the country, and
    • remained fairly local in scope.

    Read the report in Chinese 

    Malcolm McPherson, March 2020 

    This paper examines how China can improve transboundary resource management within the Greater Mekong Basin (GMB) through its participation in the Lancang-Mekong Cooperation (LMC). Such improvement would ensure the efficient management and equitable development of the basin’s natural resources and ecosystems.

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