East Asia & Pacific

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?

Top Fall 2023 Insights from the Rajawali Foundation Institute for Asia

Published January 5, 2024

From Harvard Square to Hanoi, the Rajawali Foundation Institute for Asia addresses some of the region's most intractable public policy challenges. From timely research to analysis on major regional events, this semester, we continued our work to deepen understanding of the region, explore possibilities for innovation, and advance important initiatives that will affect millions of lives in Asia. 

We encourage you to explore a selection of our most popular events and insights from the past semester below. Looking to 2024, we invite you...

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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.
Vladimir Putin stands next to Xi Jinping, both stand in front of a row of Chinese and Russian flags

As Russia Turns to China, Beijing Gives a Tepid Embrace

January 23, 2023

While China has been reluctant to criticize Russia’s invasion of Ukraine, HKS Professor Tony Saich believes that Beijing is treading a fine line in not alienating the West and risk becoming sanctions targets themselves.

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.

Can the US Regain the Lead in the Microchip Race?

Can the US Regain the Lead in the Microchip Race?

July 27, 2022

President Biden hopes the passage of the CHIPS Act will jumpstart American microchip production. But as Jason Hsu explains, subsidies will only go so far in the global competition to gain dominance in the semiconductor industry. 

Indo-Pacific Economic Framework holds value, but it’s unclear if it will counter China’s influence says Senior Economist David Dapice

Five years after the United States left the Trans-Pacific Partnership (TPP), the Biden administration is working to establish a regional economic agreement with Asia-Pacific countries. The pact, officially titled the Indo-Pacific Economic Framework (IPEF), is meant to counter China’s increasing influence amongst South and Southeast Asian countries—though some question if the framework will be effective as it lacks the traditional trappings of a trade agreement, notably tariff reductions.

As...

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