AED Economics 439 / IS 439
China's Economic Reforms and Development
Spring Quarter, 2006
http://aede.osu.edu/class/aede439/

Syllabus
 

Monday and Wednesday 12:30-2:18 p.m.
Room 0056, University Hall

Dr. Wen S. Chern
Room 223, Agricultural Administration Building
Phone:  292-6414
E-mail:  chern.1@osu.edu
 

3:00 - 4:00 p.m. Monday
or by appointment

Yoon-Hyung Kim
Room 247, Agricultural Administration Building
Phone:  292-1253
E-mail:  kim.1933@osu.edu

3:00 - 5:00 p.m. Friday
or by appointment

Judy A. Luke
Room 221, Agricultural Administration Building
Phone:  292-2822
E-mail:  luke.23@osu.edu

By the end of the quarter, students are expected to be able to:

1. Understand China's main economic reforms undertaken since 1978.
2. Evaluate the successes and failures of China's economic reforms and transformation.
3. Analyze the reform strategies and the functioning of China's economic and social institutions.
4. Conduct a research project on a particular topic through the writing of the research paper.

We will invite several outside speakers to give lectures to the class.
 

1. The Mao years: 1949-1976: This video tells the story of how Mao Zedong and his colleagues tried to build a “new China” and in the process drew almost a billion people into the largest political experiment in history.

2. Born Under the Red Flag, 1976-1997: This video examines China’s transformation under Deng Xiaoping into an extraordinary hybrid of communism and capitalism and an economic giant in the world.

15%
25%
30%
30%

China's Economic Reforms and Globalization
Outlines and Reading Materials
 

Barry Naughton.  The Chinese Economy, Unpublished book manuscripts, 2005.  (Chapters used will be posted on the class website).
 

Chow, Gregory. China’s Economic Transformation, Blackwell Publishers, 2002.

Garnaut, Ross and Yiping Huang. Growth Without Miracles: Readings on the Chinese Economy in the Era of Reform, Oxford University Press, 2001.

Lardy, Nicholas R. China in the World Economy, Institute for International Economics, Washington, D.C., 1994.

Lardy, Nicholas R. Integrating China into the Global Economy, Brookings Institution Press, 2002.

Lin, Justin Yifu,  Fang Cai,  and Zhou Li, The China Miracle: Development Strategy and Economic Reform, Hong Kong: The Chinese University Press, 2003.

1. Introduction: Growing Importance of China in the World Economy
   In this section, we will discuss why China is so important in the global economy and why China’s economic reform and development are so fascinating and interesting for economists and those with an intellectual curiosity to study.
   
   Readings:
   About China:  Introduction
   
   Naughton (2005): Chapter 1 (The Geographical Setting)
   
   Lardy, 1994: Chapter 1
   
   Nichols Lardy, "The Economic Rise of China: Threat or Opportunity?" Economic Commentary, August 1, 2003 (3 pages).
   
    

2. Pre-reform Economic Development in China
   In this section, we will discuss China’s economy development during the pre-reform period, primarily under Mao’s communist version.
   
   Readings:
   Naughton, Chapter 1 (The Command Economy and the China Difference)
   
   Lin, Justin Yifu, Fang Cai, and Zhou Li, “Pre-reform Economic Development in China,” in Garnaut and Huang (2001), Chapter 5.
   
   Myers, Ramon. “How did the Chinese Economy develop? A Review Article,” The Journal of Asian Studies 50(3), 1991, pp. 604-628.
   
   Chow, Chapter 2 (Experiments with Planning and Economic Disruption).
   
   Special Video Screening: The Mao Years - First part
   
    

3. Economic Reform Strategy in China
   This section deals with the conceptualization of economic reform. We will discuss several models of reform and how does China’s reform compare with other types of economic reform and transformation
   
   Readings:
   Naughton, Introduction (China’s Economic Reform in Comparative Perspective)
   
    

4. Rural Reform and the Role of Agriculture
   In 1978, China began its economic reform. Agriculture played a crucial role in China’s economic reforms under Deng Xiaoping. In this section, we will discuss strategy of China’s economic reforms in earlier years, the successes and failures, key institutional transformation and the role of the household responsibility system (HRS) in agricultural reform.
   
   Readings:
   Naughton, Chapter 2 (Crisis and Response: Initial Reorientation of the Economy)
   
   Naughton (2005): Chapter 10 (Rural Organization)
   
   Lin, Justin Yifu, “Success in Early Reform: Setting the Stage,” in Ross Garnaut, Guo Shutian, and Ma Guonan, eds., The Third Revolution in the Chinese Country Side, Cambridge University Press, 1996.
   
   Powell, Simon, Agricultural Reform in China, Manchester University Press, 1992, Chapter One (Introduction) and Chapter Two (Increasing Peasant Incentive and Enthusiasm for Rural Production).
   
   Special Video Screening: The Mao Years - Second part
   
    

5. The Role of Township-Village Enterprises (TVEs)
   One of the China’s reform strategies has been to develop township-village enterprises. In this section, we will discuss the evolution of this development during the reform periods.
   
   Readings:
   Naughton, Chapter 4 (Growth of the Non-state Sector).
   
   Naughton (2005): Chapter 12 (Township and Village Enterprises)
   
    

6. Food Consumption and Food Security
   Food security has been a major concern to the Chinese government.  The issues raised by Lester Brown in 1994 have pushed China to refocus on agriculture for maintaining its food security. 
   
   Readings:
   Lester Brown, "Who Will Feed China?" World Watch, Vol. 7, No.5, 1994.
   
   Fred Gale, China's Food and Agriculture: Issues for the 21^st Century, U.S. Department of Agriculture, Economic Research Service, Bulletin No. 775, April, 2002.
   
   Wen S. Chern, Colin A. Carter, and Shun-Yi Shei, Food Security in Asia: Economics and Policies, Edward Elgar, 2000.
   
   Special Video Screening: Born Under the Red Flag (First part)
   
    

7. Reforming State-Owned Enterprises (SOEs) I
   The centrally planned economy was built on huge state-owned enterprises. In this section, we will discuss how China has been dealing with this very inefficient sector of its economy.
   
   Readings:
   Naughton, Chapter 3 (State Sector Reforms, 1979-1983).
   
    

8. Reforming State-Owned Enterprises (SOEs) II
   
   Readings:
   Naughton, Chapter 5 (Reformulation and Debates), Chapter 6 (The Second Phase of Reform, 1984-1988).
   
   Special Video Showing: Born Under the Red Flag (Second part).
   
    

9. Boom and Bust: Economic Cycles in China
   Rapid economic growth has created imbalance and fluctuations in China’s macroeconomic policy regime. In this section, we will deal with macroeconomic characteristics such as inflation, economic cycles, and unemployment, as well as China’s reforms on credits and financial institution.
   
   Readings:
   Naughton, Chapter 7 (Rapid Growth and Macroeconomic Imbalance).
   
   Naughton, Chapter 8 (The Post Tiananmen Cycle).
   
    

10. Assessing Gradualism in Economic Reforms
    China’s economic reforms have been based on “gradualism” which separated “economic freedom” from “political freedom”. This approach is drastically different from the approach taken in Russia and Eastern Europe. We will discuss the opposing views on China’s strategy of this “gradualism” and how has this divorce of economic development from political change affected economic policy and what it portends for the future.
    
    Readings:
    Naughton, Chapter 9 (Conclusions: Lessons and Limitations of the Chinese Reform).
    
    Young, Alwyn, “The Razor’s Edge: Distortions and Incremental Reform in the People’s Republic of China,” Quarterly Journal of Economics, 115, Nov. 2000: 1091-1135.
    
     

11. Population and Demographics
    China has undergone a demographic transition and imposed rigid population growth policy, affecting its economic reforms and development. 

    Readings:
    Naughton (2005): Chapter 7 (Population Growth and the One Child Family)

     

12. China’s Rural-Urban Divide
    Population control is an important part of China’s development strategy. However, its uneven implementation has created a rural-urban divide. We will discuss the patterns of population growth, the resulting income disparity, and potential social problems in China.
    
    Readings:
    Naughton (2005): Chapter 5 (The Urban-Rural Divide)

    World Bank, Sharing Rising Incomes: Disparities in China, 1997, pp. 15-25, 53-59.

    Carter, Colin A., “The Urban-Rural Income Gap in China: Implications for Global Food Markets,” in Wen S. Chern, Colin A. Carter, and Shun-Yi Shei, eds. Food Security in Asia: Economics and Policies, Edward Elgar, 2000.

     

13. Foreign Investment
    China's economic reforms have greatly opened its door for direct foreign investments (DFI) which have been the pivotal force for China's economic development during the last 25 years.  We will review the strategies in attracting DFI and its impacts on China's economy.
    
    Readings:
    Naughton (2005): Chapter 17 (Foreign Investment)
    
    Yasheng Huang, “One Country, Two Systems: Foreign-invested Enterprises and Domestic Firms in China,” China Economic Review 14 (2003): 404-416.
    
     

14. Accession to the World Trade Organization (WTO)
    In December 2001, China was admitted to WTO. China’s accession to WTO will likely bring impacts on its economic development and the global economy. We will discuss the assessments of these impacts, especially on agriculture and food security.

    Readings:
    Lardy, 2002, Chapter 1 (China Enters the World Trade Organization), Chapter 4 (Implications of China’s Entry)
    
    Huang, Jikun, Scott Rozzelle, and Linxiu Zhang, “WTO and Agriculture: Radical Reforms or the Continuation of Gradual Transition,” China Economic Review 11(2000): 397-401.
    
    Johnson, D. Gale, “The WTO and Agriculture in China,” China Economic Review 11(2000): 402-404.
    
    Lin, Justin Yifu, “WTO Accession and China’s Agriculture,” China Economic Review 11(2000): 405-408.

    Daniel C.K. Chow, “Organized Crime, Local Protectionism, and the Trade in Counterfeit Goods in China,” China Economic Review 14 (2003): 473-484.

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