DPI-450 Spring 2014

DPI-450: The Political Economy of Transition in ChinaSpring Term 2014

Instructor: Tony Saich124 Mt. Auburn Street, Suite 200N, Rm. 214, 617-495-5713Anthony_Saich@harvard.eduOffice Hours: Wednesdays 3:00 to 6:00 p.m. by appointment

Faculty Assistant: Jessica Eykholt124 Mt. Auburn Street, Suite 200N, Rm. 212, 617-496-0264Jessica_Eykholt@harvard.edu

Course Assistant: Iza Dingizading@gmail.comOffice hours: to be announced at the HKS course page

Class Sessions: Monday and Wednesday—1:10-2:30

Place: L280

Course Content: The course seeks to provide a comprehensive analysis of the transition

challenges that China faces as it continues to move from a centrally planned economy and

centralized political structure to adopting a greater reliance on market-based mechanisms while

retaining the authoritarian polity. We shall focus on the changing role of the state and state-society

relations under reform.

The first question to be addressed is a transition from what? The course begins with a

critical evaluation of the development strategies pursued since 1949. The reform path has been

shaped by certain legacies of the past.

The second question to be addressed is the institutional framework for policy-making in

China. How is policy made and implemented? What is the role of the Party and governmental

apparatus at the central and non-central levels? How have state-society relations changed during

the reforms, has accountability improved, is a civil society emerging or is China moving toward a

form of Asian corporatism?

Part three looks at current key policy challenges starting with the question of whether there

is a Chinese model of development. Then, we look at the politics of urbanization, the restructuring

of state enterprises, energy policy and key social challenges such as the provision of public goods

and services and poverty alleviation.

Part Four looks at future challenges and what China’s development means in a global

context.

Course Requirements: There are two assignments required for this course.

The first assignment is a group exercise. Depending on the number of students in the class,

we will form groups of six who will work on a policy problem. The output will have two forms.

There will be a 20-minute briefing of which 10 minutes will be taken up by a power-point

presentation. The remaining 10 minutes will be used for questions. In your briefing, you may use

no more than six power-point slides. The group will also prepare a two-page memo (double-

spaced) that summarizes and highlights the points made in the briefing. You are to give me the

memo at the time of the briefing.

The second is an individually written six-page policy brief that outlines, analyzes and

makes a policy recommendation for a particular problem. This may be a national problem or one

within a specific industry, technical or geographic area. The policy brief should be addressed to the

appropriate official. Further details of expectations will be given during the course.

The group assignment will count for one-third of the grade and the individual memo two-thirds but

Class participation will be taken into account when assessing the final grade for the course. The

Kennedy School has established a recommended distribution for grading and this course will

follow this decision. The recommended range for A is 10-15%; A- 20-25%; B+ 30-40%; B 20-

25%; B- or lower 5-10%.

The Group Policy Memo will be due either during the week of March 10 or during the

week of March 24

Course Materials: Students should purchase Tony Saich, Governance and Politics of China

(Palgrave, third edition, 2010) and read the relevant sections as background for the classes. All

course materials are online. Students can access these materials from the HKS course page.

The Individual Policy Memo is due on April

30 at 5:00 p.m.

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Course Overview: Part One: Introduction, Path Dependence and Pre-Reform Structures

Part Two: Political Structures and Decision-Making

Part Three: Policy Challenges: Urbanization, Economic and Social

Part Four: Future Challenges and Their Global Consequences

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Course Schedule and Readings

Part One: Introduction, Path Dependence and Pre-Reform Structures

Session one (January 27): Introduction: Four Transitions and the Future Challenges

Introduction to the Course: Students should be prepared to introduce themselves, and

discuss what they hope to get from the course. We shall outline the key challenges facing China’s

new leaders that will be addressed in the course.

Read--Saich, Chapter Two.

Session two (January 29): Echoes from the Past: Legacies from the Maoist Past

1) Saich, Chapters Three and Four.

2) Heilmann, Sebastian and Elizabeth J. Perry, “Embracing Uncertainty: Guerrilla Policy Style

and Adaptive Governance in China,” in Heilmann and Perry (eds.), Mao’s Invisible Hand. The

Political Foundations of Adaptive Governance in China. Cambridge, MA: Harvard University

Press, 2011: 1-29.

3) Shirk, Susan. “The Pre-reform Chinese Economy and the Decision to Initiate Market

Reforms.” The Political Logic of Economic Reform in China in Shirk (ed.) (Berkeley, CA: UC

Press, 1993), pp. 23-51.

Questions to consider as you read:What influenced the CCP’s initial policy choices after 1949?Which groups or institutions were the main beneficiaries of China’s development strategy?In what ways has reform in China been shaped and constrained by its existing political structures and historical legacies?

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Part Two: Political Structures and Decision-Making

Session three (February 3): Fragmentary or Unitary Rule: Decision-Making in China

4) Heilmann, Sebastian, “Policy experimentation in China’s Economic Rise” in Studies in

Comparative International Development, vol. 43, No. 1, 2008, pp. 1-26.

5) Mertha, Andrew, “’Fragmented Authoritarianism 2.0’: Political Pluralization in the Chinese

Policy Process” in The China Quarterly, No, 200, December 2009, pp. 995-1012.

Questions to consider as you read:How does policy get made in China?Is there variation across different policy areas?What are the rewards or penalties for political entrepreneurialism?

Session four (February 5): From Revolutionary to Ruling: The Changing Role of the Party

6) Saich, Chapter Five.

7) Tsang, Steve, “Consultative Leninism: China’s New Political Framework” in Journal of

Contemporary China, Vol. 18, no. 62, pp.865-80.

8) Thornton, Patricia M., “The Advance of the Party: Transformation of takeover of Urban

Grassroots Society?” in The China Quarterly, No. 213, pp. 1-18.

9) McGregor, Richard, Chapter One: “The Red Machine: The Party and the State,” in The Party.

The Secret World of China’s Communist Rulers (New York: Harper-Collins, 2010), pp. 1-33.

Questions to consider as you read:How, if at all, has the CCP adapted to the changing socio-economic environment?What explains the resilience of the CCP?Who does the CCP represent?

Session five and six (February 10 and 12): The Mountains are High and the Emperor is Far

Away: Provincial China

We shall start this session with discussion of a simple exercise designed to get you thinking about provincial level politics.

10) Cheung, Peter T.Y. “Introduction: Provincial Leadership and Economic Reform in Post-Mao

China” in Cheung, Chung and Li (eds.), Provincial Strategies of Economic Reform in Post-

Mao China. Leadership, Politics and Implementation (Armonk, NY: M.E. Sharpe, 1998), pp.

3-46.

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11) Saich, Chapter Seven.

12) Chung, Jae Ho, Hongyi Lai and Jang-Hwan Joo, “Assessing the ‘Revive the Northeast’

(zhenxing dongbei) Programme: Origins, Policies and Implementation,” in The China

Quarterly, no. 197, March 2009, pp. 108-25.

Questions to consider as you read:Which factors are the most important in terms of influencing provincial level politics?What are the consequences of fiscal decentralization?What mechanisms does the center retain to influence policy at the local levels?

Sessions seven and eight (February 19 and 24): Fused Power or a Force for Change: Local

Government

We shall start the first of these two sessions with a couple of simple cases about township

government. The pieces by Saich and Zhang provide background for this discussion. Oi looks at

how reforms impacted on local government.

13) Saich, Tony, “The Blind Man and the Elephant: Analysing the Local State in China,” in East

Asian Capitalism. Conflicts, Growth and Crisis, in Luigi Tomba (ed.) (Milan: Feltrinelli

Editore, 2002), pp. 75-100.

14) Zhang, Le-Yin, “Chinese Central-Provincial Fiscal Relationships, Budgetary Decline and the

Impact of the 1994 Fiscal Reform: An Evaluation.” in The China Quarterly 1999, No. 157, pp.

115-141.

15) Oi, Jean, “Fiscal Reform and the Economic Foundation of Local State Corporatism in China,”

in World Politics, October 1992, vol. 45, No. 1, pp. 99-126.

16) Smith, Graeme, “The Hollow State: Rural Governance in China,” in The China Quarterly,

No. 203, September 2010, pp. 601-18.

17) Fewsmith, Joseph, “The Elusive Search for Effective Sub-County Governance,” in Heilmann

and Perry (eds.), Mao’s Invisible Hand, pp. 269-96.

Questions to consider as you read:In what ways do local officials influence policy choices?How does reform empower local bureaucrats in the policy process?What are the primary incentives governing the behavior of local officials?What is the nature of the local state in China?

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Session nine (February 26): Getting Things Done: Two Cases

This session will review two different cases of NGO activity in China to develop a discussion

about varying modes of operation. The two cases will be available on the course website.

18) “Grassroots NGOs’ Response to the 2008 Wenchuan Earthquake”.

19) “Fighting Water Pollution in China: Government-NGO Collaboration”.

Session ten (March 3): Getting Things Done or Not: Implementation of Environmental Regulation

This session will be a guest talk by Iza Ding on working in a local environmental protection agency.

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Part Three: Policy Challenges: Urbanization, Economic and Social

Session eleven (March 5): Beijing or Washington Consensus: Is there a China Model?

20) Naughton, Barry, “China’s Distinctive System: Can it be a Model for Others?” in Journal of

Contemporary China, vol. 19, No. 65, pp. 437-60.

21) Williamson, John, “Is the ‘Beijing Consensus’ Now Dominant?” in Asia Policy, No. 13,

January 2012, pp. 1-16.

22) Huang, Yasheng, “Rethinking the Beijing Consensus” in Asia Policy, No. 11, January 2011,

pp. 1-26.

23) Ramo, Joshua Cooper, The Beijing Consensus (London: Foreign Policy Centre, 2004),

available at http://fpc.org.uk/publications/TheBeijingConsensus

Questions to consider as you read:What are the distinctive features of the Beijing Consensus? Can China’s development serve as a model to others?

Session twelve (March 10) Metropolis or Small Town China: The Politics of Urbanization

24) McKinsey Global Institute, Preparing for China’s Urban Billion, 2009, Executive Summary,

pp. 13-40.

25) Yusuf, Shahid and Kaoru Nabeshima, “Optimizing Urban Development,” in Shahid Yusuf and

Tony Saich (eds.) China Urbanizes. Consequences, Strategies and Policies (Washington,

D.C.: The World Bank, 2008), pp. 1-40.

26) Fan, C. Cindy, “Migration, Hukou, and the City,” in Yusuf and Saich (eds.), China Urbanizes,

pp. 65-90.

Questions to consider as you read:What is the optimum size for Chinese cities? How sustainable is the current model of urban development? What are the major constraints on China’s urbanization?

Session thirteen (March 12) Bringing Cities to the Farmers: Urbanization in the Countryside

27) Chung, Him and Jonathan Unger, “The Guangdong Model of Urbanization: Collective Village

Land and the Making of a New Middle Class,” in China Perspectives, No. 3, 2013, pp. 33-42.

28) Ho, Peter. “Who Owns China’s Land? Property Rights and Deliberate Institutional

Ambiguity,” in The China Quarterly, 2001, No. 166, pp. 394-421.

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29) Naughton, Barry. “Rural Industrialization: Township and Village Enterprises,” in Barry

Naughton, The Chinese Economy. Transitions and Growth, (Cambridge, Mass.: MIT Press,

2006), pp. 271-94. (Course Packet 3)

30) Svartzman, Boris, “The Leap to the City: Resistance and Transition in a Chinese Village

Facing Urbanisation,” in China Perspectives, No. 1, 2013, pp. 41-52.

Questions to consider as you read:How important were the township and village enterprises for rural growth?How successful has urbanization in the countryside been?

Session fourteen (March 24) Developing Manageable Cities

This session will discuss two cases of county-level cities in different areas of China. The two cases will be available in the course website

Sessions fifteen and sixteen (March 26 and March 31) Reforming or Feeding the Beast: SOE Reform

We shall start these two sessions with discussion of two simple cases of enterprise reform. The

situation is set in the mid-nineties when the decision on reform of the state-owned enterprises was

most urgent. The Steinfeld readings provide useful background.

31) Kai Guo and Yang Yao, “Causes of Privatization in China” in Economics of Transition, vol.

13, no. 2, April 2005, pp. 211-58 (Online)..

32) Steinfeld, Edward S. “Introduction: China’s Ailing State Enterprises,” in Steinfeld, Forging

Reform in China: The Fate of State-Owned Industry (Cambridge, UK: Cambridge University

Press, 1998), pp. 1-24. (Course Packet 3)

33) Steinfeld, Edward S. “The Nested Problems Dynamic: An Alternative Approach.” ibid. pp.

45-77. (Course Packet 3)

34) Steinfeld, Edward S. “Conclusion.” ibid. pp. 249-260. (Course Packet #3)

Questions to consider as you read:Why did industrial reform proven so difficult to implement?Why has the issue of “privatization” become important?Is privatization of state industry necessary?

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Session seventeen (April 2): Developing Social Citizenship?: Framework for Social Policy

35) Saich, Chapter Eleven

36) Aspalter, Christian, “The East Asian Welfare Model” in International Journal of Social

Welfare, vol. 15, No. 4, pp. 290-301 (Online)..

Questions to consider as you read:Why have social costs been high in transitions from planned to more market oriented economies?Is it desirable to consider social equity in development strategy?Can high-level growth alone resolve social service provision?

Session eighteen (April 7): Are the Poor Always with us?: Inequality and PovertyWe shall include in these two sessions a discussion of a case on microfinance in China and

then broaden the discussion to microfinance in China more broadly and to poverty alleviation

strategy in general.

37) Campbell, Robert. “NGO Microfinance in the Tibet Autonomous Region.” HKS Case

Program, No. 1913.0, 17 pp. (Online at Case Program)

38) Park, Albert and Changqing Ren. “Microfinance with Chinese Characteristics,” in World

Development, 2001, vol. 29, No.1, pp. 39-62. (Online)

39) Albert Keidel, “China Regional Disparities: The Causes and Impact of Regional

Inequalities in Income and Well-Being,” Carnegie Endowment, September 2007.

http://www.carnegieendowment.org/files/Keidel2.pdf (Online)

40) Riskin, Carl, “Inequality. Overcoming the Great Divide” in Joseph Fewsmith (ed.) China

Today, China Tomorrow (Lanham: Rowman & Littlefield, 2010), pp. 91-107 (Course Packet).

Questions to consider as you read:How successful have microfinance experiments been in China?

What kind of role, if any, should the state play in poverty alleviation? What are the main drivers of poverty and inequality in China? Do increasing levels of inequality matter? If so, in what ways?

Session nineteen (April 9): Women’s Health in Yunnan

After discussing rural healthcare problems, we shall discuss a case of an NGO trying to start a

reproductive health program in Yunnan and then discuss the actual outcome.

41) Liu, Yuanli, et al. “China’s Health System Performance” in The Lancet, vol. 372, no. 9652,

November 29, 2008, pp. 1914-23 (Online).

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42) Duckett, Jane, “Challenging the Economic Reform Paradigm: Policy and Politics in the Early

1980s’ Collapse of the Rural Co-operative Medical System,” in The China Quarterly, No.

205, March 2011, pp. 80-95 (Online).

43) Duckett, Jane, “Health and Social Policy,” in Chris Ogden (ed.), Handbook of China’s

Governance and Domestic Politics, (New York: Routledge, 2013), pp. 67-77.

Questions to consider as you read:How can better equity be brought to healthcare provision?What factors cause the inequality of service provision between urban and rural China?

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Part Four: Future Challenges and Their Global Consequences

Session twenty (April 14): From the Collective to the Individual?: Social Trends

44) Kleinman, Arthur et al., “Introduction: Remaking the Moral Person in a New China” in Deep

China. The Moral Life of the Person (Berkeley and Los Angeles: University of California

Press, 2011), pp. 1-35 (Course Packet).

45) Wang Hui, “Contemporary Chinese Thought and the Question of Modernity” in Wang Hui,

China’s New Order (Cambridge, Mass.: Harvard University Press, 2003), pp. 141-87 and 212-

21 (Course Packet).

46) Weller, Robert and Sun Yanfei, “Religion: The Dynamics of Religion,” in Joseph Fewsmith

(ed.), China Today, China Tomorrow. Domestic Politics , Economy, and Society (Lanham:

Rowman & Littlefield, 2010), pp. 29-50.

47) Elizabeth J. Perry (2008), “Chinese Conceptions of “Rights: From Mencius to Mao—

and Now,” in Perspectives on Politics, vol. 6, No. 1, pp. 37-50.

Questions to consider as you read:How have reforms affected individual lives in China?What are the consequences of divergence between official ideologies and the way people live their lives?

Session twenty-one (April 16): New Actors in the Policy Realm: Blogs, Tweets and the

Internet

48) Link, Perry and Xiao Qiang, “From Grass-Mud Equestrians to Rights-Conscious Citizens:

Language and Thought on the Chinese Internet,” in Perry Link, Richard P. Madsen and Paul

G. Pickowicz (eds.), Restless China (Lanham: Rowman & Littlefield, 2013), pp. 83-108.

49) Larmer, Brook, “Where an Internet Joke is not Just a Joke,” New York Times Magazine,

October 26, 2011 (Online).

50) Osnos, Evan, “The Han Dynasty. How Far Can a Youth- Culture Idol Tweak China’s

Establishment?” in The New Yorker, July 4, 2011, pp. 50-59.

Questions to consider as you read:

How influential is new social media in China in shaping policy?Can the CCP control discourse in modern China?

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Session twenty-two (April 21) Fuelling Growth: Energy Policy

Guest speaker Dr. Edward A. Cunningham will lead a discussion relating to China’s energy

governance and state/firm relations.

51) Cunningham, Edward A. “Fueling the Miracle: China’s Energy Governance and Reform.” in

Joseph Fewsmith (ed.) China Today, China Tomorrow: Domestic Politics, Economy, and

Society (Lanham: Rowman & Littlefield, 2010 (Course Packet)

52) James Fallows, “Dirty Coal. Clean Future”, The Atlantic, August 29, 2011 (Online).

Questions to consider as you read:How feasible are reforms in China’s energy sector? What is the role of corporate reform?What are the environmental implications of China’s form of energy growth and governance?

Session twenty-three (April 23) Sharing Global Resources: China’s Energy Policy

For this session we shall have as a guest speaker Dr. Edward A. Cunningham

53) Steinfeld, Edward, Richard Lester and Edward Cunningham. “Power Plant Emissions:

Lessons from Sulfur.” China Economic Quarterly, September 2008, pp.28-32. (Online)

54) New York Times, “US Solar Panel Makers Accuse Chinese of Trade Violations”, October 19,

2011 (Online).

Questions to consider as you read:

How much of a constraint is energy on China’s future development?What are the geo-political consequences of China’s future energy needs?

Session twenty-four (April 28) From Isolation to Integration: China’s Global Engagement

55) Saich, Tony. “Globalization, Governance, and the Authoritarian State: The Case of China.”

Governance in a Globalizing World. Eds. Joseph Nye and Robert Keohane. Washington:

Brookings Institution Press, 2000. 208-28. (Course Packet 4).

56) Saich, Tony, Chapter Twelve.

57) Lampton, David M. and James Mann, “What’s Your China Fantasy?” Foreign Policy, May

2007. http://www.foreignpolicy.com/story/cms.php?story_id=3837&page=0 (Online)

58) “Reaching ‘Win-Win’ Solutions with the Rest of the World,” in The World Bank and the

Development Research Center of the State Council, China 2030. Building a Modern,

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Harmonious , and Creative Society (Washington, D.C.: The World Bank, 2013), pp. 361-67

and 402-10 (Online).

Questions to consider as you read:

To what extent has China become a status quo power?

Given its global engagement, can China’s policy of non-interference be maintained?

To what extent will China’s rise challenge the US national interest?

Session twenty-five (April 30) Three Scenarios in Search of a Chinese Reality

59) Gilley, Bruce. “Resources for Change.” Chapter four of Bruce Gilley, China’s Democratic

Future. How it Will Happen and Where it Will Lead. New York: Columbia University Press,

2004. 60-94. (Course Packet 4)

60) Pei, Minxin, “The Dark Side of China’s Rise,” Foreign Policy, March/April 2006. (Online)

61) Fallows, James, Arab Spring, Chinese Winter” in Atlantic Magazine, September, 2011

(Online).

62) Wright, Teresa, “Introduction” in Accepting Authoritarianism. State-Society Relations in

China’s Reform Era (Stanford: Stanford University Press, 2010), pp. 1-36 (Course Packet).

Questions to consider as you read:What are the possible resources for a potential democratic breakthrough in China and what are the major constraints?What are the consequences if China does not democratize?

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