Eco 342: Economic Development in the PRC (3)

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Economics 342

Economic Development in the PRC (3)

Spring 2001 Syllabus

Frank R. Gunter – Associate Professor

Economics Department, Lehigh University

Lecture: Tuesday – Thursday, 10:45 AM – Noon

Instructor Availability

Office: Rauch Business Center, Room 470

Hours:Tuesday, 1:30 – 4 PM and by appointment

Phone:(610) 758-4540

Fax:(610) 758-4677

E-mail:

Course Description

Eco 342: Economic Development in the People’s Republic of China examines the economic, political and social forces at work in the development process in China since 1949. Special emphasis on post-1978 market reforms, the rural-urban divergence, th erole of foreign trade and investment, the accumulation of human capital, and the deterioration of the physical environment. Course concludes with a detailed discussion of possible futures of the Chinese economy.

Reference Material

World Bank (WB) ( 1997) China 2020, Washington D.C.: World Bank. (This work is in seven parts.)

Joint Economic Committee (JEC) (1996) China’s Economic Future: Challenges to U.S. Policy, Washington D.C.: Government Printing Office. (Copies available in the Economics Department Office for $16.)

Todaro, Michael P. (1999) Economic Development, Reading, Massachusetts: Addison-Wesley. (Optional)

Most of the remaining course readings are on reserve in the Fairchild Martindale Library.

Course Schedule and Reading List

Jan 16, 18

I. Introduction to PRC economy

I.1China as a continent and a civilization

Todaro pp. 251-254

Reynolds, Lloyd G. (1985) “China,” Economic Growth in the Third World, 1850-1980, New Haven: Yale University Press, Chapter 11, pp. 268-292.

Riskin (1996) “Social Development, Quality of Life and the Environment,” JEC, pp. 361-380.

Marshall, Alfred (1948) Principles of Economics, New York: MacMillan Company. Section #4, pp. 5-10.

Edmonds, Richard L. (1999) “The People’s Republic of China after 50 Years,” China Quarterly, No. 159, September, pp. 563-568.

O’Keefe, Hsu and William O’Keefe (1997) “Chinese and Western Behavior Differences: Understanding the Gaps,” International Journal of Social Economics, Vol. 24, No. 1-3, pp. 190-196.

Confucius (1938) “Ethics and Politics,” in Lin Yutang (Ed.) Wisdom of Confucius

Jan 23

II. Review of Eco Development Theory (Guest lecture by Professor Alvin Cohen, Professor Emeritus of Lehigh University.)

Todaro Chap. 3

Jan 25Overview of Information Resources on China (This class will be held in the Audio/Visual Room of the Fairchild-Martindale Library. Attendance is required.)

Jan 30

II. Review of Eco Development Theory (continued) (Guest lecture by Professor Alvin Cohen, Professor Emeritus of Lehigh University.)

Feb 1Class cancelled.

Feb 6, 8

III. History of the PRC Economy

III.1Ancient Times through 1949

Lin, Justin Yifu (1995) “The Needham Puzzle: Why the Industrial Revolution Did Not Originate in China,” Economic Development and Cultural Change, Vol. 43, No. 2, January, pp. 269-292.

Landes (1998) Chaps. 1, 2 and 21.

III.2 The Communist Experiment: 1949-1978

Chinese Planned Economy

Great Leap Forward

Cultural Revolution

Dernberger, Robert F. (1999) “The People’s Republic of China at 50: The Economy,” China Quarterly, No. 159, September, pp. 606-615.

Chang, Gene Hsin (1997) “Communal Dining and the Chinese Famine of 1958-1961,” Economic Development and Cultural Change, Vol. 46, No. 1, pp. 1-34.

Feb 13Pacing Break

Feb 15, 20

III.3 Economic Liberalization: 1978-Current

WB (1997) China 2020, Chap. 1-8.

Naughton (1996) “Pattern and Logic of China’s Economic Reform,” JEC, pp. 1-10.

Liebethal (1996) “Politics and Economics in China,” JEC, pp. 11-15.

Wang (1996) “Some Historical Reflections on Chinese Economic Reforms,” JEC, pp. 16-23.

Cheng (1996) “A Mid-course Assessment of China’s Economic Reform,” JEC, pp. 24-33.

Gelb (1996) “China’s Reforms in the Wider Context of Transition,” JEC, pp. 86-100.

Potter (1996) “Law Reform and China’s Emerging Market Economy,” JEC, pp. 221-242.

Feb 22Quiz

Feb 27 & Mar 1

IV. The Recent Macroeconomics of PRC: 1978-Current

IV.1 Measurement Issues

Cai, Yongshun (2000) “Between State and Peasant: Local Cadres and Statistical Reporting in Rural China,” China Quarterly, No. 163, September, pp. 783-805.

IV.2 Sources Economic Growth

Todaro Chap. 4

Sachs and Woo (1996) “Chinese Economic Growth,” JEC, pp. 70-85.

Borensztein, Eduardo and Jonathon D. Ostry, “Accounting for China’s Growth Performance,” American Economic Review, Vol. 86, No. 2, (1996), pp. 224-228.

Chow, Gregory C., “Challenges of China’s Economic System for Economic Theory,” American Economic Review, Vol. 87, No. 2, (1997), pp. 321-327.

Hu, Zuliu F. and Mohsin S. Khan, "Why is China Growing So Fast," IMF Staff Papers, Vol. 44, No. 1, (1997), pp. 103-131.

Krugman, Paul, "The Myth of Asia's Miracle," Foreign Affairs, Vol. 73, No. 6, (1994), pp. 62-78.

United Bank of Switzerland, “The Asian Economic Miracle," UBS International Finance, Issue 29, (1996), pp. 1-8.

Young, Alwyn, "Lessons from the East Asian NICS: A Contrarian View," European Economic Review, Vol. 38, (1994), pp. 964-973.

IV.3 Inflation

IV.4 Poverty and Unemployment

Todaro Chap. 5

Yao, Shujie (2000) “Economic Development and Poverty Reduction in China over 20 Years of Reform,” Economic Development and Cultural Change, Vol. 48, No. 3, pp. 447-474.

IV.5 Balance of Payments

Todaro Chap. 12-14

WB (1997) Sharing Rising Incomes, Chap. 1-4

Dernberger (1996) “China’s Transformation to a Market Economy,” JEC, pp. 57-69.

V. Sectors of the PRC Economy

Mar 6 V.1 Agriculture and Rural Life

Todaro Chap. 10

WB (1997) At China’s Table, Chap. 1-5

Crook (1996) “An Assessment of China’s Agricultural Economy: 1980-2005,” JEC, pp. 124-138.

Carter and Rozelle (1996) “How Far Along is China in Developing its Food Markets,” JEC, pp. 139-161.

Oi, Jean C. (1999) “Two Decades of Rural Reform in China: An Overview and Assessment,” China Quarterly, No. 159, September, pp. 616-628.

Rozelle, Scott; Albert Park; Jikun Huang; and Hehui Jin (2000) “Bureaucrat to Entrepreneur: The Changing Role of the State in China’s Grain Economy,” Economic Development and Cultural Change, pp. 227-252.

Guo, Xuguang; Thomas Mroz, and Barry Popkin (2000) “Structural Change in the Impact of Income on Food Consumption in China, 1989-1993,” Economic Development and Cultural Change, Vol. 48, No. 4, July, pp. 737-760.

Mar 8V.2 Industrial Sector - SOE/TVE/Private Firms

Woo (1996) “Crises and Institutional Evolution in China’s Industrial Sector,” JEC, pp. 162-175.

Jefferson and Singh (1996) “Ownership Reform as a Process of Creative Reduction in Chinese Industry,” JEC, pp. 176-202.

Koo and Yeh (1996) “The Impact of TVE Growth on State Enterprises Reform,” JEC, pp. 381-402.

Li, Wei (1997) “The Impact of Economic Reform on the Performance of Chinese State Enterprises, 1980-1989,” Journal of Political Economy, Vol. 105, No. 5, pp. 1080-1106.

Wu, Yanrui (1993) “Productive Efficiency in Chinese Industry,” Asian-Pacific Economic Literature, Vol. 7, No. 2, November, pp. 58-66.

Szirmai, Adam and Ren Ruoen (2000) “Comparative Performance in Chinese Manufacturing, 1980-1992,” China Economic Review, Vol. 11, No. 1, pp. 16-53.

Mar 13, 15Spring Break

Mar 20V.3 Financial Intermediation in the PRC

Cheng, Fong and Mayer (1996) “China’s Financial Reform and Monetary Policy,” JEC, pp. 203-220.

Xu, Cheng Kenneth (2000) “The Microstructure of the Chinese Stock Market,” China Economic Review, Vol. 11, No. 1, pp. 79-97.

Mar 22 V.4 Infrastructure

Szymanski (1996) “The New Revolution in China: Telecommunications and Societal Change,” JEC, pp. 270-279.

Colton and Morison (1996) “Chinese Transportation System,” JEC, pp. 280-319.

Mar 27V.5 International Trade and Capital Flows

WB (1997) China Engaged, Chap. 1-4

Perkins (1996) “Prospects for China’s Integration into the Global Economy,” JEC, pp. 34-40.

Lilley and Hart (1996) “Greater China,” JEC, pp. 423-450.

Holliday (1996) “China and the World Trade Organization,” JEC, pp. 451-469.

Morrison and Hardt (1996) “Sino-U.S. Economic Relations into the 21st Century,” JEC pp. 471-498.

Watson, James (2000) “China’s Big Mac Attack,” Foreign Affairs, Vol. 79, No. 3, May/June, pp. 120-134.

Gunter, Frank R., "Capital Flight from the People's Republic of China: 1984-1994," China Economic Review, Vol. 7, No. 1, (1996), pp. 77-96.

Mar 29 V.6 Services and Government

WB (1997) Financing Health Care, Chap. 1-8

Rask, Kolleen; David Chu; and Thomas Gottschang (1998) “Institutional Change in Transitional Economies: The Case of Accounting in China,” Comparative Economic Studies, Vol. XXXX, No. 4, Winter, pp. 76-100.

Gamble, William (2000) “The Middle Kingdom Runs Dry,” Foreign Affairs, Vol. 79, No. 6, November/December, pp. 16 -20.

Apr 3

VI. Economic Decision Making in the PRC

VI.1 Delegation-Consensus

Todaro Chap. 16, 17

Lieberthal, Kenneth (1995) Governing China, New York: W.W. Norton Inc.

Shirk, Susan L. (1993) “Decision Rules,” Chapter 7, and “Chinese Political Institutions and the Path of Economic Reforms,” Chapter 8, in Political Logic of Economic Reform in China, Berkeley: University of California Press, pp. 116-145.

Yusuf, Shahid (1994) “China’s Macroeconomic Performance and Management During Transition,” Journal of Economic Perspectives, Vol. 8, No. 2, Spring, pp. 71-92.

VII. Challenges to Future Economic Development

Apr 5 VII.1 Energy Shortages

Sinton, Fridley and Dorian (1996) “China’s Energy Future,” JEC, pp. 243-269.

Apr 10 VII.2 Environmental Deterioration

Todaro Chap. 11

WB (1997) Clear Water, Blue Skies, Chap. 1-8

Edmonds, Richard L. (1999) “The Environment in the People’s Republic of China 50 Years On,” China Quarterly, No. 159, September, pp. 640-649.

U.S. Embassy Beijing (2000) “The Cost of Environmental Degradation in China,” Mimeo, December.

Apr 12Easter Break

Apr 17 VII.3 Population Growth and Rural-Urban Migration

Todaro Chaps 6 & 866

Banister (1996) “China: Population Dynamics and Economic Implications,” JEC, pp. 339-360.

WB (1997) Old Age Security, Chap. 1-4.

Hussain, Athar, “Social Security in Present Day China and Its Reform,” American Economic Review, Vol. 84, No. 2, (1994), pp. 276-280.

Apr 19 VII.4 Bureaucracy and Corruption

Fan, C. Simon and Herschel I. Grossman (2000) “Incentives and Corruption in Chinese Economic Reform,” Mimeo, Lingnan College, March.

Johnston, Michael, “The Vices--and Virtues--of Corruption,” Current History, Vol. 96, No. 611, (1997), pp. 270-273.

Kaufmann, Daniel, "Corruption: The Facts," Foreign Policy, Summer, (1997), pp. 114-131.

Transparency International and Gottingen University (1997) "Internet Corruption Perception Index - 1997," Internet:

Ding, X.L. (2000) “Systematic Irregularity and Spontaneous Property Transformation in the Chinese Financial System,” China Quarterly, No. 163, September, pp. 655-676.

Bernstein, Thomas and Xiaobo Lu (2000) “Taxation without Representation,” China Quarterly, No. 163, September, pp. 742-763.

Feinerman, James V. (1997) “The Rule of Law...with Chinese Socialist Characteristics,” Current History, Vol. 96, No. 611, pp. 278-281.

Ehrlich, Isaac, and Francis T. Lui (1999) “Bureaucratic Corruption and Endogenous Growth,” Journal of Political Economy, Vol. 107, No. 6, Pt. 2, pp. S270-S293.

Apr 24 VII.5 Animosity

Gladney, Dru C. (1997) “Rumblings from the Uyghur,” Current History, Vol. 96, No. 611, pp. 287-290.

Todaro Chap. 6, 8, 11

Apr 26 & May 1, 3

VIII. China 2020

VIII.1 Scenarios of Economic Development

VIII.2 Political Implications of Economic Development

VIII.3 Impact on China's Neighbors and the World

Todaro Chap 18

Singh and Singh (1996) “Economic Prospects to 2010,” JEC, pp. 101-123.

Baum, Richard, “China After Deng: Ten Scenarios in Search of Reality,” China Quarterly, No. 145 (1996), pp. 153-175.

Lardy, Nicholas, “China’s Economic Prospects,” in Hans Binnendijk and Ronald N. Montaperto (eds.), Strategic Trends in China, (Washington DC: National Defense University, 1998), pp. 33-37.

De Mesquita, Bruce Bueno and Yi Feng (1997) “Forecasting China’s Political and Economic Future,” Problems of Post-Communism, Vol. 44, No. 2, pp. 14-27.

Lardy, Nicholas, “China’s Economic Prospects,” in Hans Binnendijk and Ronald N. Montaperto (eds.), Strategic Trends in China, (Washington DC: National Defense University, 1998), pp. 33-37.

Student Evaluation

Quiz (Feb 22)20% of grade

Seminar 25% of grade

Participation20% of grade

Final Exam35% of grade

Each student will participate in a three-hour seminar on a topic associated with Chinese economic development. Successful seminar participation will require significant preparation.

There is no make-up exam for the Quiz. If you have an excused absence for the Quiz then your final will count for 55% of your semester grade.

On the last day of class or at least ten days before your final exam, I will hand out a list of ten essay questions. During the final exam you will be required to write answers to three or four of these ten questions. Since you will know the questions in advance, they may be of fiendish difficulty. Do not wait until the questions have been distributed before you begin to study. I will not answer any questions about the economics of China after I have handed out the ten potential final exam questions.

Participation means more than just attendance in class. The Information Resources Session on China on Jan 25th will count for one quarter of your participation grade (5% of your final grade.) In addition, you should have completed at least the relevant “star” readings before each class begins and be ready to engage in classroom discussions. In addition, there will probably be one or more afternoon or evening talks on issues related to Chinese economic development during the course of the semester and your attendance and participation is these talks may be required.