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Moderator:  Calla Wiemer (calla.wiemer@acaes.us)

Review of Isabella M. Weber, How China Escaped Shock Therapy

Routledge, May 2021.

Isabella M. Weber’s “How China Escaped Shock Therapy” is a painstakingly researched but fundamentally flawed account of one key thread of the economic reform debates that took place in China during the 1980’s. For those who are already familiar with those debates it is a useful and often engrossing account of the nitty gritty details of the process by which price policy was determined. For those who are not familiar, the flawed underlying argument of the book poses the risk of creating considerable misunderstanding.

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The Exchange Rate in East Asia's Macro Stabilization Policy: It's Not Just China

China has long gotten a bad rap on currency manipulation. The fact is, however, that China is no different from other East Asian economies when it comes to exchange rate management.

The essence of the East Asian model is to steer the exchange rate along a steady long-run course, erring toward undervaluation in the face of uncertainties about the future. Any perception of overvaluation runs

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PAST Webinar on Internationalization of the Renminbi

When: 22 June 2021, 5:00pm Hong Kong Time (GMT+8)

Speaker:  Edwin L.C. Lai, Hong Kong University of Science and Technology

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PAST Book Launch: How China Escaped Shock Therapy

When:  27 May 2021, 2:00-3:30pm US EDT(GMT-4)

Author:  Isabella M. Weber, University of Massachusetts Amherst

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PAST Webinar on The Global Division of Labor across Two Globalizations

When:  4 May 2021, 12:30-2:00pm US EDT (GMT-4)

Speaker:  Isabella M. Weber, University of Massachusetts Amherst

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PAST Briefing on The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival

When:  29 April 2021, 11:00am-noon US EDT (GMT-4)

Speakers:  Charles Goodhart and Manoj Pradhan, Authors, The Great Demographic Reversal 

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The Geography of Innovation in China

Co-authors: Fushu Luan; Ming He; and Donghyun Park 

This post draws on a paper presented at the Allied Social Science Association Annual Meeting in a session sponsored by the American Committee on Asian Economic Studies on "Economics of Innovation in Asia", 3 January 2021, video here.   

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PAST Webinar on How the Urban-Rural Divide Threatens China's Rise

When:  4 February 2021, 4:00pm US Pacific Time (GMT-8)

Speaker:  Scott Rozelle, Stanford University

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PAST Webinar on China's Domestic and External Economic Challenges

When:  29 January 2021, 10:00am Singapore time (GMT+8)

Speaker:  David Dollar, Brookings Institution

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PAST Webinar on The State Never Retreats: The Chinese Economy, 1995-2018

When:  28 January 2021, 3:30-5:00pm US Pacific Time (GMT-8)

Speaker:  Andrew Batson, Gavekal Dragonomics, Beijing, China

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On China As a Model for the Philippines (Fabella Review Addendum)

In the book Capitalism and Inclusion under Weak Institutions, reviewed in a previous post, author Raul Fabella points to a lack of social coherence in the Philippines as undermining economic progress and contrasts this with the Chinese case where "a strong sense of identity and mission" has propelled phenomenal economic growth. Judging by differences in receptivity to the statement "most people can be trusted", Fabella may be onto something. Survey results presented in Figure 1 show 62.7% of Chinese agreeing with this statement versus just 2.8% of Filipinos. Personally, I am mystified by these results having spent many years in both countries and not finding Filipinos any less trustworthy than Chinese. Yet the results do lend credence to Fabella's thesis.

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PAST China Economics Summer Institute 2020

When:  22-24 August 2020, 8:30am-- Hong Kong time (GMT+8)

Sponsors: Chinese University of Hong Kong & Tsinghua University

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PAST Virtual Conference of the Chinese Economists Society

When: 13-15 August 2020, 8:00am-1:50pm US Eastern Daylight Time (GMT–4)

Announcement:  here

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Review of Thomas Orlik, China: The Bubble that Never Pops

Oxford University Press, May 2020.

As much as China's crash has been predicted, someone needed to explain why it hasn't happened. And no one could be more credible in doing so than Tom Orlik who has reported insightfully on China since 2011, first with the Wall Street Journal, then with Bloomberg where he is now Chief Economist. 

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The Real Reason for China's Unbalanced Growth (Orlik Review Addendum)

This post follows up on my review of Tom Orlik's wonderful book "China: The Bubble that Never Pops". The book explains why constant predictions of China's economic collapse due to mounting debt and financial risk have not been borne out, and the explanation is altogether compelling. My one quibble with the book regards Orlik's view of the underlying driver of the saving/consumption imbalances that motivated debt driven stimulus. Orlik emphasizes China's one-child policy as the source of the imbalances, going so far as to call it China's original sin in an interview. The argument is that with China's weak social welfare system, having only one child makes for insecurity about old age that induces parents to save more during their working years. I'm not convinced that this holds up as a reason for China's imbalances. Let me hasten to add that, regardless, the book's original contribution in explaining why no crash has occurred holds up very well. The source of the imbalances is a separate issue, but one worth pursuing in its own right.

There is a sense in which I agree that the one-child policy has been a factor in China's high saving. The exceptionally sharp decline in the birth rate in China's case accentuated the demographic transition that is common among countries during economic development. A couple of decades on, the drop in the birth rate brings a bulging labor force relative to a shrinking share of old and young age dependents in the population. Per the life cycle hypothesis of Modigliani (1970), saving is done by those in their working years who generate income whereas the young and old consume without producing any income from which to save. The decline in China's dependent share was particularly steep in the 2000-aughts and relatedly, so was the rise in the saving rate, as shown by Bonham and Wiemer (2013). So while the one-child policy mattered, it did not matter until two decades after it was introduced and not because it prompted precautionary saving to provide security in old age but because of the long-run demographic forces it intensified.

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