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China’s rapidly growing local government debt problem has long been recognized by foreign observers as a risk, but inside China, only recently was this problem called out as alarming.  Why has local government debt been allowed to grow with little direct intervention from central authorities?  Based on a forthcoming paper, Oi will show how a “grand bargain” the central authorities entered into with the localities allowed Beijing to take the lion’s share of tax revenues after 1994, but also allowed localities to gain new resources and power as a quid pro quo.  While the bargain provided an expedient and seemingly successful strategy that worked for more than a decade to fuel rapid local state-led growth, it had significant costs that are now becoming increasingly visible.  Because land finance was the core means by which localities raised revenue, Oi also will help explain why the problems with property developers like Evergrande are so important to China’s future economy.   



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Dr. Jean C. Oi
Jean C. Oi is the William Haas Professor of Chinese Politics in the Department of Political Science and a senior fellow in the Freeman Spogli Institute for International Studies at Stanford University. She directs the China Program at the Walter H. Shorenstein Asia-Pacific Research Center and is the Lee Shau Kee Director of the Stanford Center at Peking University. Professor Oi has published extensively on China’s reforms. Recent books include Fateful Decisions: Choices That Will Shape China’s Future, co-edited with Thomas Fingar (Stanford University Press, 2020); Zouping Revisited: Adaptive Governance in a Chinese County, co-edited with Steven Goldstein (Stanford University Press, 2018); and Challenges in the Process of China’s Urbanization, co-edited with Karen Eggleston and Yiming Wang (2017). Current research is on fiscal reform and local government debt, continuing SOE reforms, and the Belt and Road Initiative.

 


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This event is part of the 2022 Winter webinar series, The Future of China's Economy, sponsored by the APARC China Program.

 

Via Zoom Webinar. Register at: https://bit.ly/34mnOcc

Jean C. Oi Director of Shorenstein APARC China Program; William Haas Professor of Chinese Politics, Stanford University
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What is the relationship between internal development and integration into the global economy in developing countries? How and why do state–market relations differ? And do these differences matter in the post-Cold War era of global conflict and cooperation? Drawing on research in China, India, and Russia and examining sectors from textiles to telecommunications, Micro-Institutional Foundations of Capitalism introduces a new theory of sectoral pathways to globalization and development. Adopting a historical and comparative approach, Hsueh's Strategic Value Framework shows how state elites perceive the strategic value of sectors in response to internal and external pressures. Sectoral structures and organization of institutions further determine the role of the state in market coordination and property rights arrangements. The resultant dominant patterns of market governance vary by country and sector within country. These national configurations of sectoral models are the micro-institutional foundations of capitalism, which mediate globalization and development.



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Roselyn Hsueh is an associate professor of political science at Temple University, where she co-directs the Certificate in Political Economy. She is the author of Micro-Institutional Foundations of Capitalism: Sectoral Pathways to Globalization in China, India, and Russia (Cambridge University Press, forthcoming, 2022), China’s Regulatory State: A New Strategy for Globalization (Cornell University Press, 2011), and scholarly articles on states and markets, comparative regulation and governance, and political economy of development. She is a frequent commentator on politics, finance and trade, and economic development in China and beyond. BBC World News, The Economist, Foreign Affairs, National Public Radio, and The Washington Post, among other media outlets, have featured her research. Prestigious fellowships, such as the Fulbright Global Scholar Award, have funded international fieldwork and she has served as a Visiting Scholar at the Institute of World Economics and Politics, Chinese Academy of Social Sciences. She holds a B.A. and Ph.D. in Political Science from the University of California, Berkeley.

 

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Roselyn Hsueh Associate Professor of Political Science, Temple University
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China’s spectacular growth over the last 40 years has slowed but remains strong, leading the world in economic recovery after the global financial crisis, and even in the current COVID-19 pandemic after a devasting blow early in 2020.  Yet, a number of worrying developments have emerged, most recently the troubles that China’s second largest property development company, the Evergrande Group, have suffered.

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On October 6, 2021, the APARC China Program hosted the panel program, "Engaging China: Fifty Years of Sino-American Relations." In honor of her recently released book of the same title, Director of the Grassroots China Initiative Anne Thurston was joined by contributors Mary Bullock, President Emerita of Agnes Scott College; Thomas Fingar, Shorenstein APARC Fellow; and David M. Lampton, Professor Emeritus at Johns Hopkins School of Advanced International Studies (SAIS). Thomas Fingar also moderated the panel.

Recent years have seen the U.S.-China relationship rapidly deteriorate. Engaging China brings together leading China specialists—ranging from academics to NGO leaders to former government officials—to analyze the past, present, and future of U.S.-China relations.

During their panel, Bullock, Fingar, Lampton, and Thurston reflected upon the complex and multifaceted nature of American engagement with China since the waning days of Mao’s rule. What initially motivated U.S.’ rapprochement with China? Until recent years, what logic and processes have underpinned the U.S. foreign policy posture towards China? What were the gains and the missteps made during five decades of America’s engagement policy toward China? What is the significance of our rapidly deteriorating bilateral relations today? Watch now: 

For more information about Engaging China or to purchase a copy, please click here.

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Was the strategy of engagement with China worthwhile? Experts Mary Bullock, Thomas Fingar, David M. Lampton, and Anne Thurston discuss their recent release, "Engaging China: Fifty Years of Sino-American Relations."

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To watch the recording of the event, click here.

This event is co-hosted with the East Asia Institute (EAI) in Korea.

Event Time: November 18, 4:00 - 6:00 PM (PST) / November 19, 9:00 - 11:00 PM (Japan and Korea)
Please register for this event at EAI event page.

The ROK-U.S. and U.S.-Japan joint statements have increased expectations for a possible expansion of security and economic cooperation among South Korea, the U.S. and Japan. However, heightened U.S.-China strategic competition, as well as persistent challenges in the region such as historical tensions and the North Korea threat, have complicated the strategic calculus of U.S., South Korea and Japan. Under these circumstances, the South Korea, the U.S. and Japan must define their economic and security interests and seek ways to maintain friendly relations among the three countries. This seminar will discuss security and economic cooperation among Korea, the United States and Japan in the era of strategic competition between the U.S. and China.

Panel 1 on security:

Park Joon Woo, former Chairman of the Sejong Institute; former South Korean Ambassador to E.U. and to Singapore

Tomiko Ichikawa, Director General of the Japan Institute of International Affairs

Gen. Vincent Brooks, former USFK Commander

Moderated by Young Sun Ha, Chairman of East Asia Institute; Professor Emeritus, Seoul National University

Panel 2 on economic cooperation:

Young Ja Bae, Professor of Political Science and Diplomacy, Konkuk University, Korea

Andrew Grotto, Director of the Program on Geopolitics, Technology and Governance, FSI, Stanford University

Kimura Fukunari, Professor of Economics, Keio University, Japan

Moderated by Thomas Fingar, Shorenstein APARC Fellow, Stanford University

 

Via Zoom. Register at https://bit.ly/3w7Ak9g

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Cover of book "Drivers of Innovation"

Innovation and entrepreneurship rank highly on the strategic agenda of most countries today. As global economic competition intensifies, many national policymakers now recognize the central importance of entrepreneurship education and the building of financial institutions to promote long-term innovation, entrepreneurship, and economic growth. Drivers of Innovation brings together scholars from the United States and Asia to explore those education and finance policies that might be conducive to accelerating innovation and developing a more entrepreneurial workforce in East Asia. 

Some of the questions covered include: How do universities in China and Singapore experiment with new types of learning in their quest to promote innovation and entrepreneurship? Is there a need to transform the traditional university into an “entrepreneurial university”? What are the recent developments in and outstanding challenges to financing innovation in China and Japan? What is the government’s role in promoting innovative entrepreneurship under the shadow of big business in South Korea? What can we learn about the capacity of services to drive innovation-led growth in India? 

Drivers of Innovation will serve as a valuable reference for scholars and policymakers working to develop human capital for innovation in Asia.

Contents

  1. Educating Entrepreneurs and Financing Innovation in Asia 
    Fei Yan, Yong Suk Lee, Lin William Cong, Charles Eesley, and Charles Lee
  2. Fostering Entrepreneurship and Innovation: Education, Human Capital, and the Institutional Environment 
    Charles Eesley, Lijie Zhou, and You (Willow) Wu
  3. Entrepreneurial Scaling Strategy: Managerial and Policy Considerations 
    David H. Hsu
  4. Innovation Policy and Star Scientists in Japan 
    Tatsuo Sasaki, Hiromi S. Nagane, Yuta Fukudome, and Kanetaka Maki
  5. Financing Innovation in Japan: Challenges and Recent Progress 
    Takeo Hoshi and Kenji Kushida
  6. Promoting Entrepreneurship under the Shadow of Big Business in Korea: The Role of the Government 
    Hicheon Kim, Dohyeon Kim, and He Soung Ahn
  7. The Creativity and Labor Market Performance of Korean College Graduates: Implications for Human Capital Policy 
    Jin-Yeong Kim
  8. Financing Innovative Enterprises in China: A Public Policy Perspective 
    Lin William Cong, Charles M. C. Lee, Yuanyu Qu, and Tao She
  9. Forging Entrepreneurship in Asia: A Comparative Study of Tsinghua University and the National University of Singapore 
    Zhou Zhong, Fei Yan, and Chao Zhang
  10. Education and Human Capital for Innovation in India’s Service Sector 
    Rafiq Dossani
  11. In Need of a Big Bang: Toward a Merit-Based System for Government-Sponsored Research in India 
    Dinsha Mistree
  12. The Implications of AI for Business and Education, and Singapore’s Policy Response 
    Mohan Kankanhalli and Bernard Yeung

 

 

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Entrepreneurship, Education, and Finance in Asia

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Shorenstein Postdoctoral Fellow on Contemporary Asia, 2021-22
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Diana Stanescu joined APARC as Shorenstein Postdoctoral Fellow on Contemporary Asia for the 2021-2022 academic year. Previously, she was a postdoctoral fellow with the Program on U.S.-Japan Relations, Weatherhead Center for International Affairs, at Harvard University. She holds a B.A. in International Relations & Asian Studies from Mount Holyoke College and an M.A. and Ph.D. in Political Science from Princeton University. During 2018-2020 she was a Pre-Doctoral Exchange Scholar in the Department of Government at Harvard.

Her research interests include international trade, regulation, and lobbying with a focus on Japan, using formal and quantitative methods. Her research addresses the overarching question of how bureaucracies shape global economic governance, from a structural and agent-driven perspective. Her dissertation, “The Bureaucratic Politics of Foreign Economic Policymaking,” explains the mechanisms by which stakeholders shape international economic policy through bureaucratic channels of influence.  Additional work looks at the micro-foundations of bureaucratic structure and its consequences for policy; examines the role of individual bureaucrats within domestic and international institutions; and develops micro-level data on bureaucratic careers and appointments.

As a Shorenstein APARC Postdoctoral Fellow, Dr. Stanescu further assessed how politicians and interest group representatives maneuver within bureaucratic channels to have influence over foreign economic policy. In particular, she examinedhow bureaucratic-interest group networks help firms obtain market access abroad, with evidence from trade and foreign direct investment in Japan.

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This interview was first published by the Stanford News Service.


The 2020 Summer Olympics have begun this week but public support among the Japanese public for the games has been generally low and their mood can be articulated through the succinct question: “Why are we doing this now?” says Stanford sociologist and Japan Program Director Kiyoteru Tsutsui.

 
Here, Tsutsui discusses how the various challenges posed by the COVID-19 pandemic and other national scandals related to the games have led to a general dissatisfaction among the Japanese public towards their government and the International Olympic Committee. Despite low morale, the country’s mood may change once the Summer Games commence – barring any further complications or disruptions. But given that the games are pared down this year, it still may be hard to generate the same levels of excitement as in previous years, Tsutsui said.
 
Tsutsui is the Henri H. and Tomoye Takahashi Professor and director of the Japan Program at the Walter H. Shorenstein Asia-Pacific Research Center, which is part of the Freeman Spogli Institute for International Studies. Tsutsui is also a professor of sociology and his research focuses on social movements, globalization, human rights and Japanese society. He is the author of Rights Make Might: Global Human Rights and Minority Social Movements in Japan (Oxford University Press, 2018).
 

Polls among the Japanese public show mixed support for the games and meanwhile, major advertisers in the country are pulling out. As a sociologist, how do you see this mixed public sentiment affecting overall mood and morale?

There is no question that there is a strong headwind against the Olympics in the lead-up to the opening ceremony. Opinion polls are still against the games, although the numbers improved a little in recent weeks. The general public sentiment can be summed up as “Why are we doing this now?”

The road to the Tokyo Olympics has been a long and winding one complicated by COVID-19, first and foremost, and various scandals. The Japanese public has been fed up with the COVID-19-related emergency declarations and other restrictions as well as the slower pace of vaccination compared to other developed countries. The perception, right or wrong, is that the government is making decisions based on whether they help in hosting the Olympics successfully, when the focus should be on public health and economic rescue in the COVID environment.

Morale is low, but many are hoping that things will change quickly once the games begin. Whether that happens or not depends on a whole host of factors, most importantly whether major public health incidents and other unfortunate accidents happen or not, how Japanese athletes fare, who might emerge as global stars, and so on.

To what extent has the International Olympic Committee (IOC) helped or hindered support for the games among the Japanese public?

The Japanese public sees the IOC as simply pushing its economic interest without the proper regard for their safety and health. Many people do not understand that the Japanese government does not have the authority to cancel the Olympics and could have faced a lawsuit with a huge compensation at stake if it tried to do so. The IOC looks like the IMF/World Bank during the Asian economic crisis in affected countries or the EU in some European countries – an international entity that pushes its agenda without accountability to the citizens. The frustration has nowhere to go but to the Japanese government, which combined with overall COVID-19-related dissatisfaction, has led to the most recent polls showing the lowest approval rating for the government under Prime Minister Yoshihide Suga.

For Japan, hosting the 2020 Olympic Games initially symbolized the country’s rebound from the devastating Tōhoku earthquake, tsunami and Fukushima Daiichi nuclear accident in 2011 and was poised to boost their economy. Then COVID hit, and meanwhile, Olympic expenses ballooned. Are there any opportunities for the Olympic Games to help the country bounce back? 

The 2020 Olympics was initially framed as a symbol of recovery from the triple disaster in 2011, but that slogan is no longer central. The expenses were justified as a way to develop infrastructure for foreign visitors and increase inbound tourists, and the government’s goals for the number of visitors from abroad have been met already. With no spectators allowed, Japan will lose money on hosting the Olympics, but the economic damage is not irrecoverable. Once the world gets out of COVID-19, the Japanese economy will likely rebound and tourists will come back.

It will be interesting to follow how socially, in terms of the national psyche and its unity, Japan will respond to the Tokyo Olympics. Even when the games take place in other countries, the Olympics often serve as a moment of national unity, especially in Japan. With Japan being the host, many thought that it would serve as an enormous booster towards national confidence and unity. We have yet to see how the games will turn out, but these psychological impacts will likely be lessened as the games are scaled down and may not get as much global attention as typical Olympics do.

There’s still a chance for a better outcome though if the games go smoothly and offer many compelling moments. People in many countries are still more homebound than usual and the contents that the games offer could be attractive. And the Japanese public is known to swing from one side to the other very quickly and on a massive scale, so once the games begin, TV personalities who were questioning whether the games should happen will likely quickly turn around and support Japanese athletes and tout their accomplishments. That is, if no serious outbreak incidents occur.

The Olympics are often celebrated as a nonpolitical event that can unite the world. In a globally turbulent world, what do you make of that assessment? Can the Olympics be nonpolitical?

The Beijing Winter Olympics in 2022 is a case in point. Boycott of the games seems unlikely, but House Speaker Nancy Pelosi has already floated an idea of diplomatic boycott. There’s a lot at stake for the host country, and the Olympics will likely be politicized when countries like China, Russia or even the U.S. host it.

Another problem is that not many democracies would be eager to host the games anymore. Public support is needed for democracies to host the Olympics, but the growing cost of the games, combined with increasingly less clear benefits of hosting, has made it difficult to find democracies that are eager to be the host country. Meanwhile, non-democracies like China and Russia, and even smaller countries like Kazakhstan or Azerbaijan campaign to become host nations. The pattern of dictatorships hosting the Olympics and the world demanding a change in their human rights practices and, threatening a boycott, might be a recurring pattern in the coming decades.

 
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Kiyoteru Tsutsui

Senior Fellow at FSI, Professor of Sociology, Director of the Japan Program
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A man cycles past a security fence outside the New National Stadium, the main stadium for the Tokyo Olympics, on June 23, 2021 in Tokyo, Japan. | Yuichi Yamazaki/ Getty Images
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While public support in Japan has been lackluster for the 2020 Tokyo Olympic Games, the mood may change once the games start – provided no major public health incidents and other unfortunate accidents occur, says Stanford sociologist Kiyoteru Tsutsui.

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In collaboration with Global:SF and the State of California Governor’s Office of Business and Economic Development, the China Program at Shorenstein APARC presented session five of the New Economy Conference, "Navigating Chinese Investment, Trade, and Technology," on May 19. The program featured distinguished speakers Ambassador Craig Allen, President of the US-China Business Council; David K. Cheng, Chair and Managing Partner of China & Asia Pacific Practice at Nixon Peabody LLPJames Green, Senior Research Fellow at the Initiative for U.S.-China Dialogue on Global Issues at Georgetown University; and Anja Manuel, Co-Founder and Principal of Rice, Hadley, Gates & Manuel LLC. The session was opened by Darlene Chiu Bryant, Executive Director of GlobalSF, and moderated by Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program.

U.S.-China economic relations have grown increasingly fraught and competitive. Even amidst intensifying tensions, however, our two major economies remain intertwined. While keeping alert to national security concerns, the economic strength of the United States will depend on brokering a productive competition with China, the world’s fastest growing economy. Precipitous decoupling of trade, investment, and human talent flows between the two nations will inflict unnecessary harm to U.S. economic interests--and those of California.  

Chinese trade and investments into California have grown exponentially over the last decade. But they have come under increasing pressure following geopolitical and economic tensions between the two nations, particularly in the science and technology sectors. Ambassador Craig Allen, David Cheng, James Green, and Anja Manuel explored the role of Chinese economic activity in California in the context of the greater US-Chinese relationship. Watch now: 

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Ambassador Craig Allen, David Cheng, James Green, and Anja Manuel explore the role of Chinese economic activity in California in the context of the greater US-Chinese relationship.

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On May 5, 2021, the APARC China Program hosted Professor Yuen Yuen Ang, Associate Professor of Political Science at the University of Michigan for her program, "The Role of Corruption in China's Speedy, Risky Boom." Based on her recently published book, China's Gilded Age, Ang explored the impact of corruption on China's economy and how it compares to other countries around the world, including the United States during the late 1800s. Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program, moderated the event.

While corrupt countries are usually poor, China appears to be an exception. President Xi Jinping acknowledges that corruption in the country has reached crisis proportions. If this is true, Ang asks, why has China nevertheless sustained 40 years of economic growth and deep transformation?

In fact, Ang argues, China is not as anomalous as it seems; its experience is strikingly similar to America’s Gilded Age during the 19th century. Ang unbundles corruption into four different types that each harms the economy in a different way. Similar to America’s Gilded Age, reform-era China has steadily evolved toward a particular type of corruption: access money (elite exchanges of power and wealth). Simultaneously, beginning in the 2000s, the central government effectively curbed directly growth-damaging types of corruption such as embezzlement and bureaucratic extortion. Access money fueled commerce by rewarding politicians for aggressively promoting growth and connected capitalists for building more and taking on more risky ventures. But such corruption also produced systemic risks, distortions, and inequality—problems that define China's Gilded Age under Xi's leadership. As a result, China today is a high-growth but risky and imbalanced economy.

Despite popular perceptions that China and the United States are two polar opposites, Ang argues, contemporary China and 19th century America share more similarities than we normally think. Their divergent political systems, however, drove contrasting responses to the excesses of capitalism. Watch now:

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How has corruption simultaneously driven China’s economic boom and financial risks? Professor Yuen Yuen Ang explains its role in producing a high-growth but also high-risk economy.

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