We are pleased to share the publication of a new volume, Cold War Refugees: Connected Histories of Displacement and Migration across Postcolonial Asia, edited by the Korea Program's Yumi Moon, associate professor in Stanford's Department of History.

The book, now available from Stanford University Press, revisits Cold War history by examining the identities, cultures, and agendas of the many refugees forced to flee their homes across East, Southeast, and South Asia due to the great power conflict between the US and the USSR. Moon's book draws on multilingual archival sources and presents these displaced peoples as historical actors in their own right, not mere subjects of government actions. Exploring the local, regional, and global contexts of displacement through five cases —Taiwan, Vietnam, Korea, Afghanistan, and Pakistan — this volume sheds new light on understudied aspects of Cold War history.

The book's chapters — written by Phi-Vân Nguyen, Dominic Meng-Hsuan Yang, Yumi Moon, Ijlal Muzaffar, Robert D. Crews, Sabauon Nasseri, and Aishwary Kumar — explore Vietnam's 1954 partition, refugees displaced from Zhejiang to Taiwan, North Korean refugees in South Korea from 1945–50, the Cold War legacy in Karachi, and Afghan refugees.

Purchase Cold War Refugees at www.sup.org and receive 20% off with the code MOON20.

The world stands at a critical juncture. Today, about 2.3 billion people are living with moderate or severe food insecurity worldwide (FAO, IFAD, UNICEF, WFP and WHO 2024). By 2050, our planet will be home to nearly 10 billion people, requiring at least a 50% increase in food production from 2011 levels (FAO 2017). This challenge is not simply about producing more food. It is about doing so on degraded land, with less water, under extreme weather conditions in the face of climate change. 

The traditional, resource-intensive farming that sustained the global human population for decades is no longer a viable path forward. Reliance on labor inputs and intensive use of resources cannot meet these complex, interconnected challenges. We must transform our agricultural systems into climate-smart, high-tech agriculture—driven by data and Industry 4.0 technologies, such as AI, robotics, remote sensing, and big data. These tools hold the promise of a “quantum leap” in sustainable food productivity. Yet this transformation cannot happen without investing in agricultural education and training.

From the 1950s to the 1970s, institutions such as the Rockefeller and Ford foundations, USAID and its precursors, and multilateral development banks made significant global investments in agricultural research, education, and training. These investments laid the foundation for the Green Revolution, demonstrating that human capital and agricultural research and development (R&D) are as critical as physical inputs in driving productivity growth and food security. Since then, however, global public investment in agricultural education and R&D has declined or stagnated, except in a few countries, such as China (Ruane and Ramasamy 2023). For example, in the United States, public agricultural R&D spending—adjusted for inflation—fell by nearly one-third between its 2002 peak and 2019, returning to levels last seen in the 1970s. 

Why Investing in Agricultural Education Is a Global Necessity

There is now an urgent need for a renewed commitment to build agricultural human resources that can lead the next transformation. This is not just about teaching farming. It is about cultivating a new generation of innovators, scientists, policymakers, and agro-entrepreneurs who can lead the Green Revolution 2.0. Here are seven compelling reasons why investing in agricultural education is a global necessity.

1. The times call for a quantum leap in sustainable productivity

The first Green Revolution helped avert mass famine through high-yield varieties, but at great environmental cost (see, inter alia, Tilman 1999 and Yang 2024). Now, we need a  Green Revolution 2.0 to drive a "quantum leap" in food production. This next revolution must be “smart” and sustainable. Agricultural education is the engine of this revolution. It will educate scientists, policymakers, and high-tech farmers, enabling them to develop new climate-resilient crops and adopt sustainable practices. Furthermore, the digital technologies driving the Green Revolution 2.0 can improve market access and help ensure fair prices for smallholder farmers.

2. Innovation adoption must be accelerated

Innovation is meaningless if it does not reach those who need it most. However, farmers, especially smallholders (e.g., small-scale and family farmers) and those with limited education, are often risk-averse in adopting new practices. Worse, the traditional systems supporting technology adoption have become ineffective. Government extension services struggle to keep up with the latest technologies, while farmers increasingly rely on commercial vendors for advice. Recent studies suggest that newer approaches, like social networks and farmer-to-farmer learning, have proven far more effective. Investing in education helps create "agropreneurs" who can champion innovation within farming communities, thereby accelerating the adoption of new technologies.

3. The agriculture workforce needs upskilling

The nature of work in agriculture is rapidly changing—vertical farms, AI-driven analytics, automated systems, and climate-resilient practices are redefining food production. Farmers need new skills in data, systems management, digital operations, and climate-resilient methods. Without education, millions risk being left behind, especially in developing countries, resulting in worsening inequality. Investment in upskilling enables farmers to collaborate with technology, thereby avoiding a poverty trap.

4. Empowering smallholder and family farmers will create opportunities and aid their survival

Unlike past mechanization that favored large farms, today’s advances in precision and digital agriculture can empower smallholders. And it creates new opportunities for smallholder farmers to serve growing niche, diverse markets. With supportive policies and education, smallholders can become key drivers of inclusive agricultural transformation.

5. Agriculture needs new, young blood

Farmers are aging worldwide, while youth are leaving rural areas to seek careers in other fields. Traditional agricultural curricula and programs fail to spark their interest. By integrating robotics, AI, biotechnology, and data science into agricultural education, coupled with the use of app-based market-access solutions, we can redesign agricultural systems and make farming an attractive, future-oriented career. Investing in high-tech agricultural education is the key to filling the labor gap with skilled, motivated, next-generation farmers

6. Greenhouse gas reduction

Agriculture is the second-largest contributor to greenhouse gas emissions and consumes 70% of global fresh water. Climate-smart farming practices can reduce emissions, store carbon, and build resilience against droughts, pests, and diseases. Education is the gateway to equipping farmers with the knowledge to implement such solutions at scale.

7. Agricultural investment boosts national prosperity and global collaboration

The benefits of investing in agricultural education extend far beyond farms. Past investments in the 1950s–70s powered the Green Revolution, saving over a billion people from starvation, reducing rural poverty, and fueling industrial development. A notable example of a successful investment is the US-funded Seoul National University (SNU) Minnesota Project (1954–1962). Under the project, the University of Minnesota helped rebuild SNU’s College of Agriculture and train a generation of agricultural scientists. These scientists not only transformed Korea from a food-deficit to a food-secure nation, but are today contributing to agricultural advancements globally. Replicating such initiatives worldwide could deliver similar results in today’s food-insecure countries.

Moving Forward

Momentum for significant investments in agriculture is building. The G20 has committed to food security, emphasizing investment in sustainable productivity. The World Bank has invested $45 billion in food and nutrition security programs since 2022, exceeding its target of $30 billion. The Asian Development Bank (ADB) pledged $40 billion (2022–2030), including $26 billion in new financing. It is encouraging that more than 50 countries have launched programs to nurture young and next-generation farmers, recognizing their vital role in food security, as well as in ensuring the future sustainability and competitiveness of the agricultural sector (although the outcomes of these programs remain mixed). Countries are also stepping up their investment in agricultural education and training. For example, Bangladesh is developing a $150 million project with ADB and the Korean Eximbank to upgrade its agricultural tertiary education, while Thailand is developing a $120 million investment project in agricultural technical and vocational education.

However, to avert a coming food crisis, these efforts need to be scaled, and to achieve that, concerted global action is necessary. One such initiative, now being proposed by ADB in partnership with a consortium of agricultural universities, is the establishment of a global climate-smart, high-tech agricultural education network to mobilize public and private investments, accelerate knowledge sharing and technology adoption, and prepare the next generation of agriculture leaders and entrepreneurs globally.

The challenges are immense, but so are the opportunities. Investing in agricultural education and training is not just about farming—it is about building a sustainable, food-secure, and climate-resilient future.
 

Works Cited

FAO. 2017. The Future of Food and Agriculture—Trends and Challenges.

FAO, IFAD, UNICEF, WFP, and WHO. 2024. The State of Food Security and Nutrition in the World 2024—Financing to End Hunger, Food Insecurity and Malnutrition in All Its Forms.

Ruane, John, and Selvaraju Ramasamy. 2023. Global Investments in Agricultural Research: Where Are We and Where Are We Going? Food and Agriculture Organization of the United Nations.

Tilman, David. 1999. “Global Environmental Impacts of Agricultural Expansion: The Need for Sustainable and Efficient Practices.” Proceedings of the National Academy of Sciences of the United States of America 96 (11): 5995-6000.

Yang, Yi, David Tilman, Zhenong Jin et al. 2024. “Climate Change Exacerbates the Environmental Impacts of Agriculture.” Science 385 (6713).
 

As the U.S.-China competition unfolds in areas ranging from trade to technology to the military, the rival-making discourse surrounding this great power competition was the focus of the conference Beyond a New Cold War, organized and hosted by the Stanford Next Asia Policy Lab (SNAPL).

Held on August 14, 2025, the event showcased SNAPL research illuminating how U.S. political leaders and the media shape narratives concerning China and how citizens in young democracies perceive these narratives. Serving as discussants were experts from Columbia University, the University of California, Berkeley, the Hoover Institution (represented by a former National Security Affairs Fellow), and the U.S. Congressional-Executive Commission on China.

The studies presented and discussed at the conference are part of SNAPL’s U.S.-Asia Relations research track, one of four research streams the lab pursues. Housed at the Shorenstein Asia-Pacific Research Center (APARC) and founded by sociologist Gi-Wook Shin, the lab aims to generate evidence-based policy recommendations and promote transnational collaboration with academic and policy institutions to advance the future prosperity of Asia and U.S.-Asia relations.

“This conference provided an excellent opportunity to engage the policy community with our research findings,” says Shin, the William J. Perry Professor of Contemporary Korea, a senior fellow at the Freeman Spogli Institute for International Studies (FSI), and the director of APARC and the Korea Program. “The lab will continue to foster ongoing dialogue between academic and policy circles.” 

The conference builds on previous SNAPL forums and meetings with policy and academic communities in Washington, D.C., held in September 2024. These policy engagement activities are made possible thanks to a grant from FSI. 

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Dynamics of American Elite Discourse on China

At the first conference panel, Research Fellow Xinru Ma shared a study that unravels who leads elite discourse on U.S.-China relations – whether Congress, the White House, or the media. While prior research suggests that each of these actors could have distinct agenda-setting capacities, their relative influence and its directionality in foreign policy discourse remain empirically underexamined.

The study addresses this question by investigating China-focused discourse and framing by the U.S. legislative and executive branches as well as the media. Using computational and causal inference methods, the study analyzes social media data from the legislative and executive branches alongside major U.S. media outlets across two periods: the 116th Congress (January 3, 2019 – January 3, 2021) and the 118th Congress (January 3, 2023 – January 3, 2025).

The analysis reveals that, both in terms of issue attention and framing, the media tends to follow the lead of Congress and the President. The findings also indicate that Republican lawmakers exert greater influence on setting the China agenda in the media. In contrast, Democratic lawmakers are stronger predictors of how the media frames the issues at stake. Moreover, the findings suggest that presidential influence on China discourse weakened sharply in the 118th Congress, and that there is an overall shift toward party-driven, rather than institutionally mediated, communication among elites. 

Policy Implications
 

• Media Weakness: The reliance of media outlets on partisan cues from political elites on foreign policy issues increases the risk of incomplete or skewed public understanding of China and U.S.-China relations. The risk is especially disconcerting as U.S. reporters face limited access to China.
• Partisan Echo Chambers: Communication flows primarily within partisan networks rather than across institutions, with the separation of powers becoming less effective as a system of checks and balances. The splintering of political discourse into parallel echo chambers risks eroding opportunities for cross-party dialogue and democratic deliberation on complex foreign policy issues.
• Fragmented Messaging: Divergent partisan messaging on China signals inconsistency to both domestic and international audiences who might draw contradictory conclusions about U.S. intentions. This dynamic gives rise to strategic miscalculations abroad and a fragmented public understanding of China policy at home.
• Declining  Institutional Voices: The decline of institutional power over shaping U.S. discourse on China has created a growing vulnerability. As individual political figures gain sway, personalized narratives often prioritize short-term visibility over a coherent, long-term strategy.

Democracy vs. Autocracy: A View from Young Democracies

Despite their deep divisions on most issues, there is one topic Republicans and Democrats converge on: China. Both parties increasingly frame the intensifying U.S.-China tensions as a strategic competition between democracy and autocracy. But is the value diplomacy this approach begets effective in promoting liberal values in young democracies?

At the second conference panel, Visiting Scholar Gidong Kim presented a study that addresses this question. “This study challenges the effectiveness of the value-laden U.S. diplomacy in young democracies and presents a more nuanced explanation of democracy's role in forming public opinion on foreign policy,” says Kim, formerly a postdoctoral fellow with SNAPL and currently an assistant professor of political science at Hankuk University of Foreign Studies (HUFS).

The study hypothesizes that in young democracies, where democratic histories are relatively short and legacies of authoritarian rule endure, citizens tend to understand democracy in terms of electoral institutions rather than liberal values. Similarly, in the context of the U.S.-China competition, citizens in these countries tend to perceive China’s threats to electoral institutions more seriously than its threats to liberal values.

To test this proposition, the study uses a country-level, cross-national analysis and an original survey experiment in South Korea. The findings support the hypothesis.

Policy Implications
 

• Context Matters: U.S. policymakers must acknowledge the limits of value-driven diplomacy. Washington should diversify its foreign policy toolkit and adapt it to regional contexts: in Western Europe, liberal values rhetoric can reinforce alliances, but in young democracies, the design and strength of electoral institutions carry greater weight.
• A Crisis of Credibility: For China, there is an equally clear lesson about the need to rethink its approach to diplomacy. Without addressing suspicions of election interference in democratic countries, Beijing will struggle to gain traction with the publics in young Asian democracies and dissipate anti-China sentiments in those countries, even if it increases its soft power through liberalization policies.

SNAPL’s studies presented at the conference underscore the crucial role that narratives and public perceptions play in international relations. They suggest that great power competition is not just about power. Rather, it is also about persuasion, which, in turn, depends on how different audiences — at home and abroad — perceive the story.

When Stanford sociologist Gi-Wook Shin left his home country of South Korea in 1983 to pursue graduate studies at the University of Washington, he was certain he would return to Korea upon graduation. More than 40 years later, Shin, the William J. Perry Professor of Contemporary Korea and a senior fellow at the Freeman Spogli Institute for International Studies, is still in the United States. 

Yet he does not consider himself a case of brain drain for Korea. Shin, who is also the founding director of the Korea Program at the Shorenstein Asia-Pacific Research Center (APARC) and APARC director, has continuously contributed to Korea by leading transnational collaborations, researching and publishing on pressing issues in Korean affairs, and otherwise engaging in diverse intellectual exchanges with the country.

Shin’s experiences sparked his interest in the sociological patterns of mobile talent and a central question: How do countries attract, develop, and retain talent in a globalized world? His new book, The Four Talent Giants (Stanford University Press, 2025), explores that question regarding transnational talent flows from a comparative lens by examining how four strikingly different Asia-Pacific nations – Japan, Australia, China, and India – have become economic powerhouses.

We interviewed Shin about his book – watch:

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The book’s main idea, Shin explains, is that how countries manage talent is key to their strength and future success. He calls the four Asia-Pacific nations the book examines “talent giants” because each has used a distinct talent strategy that has proven critical to national development. Three of these nations – China, Japan, and India – are among the top five economies in the world in terms of GDP, and Australia, despite its relatively small population size, is third in terms of wealth per adult.

In The Four Talent Giants, Shin investigates how these four nations have become global powers and sustained momentum by responding to risks and challenges, such as demographic crises, brain drain, and geopolitical tensions, and what lessons their developmental paths hold for other countries.

A New Framework for Studying Human Resource Development 

Asia’s robust economic growth over the past forty years is nothing short of a remarkable feat. The Asia-Pacific today continues to be the world's fastest-growing region, despite global economic uncertainty. How did this phenomenal ascendance come about?

The existing literature has emphasized common “recipes” of success among Asia-Pacific powers. Endeavoring to find one-size-fits-all formulas that could be replicated in other countries seeking rapid development, it has overlooked the distinct developmental journeys of Asian nations. “We need a new lens, or framework, to explain their successes, while also accounting for cross-national variation in development and sustainability,” writes Shin. 

In his book, Shin examines talent – the skilled occupations essential to a nation’s economy – as a key driver of economic development. While all countries rely on human resources for development, their talent strategies vary based on historical, cultural, and institutional factors. Shin introduces a new framework, talent portfolio theory (TPT), inspired by financial portfolio theory, to analyze and compare these national approaches.

“TPT views a nation’s talent development, like financial investment, as constructing a ‘talent portfolio’ that mixes multiple forms of talent – domestic, foreign, and diasporic – adjusting its portfolio over time to meet new risks and challenges,” he explains. Just as an investor may select different financial products in a mix of assets, countries can create talent portfolios by picking from various strategies.

Shin identifies four main strategies by which a country can harness talent – what he calls the four B's: 

• “Brain train” signifies efforts to develop and expand a country’s domestic talent or human capital.
• “Brain gain” refers to attracting foreign talent to strengthen the domestic workforce.
• “Brain circulation” involves bringing back nationals who have gone abroad for work or study.
• “Brain linkage” means leveraging the global networks and expertise of citizens living overseas through transnational collaboration.

Shin uses TPT as an analytical framework to examine how each of the four talent giants has constructed its distinct national talent portfolio and how this portfolio has evolved. As in an investment portfolio rebalancing, a nation can maintain diversification across the four B's and within each B. TPT therefore offers a holistic framework for understanding the overall picture of a country’s talent strategy, and how and why it may “rebalance” its talent portfolio.

Throughout the book, Shin shows that, while Japan has relied on the brain train strategy, Australia, whose population was too small for such an approach, emphasized brain gain. China used brain circulation: it first sent students and professionals abroad to learn, then implemented policies to encourage them to return. India, by contrast, established linkages among its diaspora and used them to develop its economy.

New Geopolitics of Global Talent: Lessons and Policy Implications

The case studies of the four talent giants reveal that there is no single path to talent-driven development. Each of the four Asia-Pacific countries has built its unique talent portfolio, balancing human and social capital, homegrown and foreign-educated individuals, and domestic and diasporic talents. While the talent giants use all four B's to some extent, each emphasizes them differently, reflecting diverse strategies and development paths. The core findings of these studies offer valuable insights for countries aiming to design effective talent policies. 

The four B's were instrumental in the economic rise of the four Asian nations, and they will be equally critical in addressing new challenges facing all economies, from demographic crises to emergent geopolitical tensions. For the United States, one such challenge is its sprawling competition with China, where the battle for talent is heating up in the race for technological supremacy.

Shin warns that the advantage the United States has long held in technological innovation, driven by its ability to attract skilled foreign talent, is now at risk from the Trump administration’s anti-immigration policies, pressures on universities, and cuts to research funding. “Immigrants have not just filled jobs,” he emphasizes. “They have created new industries and helped the US and their home countries. If the US makes it harder for talent to come in and stay, it risks hurting its long-term success.”

The Four Talent Giants is an outcome of Shin’s longstanding project investigating Talent Flows and Development, now one of the research tracks he leads at the Stanford Next Asia Policy Lab (SNAPL), which he launched in 2022. Housed at APARC, the lab is an interdisciplinary research initiative addressing Asia’s social, cultural, economic, and political challenges through comparative, policy-relevant studies. SNAPL’s education mission is to cultivate the next generation of researchers and policy leaders by offering mentorships and fellowship opportunities for students and emerging scholars.

Shin notes that the SNAPL team illustrates all four B’s in his talent portfolio theory, as some members are U.S.-born and trained, some come from Asia and, after working at the lab, return to their home countries, whereas some stay here, promoting linkages with their home countries. “In many ways, this project shows what is possible when we invest in talent and encourage international collaboration.”

In the Media

Stanford Scholar Reveals How Talent Development Strategies Shape National Futures
The Korean Daily, July 13, 2025 (interview)
- English version
- Korean version

Over the past two decades, China has pursued an ambitious plan to establish an accessible and affordable health system that meets the needs of its population. As part of this journey, China’s leadership implemented comprehensive health system reforms and achieved near-universal health insurance coverage at a relatively low per capita income level. Key to this process was the integration of rural and urban resident health insurance programs, which has proven to yield positive outcomes in health care utilization, physical health, and related equity issues. Thus far, however, the integration’s potential psychological effects have been understudied.

New research, published in the journal Health & Social Care in the Community, addresses this gap in the literature. The researchers – Stanford health economist Karen Eggleston, the director of APARC’s Asia Health Policy Program (AHPP); Peking University’s Gordon Liu; and Renmin University of China’s Yue-Hui Yu and Qin Zhou, the latter a former visiting scholar with AHPP – find that the urban-rural health insurance integration has been beneficial for improving mental health among China’s rural adults.

Their study underscores the potential of policy-driven health system reforms to address longstanding disparities, promote mental well-being in vulnerable communities, and enhance quality of life among aging populations. This is the researchers’ final installment in a series of studies on China’s urban-rural health insurance integration.

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• Learn more about Dr. Eggleston's related research project, "Addressing Health Disparities in China" > 

Tracking Mental Health Over Eight Years

For decades, China had a fragmented health insurance system, which led to disparities between different populations and hindered the implementation of the Healthy China 2030 blueprint, a bold national strategy to make public health a precondition for all future economic and social development. Responding to this challenge, in 2016, China announced plans to unify its rural and urban health insurance programs. The unified health insurance system, called Urban and Rural Residents’ Basic Medical Insurance (URRBMI), offered equal health service packages and insurance benefits to rural and urban residents. Studies have shown that the integrated system improved healthcare access for nearly 800 million rural residents and helped reduce coverage gaps and inequality. Yet evidence about the integration’s potential psychological impacts has been limited.

Eggleston and her co-authors hypothesized that this reform might also benefit rural adults’ psychological well-being. To test this hypothesis, the researchers conducted a comprehensive analysis using data from the China Health and Retirement Longitudinal Study (CHARLS), a nationally representative survey that tracks health, economic, and social variables among Chinese adults aged 45 and older. The study focused specifically on rural residents, examining changes in mental health, particularly depressive symptoms, before and after the insurance integration. Data from four waves of CHARLS, spanning from 2011 to 2018, allowed the team to analyze trends over a substantial period.

The researchers used an event study combined with a time-varying difference-in-differences (DID) approach, capturing the effect of the health insurance integration on depressive symptoms and comparing changes over time between those affected by the reform and a control group not yet impacted (since local governments introduced the integration reforms in different years, samples in the control group had constantly entered the treatment group during the survey period). This method helps isolate the effect of the policy from other confounding factors, providing a clearer picture of causality. The researchers further examined the heterogeneity of the integration effect across subgroups by gender, age, health status, and family economic status. They also analyzed possible mechanisms through which the reform produced psychological effects

Key Findings: A Significant Drop in Depression

The researchers find that the health insurance integration was associated with a measurable reduction in depressive symptoms among rural seniors. Specifically:

• CES-D scores – a standard measure of depression severity (using a version of the Centre for Epidemiological Studies Depression Scale) – decreased by an average of 0.441 points among those covered by the reform.
• The likelihood of experiencing depression dropped by approximately 3.5% in the post-reform period.
• The decline in depression scores following the integration was continuous, suggesting cumulative effects of the reform. Notably, some psychological benefits appeared up to two years before the reform took effect, likely due to public awareness and positive expectations generated by advance announcements from local authorities.

The results were statistically significant, indicating that the health insurance integration reform has significantly improved the mental health of rural adults and reduced their risk of becoming depressed.

The findings also indicate that a key driver that produced continuous positive psychological effects was the integration’s reduction of health care costs for rural residents, particularly for hospital care. By lowering financial barriers to treatment, the integration improved access to healthcare and made its use more equitable. This, in turn, boosted rural adults’ satisfaction with their health and overall sense of well-being. The improvement may have set off a positive cycle, encouraging more social engagement and physical activity, which helped further ease symptoms of depression.

While the reform reduced depressive symptoms for both male and female older adults, the findings revealed differences across subgroups. It appears the reform did not significantly reduce depressive symptoms for those aged 40-49 and over 70, individuals in poor health, or those in the lowest economic bracket. The researchers attribute this to ongoing financial barriers and limited insurance financing, which may blunt the perceived benefits for high-need groups.

Policy Implications: A Path Toward Health Equity

The study’s co-authors highlight several policy implications for China:

• Expand and standardize coverage: Build on the success of the URRBMI by moving from local-level integration to broader provincial or national coverage, and encourage enrollment among vulnerable populations through subsidies.
• Improve equity for high-need groups: Design more targeted insurance policies for older adults, those with chronic illnesses or disabilities, and low-income groups, especially by covering outpatient treatments for high-cost conditions.
• Increase funding for the URRBMI: Despite progress, reimbursement rates remain low, highlighting the need for greater investment in the program.
• Strengthen rural health infrastructure: Insurance reforms must be paired with improvements in rural healthcare facilities and services to ensure quality care is both accessible and effective.

China’s experience offers valuable lessons for countries aiming to achieve universal health coverage and those grappling with health disparities and aging populations. The positive association between insurance integration and mental health among rural adults in China underscores the importance of comprehensive, inclusive policies addressing financial and social determinants of health.

The study’s findings highlight the need to ensure that the most vulnerable populations benefit equally from health reforms. They also serve as a compelling reminder that thoughtfully designed and implemented reforms can improve physical health and increase mental resilience and social cohesion.

Mounting hidden local government debt is one of China’s pressing challenges. Held by local government financing vehicles (LGFVs) and estimated between US$8-10 trillion, this off-the-books debt originates from a long-running tug-of-war over tax revenue between China’s central government and the localities. In the years before COVID-19, LGFVs controlled their debt by drawing on steady non-tax revenues. In summer 2020, however, approximately six months after the pandemic broke out in Wuhan, the hidden debt held by LGFVs began rising dramatically. Today, many of them are nearing default, and local governments are increasingly going broke.

​​Why did hidden LGFV debt rise so much during COVID?

A recent study, published in The China Journal, sheds light on this question. The study’s co-authors – including Jean Oi, the William Haas Professor of Chinese Politics, a senior fellow at the Freeman Spogli Institute for International Studies, and director of the China Program at APARC – use quantitative data to show how China’s central government’s regulatory crackdowns on income tied to the real estate sector during the pandemic disrupted the revenue sources LGFVs and their local governments relied on to service their debts. These policy changes “interacted with the zero-COVID policy to create a perfect storm, pushing hidden local government debt to new highs,” they write. 

Their study draws on a wide array of quantitative data, tracking information on factors ranging from COVID shocks (including confirmed cases and deaths) to, among others, government medical responses, special treasury bonds and their allocation, local debt, land purchases, and business activities. Using these sources, the co-authors built a province-level dataset covering all 31 of China’s provincial units from 2018 to 2022, allowing comparative analyses before and after China’s COVID shocks. They organized the data into three categories: (1) the impact of COVID on small and medium enterprises; (2) government fiscal responses and COVID expenditures during the pandemic; and (3) local government finances and debts.

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The Pre-COVID Era: The Grand Bargain That Failed

China’s local debt problem traces back to the 1994 fiscal reforms, which recentralized tax revenues in Beijing and left local governments with chronic budget shortfalls. To bridge the gap, the central government struck a “grand bargain”: while claiming a larger share of tax income, localities could generate new non-tax revenues through special-purpose vehicles, namely, local government financing vehicles. These LGFVs were set up as state-owned enterprises to incur and hold debt off-the-books, yet not illegally, on behalf of local governments.

The workaround fueled rapid development for years but laid the groundwork for today’s mounting hidden debt crisis.

“The success of LGFVs hinged largely on revenue generated through land finance,” explain Oi and her co-authors. “Local governments provided LGFVs with cheap land as collateral for bank loans and bonds. Further revenue was generated from preparing and selling land to real estate developers.”

Thus, LGFVs powered over a decade of rapid growth in China, driving infrastructure booms and urbanization that made the real estate sector a cornerstone of the economy. The model appeared mutually beneficial: the central government gained more tax revenue as the economy grew, while local governments used land sales and debt to fund development. But this growth depended on a continuous flow of non-tax income, making the system increasingly fragile.

After the 2008 global financial crisis, Beijing launched a sustained push to rein in local government hidden debt, focusing heavily on LGFVs. By 2017, officials labeled the risk a “gray rhino.” Yet this drive for fiscal discipline ground to a halt with the onset of COVID.

A Perfect Storm of Policy and Pandemic

The pandemic’s impact was swift and severe. Small and medium-sized businesses, especially in the hardest-hit regions like Hubei Province, saw their incomes collapse by up to 90%. In response, Beijing provided a massive fiscal support package to localities, including one trillion yuan in special COVID bonds to offset the costs from the initial onslaught of the pandemic. Crucial for LGFVs, these bonds cushioned the impact of the pandemic on land sales.

By summer 2020, however, as China was still locked away from the rest of the world and COVID was under control, Beijing resumed its policy agenda to enforce fiscal discipline and curb local government debt. The central government’s most consequential measure was the “three red lines” policy, which dealt a major blow to China’s real estate sector by sharply restricting developers’ ability to borrow once debt thresholds were crossed. The policy, expanded from 12 pilot firms in 2020 to cover the entire sector by 2021, disrupted the “borrow-to-grow” model and triggered a liquidity crisis. Evergrande, China’s second-biggest property developer, was among the first groups affected.

As borrowing dried up, firms struggled to repay debt, halted construction, and stopped buying land, slashing local government revenues. Land sales plummeted across provinces, with national revenue growth from land transfers plunging into negative territory by 2022. The crisis deepened when unfinished housing projects led to mortgage boycotts by frustrated home buyers, prompting more state intervention.

For local governments, the shift came at a steep cost. They were ordered to step in, using LGFVs to purchase land and inject cash into public budgets. As a result, even wealthier provinces like Shanghai and Guangdong saw sharp increases in LGFV debt.

“The call for LGFVs to buy land to create revenue for local governments made matters worse, turning land from a key source of revenue into a source of new debt and forcing LGFVs further to increase borrowing, all of which caused soaring increases in LGFV debt, without any alternative revenue source to service or pay that debt,” explain Oi and her co-authors.

A Fiscal Reform Imperative

The study shows how China’s shifts in central government policies during the pandemic – especially the three red lines and the directive for LGFVs to buy up unwanted land — exacerbated long-standing vulnerabilities in local public finance. What had been a delicate balancing act quickly became unsustainable.

“At the root of China’s continuing crisis of LGFVs' debt is China’s flawed fiscal system,” the co-authors emphasize. Before the pandemic, the system masked deficits by relying on LGFVs to generate off-the-books revenues, primarily through land sales fueled by a booming real estate market. This arrangement allowed Beijing to capture the bulk of tax revenue while localities chased growth. But when COVID struck and the property sector collapsed, the facade crumbled.

The fallout exposed how deeply local governments had come to depend on land finance – an unstable, non-institutionalized revenue stream. With the real estate sector once accounting for over 20 percent of GDP, its collapse left localities and their financing vehicles adrift. “In the context of a crisis such as COVID, the weakness of the fiscal system and LGFVs was exposed as policy instability added to the volatility of the economic situation,” Oi and her co-authors note.

The local government debt problem might not trigger a financial crisis in China, “but LGFVs and their local governments remain in dire straits,” they write. More worrying, the economy has not rebounded in the post-COVID years as hoped, and “as long as the real estate sector remains depressed, land finance will not be able to make local government budgets whole as it once did. The grand bargain can’t work.”

Rather than assume the debt, Beijing is extending lifelines: urging banks to offer LGFVs 25-year loans with temporary interest relief, approving debt swaps into longer maturity municipal bonds, and allowing new issuances of special-purpose bonds. But these are stopgaps, not solutions.

Hidden debt will keep resurfacing unless China overhauls the fiscal system born out of the 1994 reforms, Oi and her co-authors conclude. Institutionalized, dependable, alternative revenue streams for local governments are needed, or the crisis will persist. “It may be time for Chinese leadership to stop kicking the can down the road and undertake institutional reforms of the fiscal system. This may be painful, but there is no other sustainable solution.”