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Phillip Lipscy
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When China first proposed creating the Asian Infrastructure Investment Bank (AIIB) in 2013, it generated considerable anxiety in Washington and many other capitals. Many pundits and policymakers view the AIIB as a bid to undermine or replace the international architecture designed by the United States and its allies since the end of World War II. Although several U.S. allies, including Australia, Germany, and the United Kingdom, have declared their intention to join the AIIB, others, including Japan, have expressed ambivalence. For its part, the United States has made it clear that it will seek to influence the institution from the outside. But it would be a mistake to shun or undermine the AIIB. Rather, it should be welcomed. Both the United States and Japan have far more to gain by joining the AIIB and shaping its future than remaining on the sidelines.

The details remain vague, but the AIIB is meant to be a multilateral development institution that will focus on infrastructure needs in Asia. There is no question that this is a deserving cause. Asia’s large population, rapid growth, and integration with the global economy all generate demand for better infrastructure. A report by the Asian Development Bank (ADB) estimates the region needs about $750 billion annually in infrastructure-related financing. Citing historical underinvestment, McKinsey & Company, a global management consulting firm based in New York City, proclaims a “$1 trillion infrastructure opportunity” in Asia. [...]

This article was originally published on Foreign Affairs on May 7, 2015, and an excerpt has been reproduced here with permission. The full article may be viewed on the Foreign Affairs website.

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U.S. Secretary of State John Kerry and U.S. Treasury Secretary Jack Lew meet with Chinese Premier Li Keqiang at an economic dialogue between the two nations in July 2014.
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The damage that Mao Zedong wrought in China made it much easier for that country to move away from a Soviet-style economic model and toward a new market-oriented one, a Stanford scholar says.

In fact, China has been in full retreat for four decades from Mao's disastrous rule, according to a new book by Stanford sociology Professor Andrew Walder, a senior fellow at the Freeman Spogli Institute for International Studies and director emeritus of the Walter H. Shorenstein Asia Pacific Research Center.

"Mao ruined much of what he had built and created no viable alternative," he wrote. "At the time of his death, he left China backward and deeply divided."

Led by Mao, China's Communist Party seized power in 1949 after a long period of guerrilla insurgency followed by full-scale war. Mao launched a bloody Chinese revolution that resulted in the deaths of millions of Chinese over the next few decades. 

In an interview, Walder said that Mao pushed campaign after campaign against the Chinese Communist party and bureaucracy after 1966 – "The bureaucracy was basically flat on its back at the time of his death."

By contrast, Walder noted, the Soviet bureaucracy was powerful and well-entrenched, and had enormous vested interests that thwarted genuine reforms.

"In post-Mao China, the economy was so backward and the bureaucratic interests so weak that market reform was bundled together with a program of national revival – restructuring the economy along market lines while rebuilding the party and bureaucracy," he said.

Therefore, the politics of reform were much easier for a Chinese leader like Deng Xiaoping than for a Soviet leader like Mikhail Gorbachev, who had to contend with an entrenched bureaucracy still proud of the fact that the USSR was (until the late 1980s) the second largest economy in the world and an undeniable superpower, according to Walder.

He noted that Mao's initiatives repeatedly led to unintended and unanticipated outcomes.

"What is so remarkable is that after 1956 this was a recurring pattern. His initiatives repeatedly ran into trouble, forcing him to backtrack and change direction constantly – although he always insisted that things had unfolded in ways that were according to his plans," Walder said.

Class struggle, imaginary enemies

Mao's China, he added, was defined by a harsh Communist Party rule and a socialist economy modeled after the Soviet Union. Mao himself intervened at almost every level, despite a large national bureaucracy that oversaw this authoritarian system.

"The doctrines and political organization that produced Mao's greatest achievements – victory in the civil war, the creation of China's first unified modern state, a historic transformation of urban and rural life – also generated his worst failures: the industrial depression and rural famine of the Great Leap Forward and the violent destruction and stagnation of the Cultural Revolution," Walder wrote.

He said that Mao misunderstood China's real problems in advocating a top-down "class struggle" against capitalism and imaginary enemies.

"At the time of his death (in 1976), he left China backward and deeply divided," Walder wrote.

The result was a gradual transition to the market-oriented system of today, he added. Almost immediately following Mao's death, his most fervent followers and supporters in the party were arrested and detained – all of which opened the door to reform and opportunity.

China has overcome widespread poverty to become the second largest economy in the world within the span of just a couple of decades. Still, according to Walder, China's rulers seek to cling to a sanitized version of Mao as a way to buttress their legitimacy.

"The damage of his misrule, and the incompetence on his part that it reflects, are not part of the official story anymore, and certainly this is not what is taught to school children or in party manuals in the present day," he said.

World War II and Stalinism

On two other key issues, Walder said his book challenges the conventional wisdom about China and Mao.

First, he says that Mao's forces did very little of the fighting against the Japanese in WWII.

Walder said that the victory of the Chinese Communist Party in 1949 over the Chinese nationalist forces has usually been traced to the strategy of guerrilla warfare in rural regions championed early on by Mao.

"But that was simply a strategy of survival during the Japanese invasion – and Mao's forces did very little of the fighting against the Japanese, in stark contrast to the popular myth of rural resistance." (Only 10 percent of China's military casualties were Red Army, he said.)

What Mao's Chinese Communist Party (CCP) excelled at was mass mobilization for all-out warfare during the Chinese civil war of 1945-49, Walder said.

"And this – pushing your organization and the population for all-out mobilization for war – is the real source of the CCP's success over the Chinese nationalists. This was more like the Soviet Union's war against German armies during World War II than a 'people's war' led by a party that was close to the rural people and built support by catering to their needs," he said.

Second, Walder describes Mao's thinking as frozen in Stalinist doctrine, despite the conventional view of him as an original thinker.

"In fact, Mao's core ideas were absorbed from late-1930s Soviet pamphlets put out under Stalin, and his thinking was very much frozen in that earlier era," Walder said. "The core idea that he absorbed from these pamphlets in creating 'Mao Thought' was that socialism had to be built in an all-out mobilization, like warfare, by extracting huge sacrifices from the population."

The most pernicious idea that Mao absorbed from these old Soviet pamphlets, Walder said, was that class struggle actually intensifies after the means of production are put under public ownership and former exploiting classes are liquidated.

"The sad corollary to this idea is that the Great Leader is the fount of correct ideas, and those who doubt or oppose him represent class enemies who actually oppose socialism," said Walder.

Based on this logic, Walder pointed out, the class struggle had to be waged against "incorrect ideas" as judged by the Great Leader.

"Mao's personality cult was an imitation of Stalin's own," he said.

And so, the Chinese leader held on to old Stalinist ideas long after they were rejected by the Soviet Union as crude distortions of Marxism.

"Mao was actually insisting on keeping to the old and tattered Stalinist playbook," Walder said.

Clifton Parker is a writer for the Stanford News Service.

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A statue of Mao Zedong in Lijiang, China.
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The “Nanjing Incident” of late March 1976 was a precursor of, and according to some analysts a trigger for, the more famous Tiananmen Square demonstrations of 4-5 April. The two protests have widely been interpreted as spontaneous outpourings of dissent from Cultural Revolution radicalism, expressed through mourning for the recently deceased Premier Zhou Enlai. A closer look at the background to these demonstrations in Nanjing, however, reveals that the protests there occurred in the midst of, and in response to, a vigorous public offensive by former leaders of rebel factions to overthrow local civilian cadres for reversing Cultural Revolution policies. The outpouring of respect for Zhou—and criticism of Politburo radicals—mobilized enormous numbers of ordinary citizens into the city streets, far larger numbers than the rebel leaders were able to muster. This demonstrated beyond dispute the virtual disappearance of the popular support rebel leaders had briefly enjoyed a decade before. While the Nanjing protests were unanticipated by either the rebel leaders or the party officials they sought to overthrow, they were only the latest in a linked series of local political confrontations, and had a decisive impact on the national political scene.

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State socialist economies provided public housing to urban citizens at nominal cost, while allocating larger and better quality apartments to individuals in elite occupations. In transitions to a market economy, ownership is typically transferred to existing occupants at deeply discounted prices, making home equity the largest component of household wealth. Housing privatization is therefore a potentially important avenue for the conversion of bureaucratic privilege into private wealth. We estimate the resulting inequalities with data from successive waves of a Chinese national income survey that details household assets and participation in housing programs. Access to privatization programs was relatively equal across urban residents in state sector occupations. Elite occupations had substantially greater wealth in the form of home equity shortly after privatization, due primarily to their prior allocations of newer and higher quality apartments. The resulting gaps in private wealth were nonetheless small by the standards of established market economies, and despite the inherent biases in the process, housing privatization distributed home equity widely across those who were resident in public housing immediately prior to privatization.

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China’s Communist Party seized power in 1949 after a long period of guerrilla insurgency followed by full-scale war, but the Chinese revolution was just beginning. China Under Mao narrates the rise and fall of the Maoist revolutionary state from 1949 to 1976—an epoch of startling accomplishments and disastrous failures, steered by many forces but dominated above all by Mao Zedong.

Mao’s China, Andrew Walder argues, was defined by two distinctive institutions established during the first decade of Communist Party rule: a Party apparatus that exercised firm (sometimes harsh) discipline over its members and cadres; and a socialist economy modeled after the Soviet Union. Although a large national bureaucracy had oversight of this authoritarian system, Mao intervened strongly at every turn. The doctrines and political organization that produced Mao’s greatest achievements—victory in the civil war, the creation of China’s first unified modern state, a historic transformation of urban and rural life—also generated his worst failures: the industrial depression and rural famine of the Great Leap Forward and the violent destruction and stagnation of the Cultural Revolution.

Misdiagnosing China’s problems as capitalist restoration and prescribing continuing class struggle against imaginary enemies as the solution, Mao ruined much of what he had built and created no viable alternative. At the time of his death, he left China backward and deeply divided.

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Keyu Jin
There is a fundamental misunderstanding and misconception about the Chinese economy - about how it works and what are the true challenges it faces. In the talk, Dr. Keyu Jin will highlight three major myths: on what really drives growth in China, what explains its high savings rate, and the economic consequences of the one child policy. Everyone has something to complain about the Chinese economy: large misallocation of resources, low employment growth, a declining share of the economic pie going to Chinese households, environmental costs, financial repression, and wage suppression. Dr. Jin will argue that all of these phenomena are not disparate problems, but are all part of the same fundamental problem, one of macroeconomic structure. The Chinese economy is not 'imbalanced,' rather it is subject to a vicious cycle. And yet, there is still reason to view the Chinese economy with 'guarded optimism.'

Dr. Keyu Jin is an Assistant professor of Economics at London School of economics. She is from Beijing, China, and holds a B.A., M.A., and PhD from Harvard University. Her field of expertise is international macroeconomics and the Chinese economy. Her research has focused on global imbalances and global asset prices, demographics, as well as international trade and growth. Her research is tightly linked to examining the various economic issues in China. She has multiple publications in the American Economic Review, and has also written opinion pieces for the Financial Times and Project Syndicate. She sits on the Asian advisory board of Richemont Group and is also a World Economic Forum Young Global Leader. 

Please note this event is off the record.

Keyu Jin Assistant professor in Economics London School of Economics
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In the third annual Nancy Bernkopf Tucker Memorial Lecture on U.S.-East Asia Relations, Thomas Fingar, Oksenberg-Rohlen Distinguished Fellow in the Freeman Spogli Institute for International Studies at Stanford, former deputy director of national intelligence for analysis and former chairman of the National Intelligence Council, discusses U.S. policy toward China. The speech titled "The United States and China: Same Bed, Different Dreams, Shared Destiny" was delivered at The Wilson Center in Washington, D.C., on April 20, 2015. Links to English and Chinese versions are listed below.

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Fei Yan, a postdoctoral fellow at the Walter H. Shorenstein Asia-Pacific Research Center, has been awarded a prize from the China and Inner Asia Council (CIAC) for his paper on political rivalries during China’s Cultural Revolution. The award aims to recognize emerging scholarship and foster intellectual exchange among experts working on China and Inner Asia topics, according to the award website.

Yan was presented the award at the Association for Asian Studies Annual Conference on March 27. CIAC released the following statement:

“In his paper, Fei Yan offers a new interpretation of the factional rivalries that wracked China's provinces during the early years of the Cultural Revolution. His focus is on the dispute between the so-called ‘radical’ Red Flag faction and the so-called ‘conservative’ East Wind faction that came to a head in Guangzhou in 1967. Making use of previously unavailable archival sources, he offers a meticulous and detailed description of the extent to which this split was based less on deep ideological differences and more on intense power rivalries and disagreements over tactics.”

Yan specializes in Chinese politics and political culture, and comparative social policy within transitional economies and authoritarian settings. He will join the Department of Political Science at Tsinghua University as an assistant professor this fall.

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Global Talent seeks to examine the utility of skilled foreigners beyond their human capital value by focusing on their social capital potential, especially their role as transnational bridges between host and home countries. Gi-Wook Shin (Stanford University) and Joon Nak Choi (Hong Kong University of Science and Technology) build on an emerging stream of research that conceptualizes global labor mobility as a positive-sum game in which countries and businesses benefit from building ties across geographic space, rather than the zero-sum game implied by the "global war for talent" and "brain drain" metaphors.

"Advanced economies like Korea face a growing mismatch between low birth rates and increasing demand for skilled labor. Shin and Choi use original, comprehensive data and a global outlook to provide careful, accessible and persuasive analysis. Their prescriptions for Korea and other economies challenged by high-level labor shortages will amply reward readers of this landmark study."  —Mark Granovetter, Professor of Sociology, Stanford University

The book empirically demonstrates its thesis by examination of the case of Korea: a state archetypical of those that have been embracing economic globalization while facing a demographic crisis—and one where the dominant narrative on the recruitment of skilled foreigners is largely negative. It reveals the unique benefits that foreign students and professionals can provide to Korea, by enhancing Korean firms' competitiveness in the global marketplace and by generating new jobs for Korean citizens rather than taking them away. As this research and its key findings are relevant to other advanced societies that seek to utilize skilled foreigners for economic development, the arguments made in this book offer insights that extend well beyond the Korean experience.

Media coverage related to the research project:  

Dong-A Ilbo, January 27, 2016

Interiew with Arirang TV, March 10, 2016 (Upfront Ep101 - "Significance of attacting global talent," interview with Arirang)

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