Financial reform is one of the key priorities identified at the Third Plenum in November while state-owned enterprises got little mention.  But will financial reform possibly lead to a fundamental reform of state-owned companies?

Nicholas R. Lardy, Anthony M. Solomon Senior Fellow, joined the Peterson Institute for International Economics in March 2003. Previously, he was a senior fellow in the Foreign Policy Studies Program from 1995 until 2003. Before Brookings, he served at the University of Washington, where he was the director of the Henry M. Jackson School of International Studies from 1991 to 1995. From 1997 through the spring of 2000, he was also the Frederick Frank Adjunct Professor of International Trade and Finance at the Yale University School of Management. He is an expert on Asia, especially the Chinese economy.

Lardy is a member of the Council on Foreign Relations and is a member of the editorial boards of the China Quarterly, Journal of Asian Business,China Review, and China Economic Review. He received his BA from the University of Wisconsin in 1968 and his PhD from the University of Michigan in 1975, both in economics.

This event is co-sponsored with CEAS and is part of the China under Xi Jinping series.

A year has passed since the Japanese government embarked on the new economic policy package called “Abenomics” with three “arrows”: aggressive monetary easing, flexible fiscal policy, and a growth strategy. The package is designed to bring the Japanese economy out of 20 years of stagnation and 15 years of deflation, and put it on a sustainable growth path. How effective has the policy package been during the first year of the Abe administration?  Will it succeed in bringing sustainable growth to Japan?  Professor Takatoshi Ito, a prominent expert on the Japanese economy, tackles these questions.

Takatoshi Ito, Professor at Faculty of Economics and Dean of Graduate School of Public
Policy, University of Tokyo, has taught extensively both in the United States and Japan,
including at University of Minnesota, Hitotsubashi University, and Harvard University.
He held visiting professor positions at Harvard University (1986-87 and 1992-94), Stanford
University (as National Fellow; 1984-85); Columbia Business School (fall semester, 2009),
and Tun Ismail Ali Chair Professor at University of Malaya (summer semester, 2008). His
public sector experiences include Senior Advisor in the Research Department, IMF
(1994-97); Deputy Vice Minister for International Affaires at Ministry of Finance
(1999-2001); and a member of the Prime Minister’s Council of Economic and Fiscal
Policy (2006-08). He is an author of many books including The Japanese Economy (MIT
Press), The Political Economy of the Japanese Monetary Policy (MIT Press), and
Financial Policy and Central Banking in Japan (MIT Press), and more than 50
refereed academic journal articles on international finance and the Japanese economy,
including ones in American Economic Review and Econometrica. He has distinguished
academic and research appointments such as President of the Japanese Economic
Association in 2004; Fellow of Econometric Society, since 1992; Research Associate at
National Bureau of Economic Research since 1985; and Faculty Fellow, Centre for
Economic Policy Research, since 2006. His research interest includes capital flows and
currency crises, microstructures of the foreign exchange rates, and inflation targeting. He
contributes frequently op-ed columns and articles to Financial Times, Nihon Keizai Shinbun,
Mainichi Shinbun, and Toyo Keizai Weekly.

By any measure, China’s economy and defense budget are second only to those of the United States. Yet tremendous uncertainties persist concerning China’s military development and national trajectory, and areas with greater information available often conflated misleadingly. Fortunately, larger dynamics elucidate both areas. Particularly since the 1995-96 Taiwan Strait Crisis, China has made rapid progress in aerospace and maritime development, greatly facilitating its military modernization. The weapons and systems that China is developing and deploying fit well with Beijing’s geostrategic priorities. Here, distance matters greatly: after domestic stability and border control, Beijing worries most about its immediate periphery, where its unresolved disputes with neighbors and outstanding claims lie primarily in the maritime direction. Accordingly, while it would vastly prefer pressuring concessions to waging war, China is already capable of threatening potential opponents’ military forces should they intervene in crises over islands and maritime claims in the Yellow, East, and South China Seas and the waterspace and airspace around them. Far from mainland China, by contrast, it remains ill-prepared to protect its own forces from robust attack. Fortunately for Beijing, the non-traditional security focus of its distant operations makes conflict unlikely; remedying their vulnerabilities would be difficult and expensive. Despite these larger patterns, critical unknowns remain concerning China’s economic development, societal priorities, industrial efficiency, and innovation capability. Dr. Erickson will examine these and related issues to probe China’s development trajectory and future place in the international system. 

The views expressed by Dr. Erickson are his alone, and do not represent the policies or estimates of any organization with which he is affiliated.

Dr. Andrew S. Erickson is an Associate Professor in the Strategic Research Department at the U.S. Naval War College and a core founding member of the department’s China Maritime Studies Institute (CMSI). He is an Associate in Research at Harvard University’s John King Fairbank Center for Chinese Studies (2008-). Erickson also serves as an expert contributor to the Wall Street Journal’s China Real Time Report (中国实时报), for which he has authored or coauthored 25 articles. In spring 2013, he deployed in the Pacific as a Regional Security Education Program scholar aboard USS Nimitz (CVN68), Carrier Strike Group 11.

Erickson received his Ph.D. and M.A. in international relations and comparative politics from Princeton University and graduated magna cum laude from Amherst College with a B.A. in history and political science. He has studied Mandarin in the Princeton in Beijing program at Beijing Normal University’s College of Chinese Language and Culture and Japanese language, politics, and economics in the year-long Associated Kyoto Program at Doshisha University.

Erickson’s research, which focuses on Asia-Pacific defense, international relations, technology, and resource issues, has been published widely in English- and Chinese-language edited volumes and in such peer-reviewed journals as China Quarterly, Asian Security, Journal of Strategic Studies, Orbis, Asia Policy (forthcoming January 2014), and China Security; as well as in Foreign Affairs, The National Interest, The American Interest, Foreign Policy, Joint Force Quarterly, China International Strategy Review (published in Chinese-language edition, forthcoming in English-language edition January 2014), and International and Strategic Studies Report (Center for International and Strategic Studies, Peking University). Erickson has also published annotated translations of several Chinese articles on maritime strategy. His publications are available at <www.andrewerickson.com> and <www.chinasignpost.com>.

This event is co-sponsored with CEAS and is part of the China under Xi Jinping series.

Abstract: I examine how the shift from an exam to a district based high school assignment rule impacts intergenerational mobility and residential inequality. A stylized model predicts that under district assignment, household income relative to one’s ability becomes a stronger predictor of achievement, and higher income households sort towards and increase housing prices in the better school districts. I test predictions utilizing a unique policy change from South Korea in the 1970s. High school admission had traditionally been exam based in South Korea. However, between 1974 and 1980 the central government shifted several cities to a school district based system. I find that the reform increased intergenerational income elasticity from 0.15 to 0.31, and that higher income households migrated to the reform cities. I next examine whether school districting altered residential land prices within a city using a first differenced boundary discontinuity design. By focusing on the immediate years before and after the creation of school districts in Seoul, I find that residential land prices increased by about 13% point more on average and by about 26% point across boundaries in the better school district. In sum, I find that the shift from a merit to a location based student assignment rule decreases intergenerational mobility and increases residential inequality.

Professor Lee's research intersects the fields of economic development, political economy, urban economics and public economics, and regionally focuses on Korea and East Asia. Some of his recent research on Korea examines the impact of economic sanctions on the urban elites in North Korea and the impact of education policy on intergenerational mobility in South Korea. His research also examines entrepreneurship and urban growth, the efficacy of disaster aid delivery, and the relationship between aid and trade. Professor Lee is a member of the US-Korea Scholar-Policymaker Nexus Program organized by the Mansfield Foundation and the Korea Foundation. He received his PhD in economics from Brown University, master of public policy from Duke University, and bachelor degree in architecture from Seoul National University. As he made the transition from architecture to economics, he worked as an architecture designer and real estate development consultant.

Over the past 35 years of the reform period Beijing has tried to make its state-owned enterprises more efficient and competitive. In the early 1990s it adopted a strategy modeled closely on the Western corporation and the equity and debt capital markets that support its operations. But China's big SOEs have demonstrated more and more independence despite outright economic and ownership control by the government and the Communist Party. And this independence has not led to greater efficiencies or, arguably, even competitiveness. Instead the National Champions represent monopolistic economic and political power. Today China's new leadership confronts the National Champions seeking to regain control over the state's principal assets. How did this happen and what can be done to reassert Beijing's rights?  

Carl E. Walter worked in China and its financial sector for over 20 years and actively participated in many of the country’s financial reform efforts. While at Credit Suisse First Boston he played a major role in China’s groundbreaking first overseas IPO in 1992. Later at Morgan Stanley he was a member of senior management at China International Capital Corporation, China’s first and most successful investment bank. While there he supported a number of groundbreaking domestic and international stock and bond underwritings for major Chinese corporations. More recently at JPMorgan he was China Chief Operating Officer and Chief Executive Officer of its China banking subsidiary. During this time Carl helped build a pioneering domestic security, risk and currency trading operation. In his spare time he enjoyed driving his Jeep to distant provinces.

A long time resident of Beijing before his recent return to the United States, Carl is fluent in Mandarin and holds a PhD from Stanford University and a graduate certificate from Peking University. In Spring 2013, Carl returned to Stanford as a visiting scholar at the Shorenstein-Asia Pacific Research Center, FSI. He is the co-author of Red Capitalism: the fragile financial foundations of China’s extraordinary rise, which has been published in Chinese in China. His earlier book, Privatizing China: inside China’s stock markets, was also published in China and, like Red Capitalism, contributed to the government’s policy debate.

This event is co-sponsored with CEAS and is part of the China under Xi Jinping series.

We use retrospectively reported data on smoking behavior of residents of Mainland China and Taiwan to compare and contrast patterns in smoking behavior over the life-course of individuals in these two regions. Because we construct the life-history of smoking for all survey respondents, our data cover an exceptionally long period of time – up to fifty years in both samples. During this period, both societies experienced substantial social and economic changes. The two regions developed at much different rates and the political systems of the two areas evolved in very different ways. More importantly, governments in the two areas set policies that caused the flow of information about the health risks of smoking to differ across the regions and over time. We exploit these differences, using counts of articles in newspapers from 1951 to present, to explore whether and how the arrival of information affected life-course smoking decisions of residents in the two areas. We also present evidence that suggests how prices/taxes and key historical events might have affected decisions to smoke.

Dean Lillard received his PhD in economics from the University of Chicago in 1991. From 1991 to 2012, he was a faculty member and senior research associate in the Department of Policy Analysis and Management at Cornell University. In August 2012 he joined the Department Human Sciences at Ohio State University as an Associate Professor. He is Director and Project Manager of the Cross-National Equivalent File study that produces cross-national data. He is a member of the American Economics Association, the Population Association of America, the International Association for Research on Income and Wealth, the International Health Economics Association, the American Society for Health Economics, a Research Associate at the German Institute for Economic Research in Berlin, Germany, and a Research Associate of the National Bureau of Economic Research. He serves on the advisory board of the Danish National Institute for Social Research in Copenhagen, Denmark and the Cross-National Studies: Interdisciplinary Research and Training Program – a collaborative program run by the Polish Academy of Sciences (PAN), and together with the Mershon Centre at OSU.

Dean Lillard's current research focuses on health economics, the economics of schooling, and international comparisons of economic behavior. His research in health economics is primarily focused on the economics of the marketing and consumption of cigarettes and alcohol. His research on the economics of schooling includes studies of direct effects of policy on educational outcomes and on the role that education plays in other economic behaviors such as smoking, production of health, and earnings. His cross-national research ranges widely from comparisons of the role that obesity plays in determining labor market outcomes to comparisons of smoking behavior cross-nationally.