Economics 342
Economic Development in the PRC (3)
Spring 2001 Syllabus
Frank R. Gunter – Associate Professor
Economics Department, Lehigh University
Lecture: Tuesday – Thursday, 10:45 AM – Noon
Instructor Availability
Office:
Rauch Business Center, Room 470
Hours:
Tuesday, 1:30 – 4 PM and by appointment
Phone:
(610) 758-4540
Fax:
(610) 758-4677
E-mail:
frg2@lehigh.edu
Course Description
Eco 342: Economic Development in the People’s Republic of China examines the
economic, political and social forces at work in the development process in China since
1949. Special emphasis on post-1978 market reforms, the rural-urban divergence, th erole
of foreign trade and investment, the accumulation of human capital, and the deterioration
of the physical environment. Course concludes with a detailed discussion of possible
futures of the Chinese economy.
Reference Material
World Bank (WB) ( 1997) China 2020, Washington D.C.: World Bank. (This work is in
seven parts.)
Joint Economic Committee (JEC) (1996) China’s Economic Future: Challenges to U.S.
Policy, Washington D.C.: Government Printing Office. (Copies available in the
Economics Department Office for $16.)
Todaro, Michael P. (1999) Economic Development, Reading, Massachusetts: AddisonWesley. (Optional)
Most of the remaining course readings are on reserve in the Fairchild Martindale Library.
Course Schedule and Reading List
Jan 16, 18
I. Introduction to PRC economy
I.1China as a continent and a civilization
Todaro pp. 251-254
2
Reynolds, Lloyd G. (1985) “China,” Economic Growth in the Third
World, 1850-1980, New Haven: Yale University Press, Chapter
11, pp. 268-292.
Riskin (1996) “Social Development, Quality of Life and the
Environment,” JEC, pp. 361-380.
Marshall, Alfred (1948) Principles of Economics, New York: MacMillan
Company. Section #4, pp. 5-10.
Edmonds, Richard L. (1999) “The People’s Republic of China after 50
Years,” China Quarterly, No. 159, September, pp. 563-568.
O’Keefe, Hsu and William O’Keefe (1997) “Chinese and Western
Behavior Differences: Understanding the Gaps,” International
Journal of Social Economics, Vol. 24, No. 1-3, pp. 190-196.
Confucius (1938) “Ethics and Politics,” in Lin Yutang (Ed.) Wisdom of
Confucius
Jan 23
II. Review of Eco Development Theory (Guest lecture by Professor Alvin Cohen,
Professor Emeritus of Lehigh University.)
Todaro Chap. 3
Jan 25
Overview of Information Resources on China (This class will be held in
the Audio/Visual Room of the Fairchild-Martindale Library. Attendance is
required.)
Jan 30
II. Review of Eco Development Theory (continued) (Guest lecture by Professor Alvin
Cohen, Professor Emeritus of Lehigh University.)
Feb 1
Class cancelled.
Feb 6, 8
III. History of the PRC Economy
III.1Ancient Times through 1949
Lin, Justin Yifu (1995) “The Needham Puzzle: Why the Industrial
Revolution Did Not Originate in China,” Economic Development
and Cultural Change, Vol. 43, No. 2, January, pp. 269-292.
Landes (1998) Chaps. 1, 2 and 21.
III.2 The Communist Experiment: 1949-1978
Chinese Planned Economy
Great Leap Forward
Cultural Revolution
Dernberger, Robert F. (1999) “The People’s Republic of China at 50: The
Economy,” China Quarterly, No. 159, September, pp. 606-615.
3
Chang, Gene Hsin (1997) “Communal Dining and the Chinese Famine of
1958-1961,” Economic Development and Cultural Change, Vol.
46, No. 1, pp. 1-34.
Feb 13
Pacing Break
Feb 15, 20
III.3 Economic Liberalization: 1978-Current
WB (1997) China 2020, Chap. 1-8.
Naughton (1996) “Pattern and Logic of China’s Economic Reform,” JEC,
pp. 1-10.
Liebethal (1996) “Politics and Economics in China,” JEC, pp. 11-15.
Wang (1996) “Some Historical Reflections on Chinese Economic
Reforms,” JEC, pp. 16-23.
Cheng (1996) “A Mid-course Assessment of China’s Economic Reform,”
JEC, pp. 24-33.
Gelb (1996) “China’s Reforms in the Wider Context of Transition,” JEC,
pp. 86-100.
Potter (1996) “Law Reform and China’s Emerging Market Economy,”
JEC, pp. 221-242.
Feb 22
Quiz
Feb 27 & Mar 1
IV. The Recent Macroeconomics of PRC: 1978-Current
IV.1 Measurement Issues
Cai, Yongshun (2000) “Between State and Peasant: Local Cadres and
Statistical Reporting in Rural China,” China Quarterly, No. 163,
September, pp. 783-805.
IV.2 Sources Economic Growth
Todaro Chap. 4
Sachs and Woo (1996) “Chinese Economic Growth,” JEC, pp. 70-85.
Borensztein, Eduardo and Jonathon D. Ostry, “Accounting for China’s
Growth Performance,” American Economic Review, Vol. 86, No.
2, (1996), pp. 224-228.
Chow, Gregory C., “Challenges of China’s Economic System for
Economic Theory,” American Economic Review, Vol. 87, No. 2,
(1997), pp. 321-327.
Hu, Zuliu F. and Mohsin S. Khan, "Why is China Growing So Fast," IMF
Staff Papers, Vol. 44, No. 1, (1997), pp. 103-131.
Krugman, Paul, "The Myth of Asia's Miracle," Foreign Affairs, Vol. 73,
No. 6, (1994), pp. 62-78.
United Bank of Switzerland, “The Asian Economic Miracle," UBS
International Finance, Issue 29, (1996), pp. 1-8.
4
Young, Alwyn, "Lessons from the East Asian NICS: A Contrarian View,"
European Economic Review, Vol. 38, (1994), pp. 964-973.
IV.3 Inflation
IV.4 Poverty and Unemployment
Todaro Chap. 5
Yao, Shujie (2000) “Economic Development and Poverty Reduction in
China over 20 Years of Reform,” Economic Development and
Cultural Change, Vol. 48, No. 3, pp. 447-474.
IV.5 Balance of Payments
Todaro Chap. 12-14
WB (1997) Sharing Rising Incomes, Chap. 1-4
Dernberger (1996) “China’s Transformation to a Market Economy,” JEC,
pp. 57-69.
V. Sectors of the PRC Economy
Mar 6 V.1 Agriculture and Rural Life
Todaro Chap. 10
WB (1997) At China’s Table, Chap. 1-5
Crook (1996) “An Assessment of China’s Agricultural Economy: 19802005,” JEC, pp. 124-138.
Carter and Rozelle (1996) “How Far Along is China in Developing its
Food Markets,” JEC, pp. 139-161.
Oi, Jean C. (1999) “Two Decades of Rural Reform in China: An Overview
and Assessment,” China Quarterly, No. 159, September, pp. 616628.
Rozelle, Scott; Albert Park; Jikun Huang; and Hehui Jin (2000)
“Bureaucrat to Entrepreneur: The Changing Role of the State in
China’s Grain Economy,” Economic Development and Cultural
Change, pp. 227-252.
Guo, Xuguang; Thomas Mroz, and Barry Popkin (2000) “Structural
Change in the Impact of Income on Food Consumption in China,
1989-1993,” Economic Development and Cultural Change, Vol.
48, No. 4, July, pp. 737-760.
Mar 8 V.2 Industrial Sector - SOE/TVE/Private Firms
Woo (1996) “Crises and Institutional Evolution in China’s Industrial
Sector,” JEC, pp. 162-175.
Jefferson and Singh (1996) “Ownership Reform as a Process of Creative
Reduction in Chinese Industry,” JEC, pp. 176-202.
Koo and Yeh (1996) “The Impact of TVE Growth on State Enterprises
Reform,” JEC, pp. 381-402.
Li, Wei (1997) “The Impact of Economic Reform on the Performance of
Chinese State Enterprises, 1980-1989,” Journal of Political
Economy, Vol. 105, No. 5, pp. 1080-1106.
5
Wu, Yanrui (1993) “Productive Efficiency in Chinese Industry,” AsianPacific Economic Literature, Vol. 7, No. 2, November, pp. 58-66.
Szirmai, Adam and Ren Ruoen (2000) “Comparative Performance in
Chinese Manufacturing, 1980-1992,” China Economic Review,
Vol. 11, No. 1, pp. 16-53.
Mar 13, 15
Spring Break
Mar 20 V.3 Financial Intermediation in the PRC
Cheng, Fong and Mayer (1996) “China’s Financial Reform and Monetary
Policy,” JEC, pp. 203-220.
Xu, Cheng Kenneth (2000) “The Microstructure of the Chinese Stock
Market,” China Economic Review, Vol. 11, No. 1, pp. 79-97.
Mar 22 V.4 Infrastructure
Szymanski (1996) “The New Revolution in China: Telecommunications
and Societal Change,” JEC, pp. 270-279.
Colton and Morison (1996) “Chinese Transportation System,” JEC, pp.
280-319.
Mar 27 V.5 International Trade and Capital Flows
WB (1997) China Engaged, Chap. 1-4
Perkins (1996) “Prospects for China’s Integration into the Global
Economy,” JEC, pp. 34-40.
Lilley and Hart (1996) “Greater China,” JEC, pp. 423-450.
Holliday (1996) “China and the World Trade Organization,” JEC, pp. 451469.
Morrison and Hardt (1996) “Sino-U.S. Economic Relations into the 21st
Century,” JEC pp. 471-498.
Watson, James (2000) “China’s Big Mac Attack,” Foreign Affairs, Vol.
79, No. 3, May/June, pp. 120-134.
Gunter, Frank R., "Capital Flight from the People's Republic of China:
1984-1994," China Economic Review, Vol. 7, No. 1, (1996), pp.
77-96.
Mar 29 V.6 Services and Government
WB (1997) Financing Health Care, Chap. 1-8
Rask, Kolleen; David Chu; and Thomas Gottschang (1998) “Institutional
Change in Transitional Economies: The Case of Accounting in
China,” Comparative Economic Studies, Vol. XXXX, No. 4,
Winter, pp. 76-100.
Gamble, William (2000) “The Middle Kingdom Runs Dry,” Foreign
Affairs, Vol. 79, No. 6, November/December, pp. 16 -20.
6
Apr 3
VI. Economic Decision Making in the PRC
VI.1 Delegation-Consensus
Todaro Chap. 16, 17
Lieberthal, Kenneth (1995) Governing China, New York: W.W. Norton
Inc.
Shirk, Susan L. (1993) “Decision Rules,” Chapter 7, and “Chinese
Political Institutions and the Path of Economic Reforms,” Chapter
8, in Political Logic of Economic Reform in China, Berkeley:
University of California Press, pp. 116-145.
Yusuf, Shahid (1994) “China’s Macroeconomic Performance and
Management During Transition,” Journal of Economic
Perspectives, Vol. 8, No. 2, Spring, pp. 71-92.
VII. Challenges to Future Economic Development
Apr 5 VII.1 Energy Shortages
Sinton, Fridley and Dorian (1996) “China’s Energy Future,” JEC, pp. 243269.
Apr 10 VII.2 Environmental Deterioration
Todaro Chap. 11
WB (1997) Clear Water, Blue Skies, Chap. 1-8
Edmonds, Richard L. (1999) “The Environment in the People’s Republic
of China 50 Years On,” China Quarterly, No. 159, September, pp.
640-649.
U.S. Embassy Beijing (2000) “The Cost of Environmental Degradation in
China,” Mimeo, December.
Apr 12
Easter Break
Apr 17 VII.3 Population Growth and Rural-Urban Migration
Todaro Chaps 6 & 866
Banister (1996) “China: Population Dynamics and Economic
Implications,” JEC, pp. 339-360.
WB (1997) Old Age Security, Chap. 1-4.
Hussain, Athar, “Social Security in Present Day China and Its Reform,”
American Economic Review, Vol. 84, No. 2, (1994), pp. 276-280.
Apr 19 VII.4 Bureaucracy and Corruption
Fan, C. Simon and Herschel I. Grossman (2000) “Incentives and
Corruption in Chinese Economic Reform,” Mimeo, Lingnan
College, March.
Johnston, Michael, “The Vices--and Virtues--of Corruption,” Current
History, Vol. 96, No. 611, (1997), pp. 270-273.
Kaufmann, Daniel, "Corruption: The Facts," Foreign Policy, Summer,
(1997), pp. 114-131.
7
Transparency International and Gottingen University (1997) "Internet
Corruption Perception Index - 1997," Internet:
http://www1.gwdg.de/~uwvw/rank-96.htm
Ding, X.L. (2000) “Systematic Irregularity and Spontaneous Property
Transformation in the Chinese Financial System,” China
Quarterly, No. 163, September, pp. 655-676.
Bernstein, Thomas and Xiaobo Lu (2000) “Taxation without
Representation,” China Quarterly, No. 163, September, pp. 742763.
Feinerman, James V. (1997) “The Rule of Law...with Chinese Socialist
Characteristics,” Current History, Vol. 96, No. 611, pp. 278-281.
Ehrlich, Isaac, and Francis T. Lui (1999) “Bureaucratic Corruption and
Endogenous Growth,” Journal of Political Economy, Vol. 107, No.
6, Pt. 2, pp. S270-S293.
Apr 24 VII.5 Animosity
Gladney, Dru C. (1997) “Rumblings from the Uyghur,” Current History,
Vol. 96, No. 611, pp. 287-290.
Todaro Chap. 6, 8, 11
Apr 26 & May 1, 3
VIII. China 2020
VIII.1 Scenarios of Economic Development
VIII.2 Political Implications of Economic Development
VIII.3 Impact on China's Neighbors and the World
Todaro Chap 18
Singh and Singh (1996) “Economic Prospects to 2010,” JEC, pp. 101-123.
Baum, Richard, “China After Deng: Ten Scenarios in Search of Reality,”
China Quarterly, No. 145 (1996), pp. 153-175.
Lardy, Nicholas, “China’s Economic Prospects,” in Hans Binnendijk and
Ronald N. Montaperto (eds.), Strategic Trends in China,
(Washington DC: National Defense University, 1998), pp. 33-37.
De Mesquita, Bruce Bueno and Yi Feng (1997) “Forecasting China’s
Political and Economic Future,” Problems of Post-Communism,
Vol. 44, No. 2, pp. 14-27.
Lardy, Nicholas, “China’s Economic Prospects,” in Hans Binnendijk and
Ronald N. Montaperto (eds.), Strategic Trends in China,
(Washington DC: National Defense University, 1998), pp. 33-37.
Student Evaluation
Quiz (Feb 22) 20% of grade
Seminar
25% of grade
Participation 20% of grade
Final Exam 35% of grade
8
Each student will participate in a three-hour seminar on a topic associated with Chinese
economic development. Successful seminar participation will require significant
preparation.
There is no make-up exam for the Quiz. If you have an excused absence for the Quiz then
your final will count for 55% of your semester grade.
On the last day of class or at least ten days before your final exam, I will hand out a list of
ten essay questions. During the final exam you will be required to write answers to three
or four of these ten questions. Since you will know the questions in advance, they may be
of fiendish difficulty. Do not wait until the questions have been distributed before you
begin to study. I will not answer any questions about the economics of China after I have
handed out the ten potential final exam questions.
Participation means more than just attendance in class. The Information Resources
Session on China on Jan 25th will count for one quarter of your participation grade (5% of
your final grade.) In addition, you should have completed at least the relevant “star”
readings before each class begins and be ready to engage in classroom discussions. In
addition, there will probably be one or more afternoon or evening talks on issues related
to Chinese economic development during the course of the semester and your attendance
and participation is these talks may be required.