China’s Global Ambitions
In response to a question posed by Professor Li, Economy said, “I think, under Xi Jinping, there are big ambitions.” She followed by listing out several of China’s objectives including:

1. Become the dominant power in the Indo-Pacific, which begins with China's sovereignty claims around Taiwan, Hong Kong and the South China Sea;
2. Continue to have the international business community be dependent on China for parts of its supply chain;
3. Create an insulated domestic economy that is protected from pressures of the global economy but at the same time exerts enormous influence on it;
4. Shape the geostrategic and political landscape in new ways through programs like the Belt and Road Initiative and through its behavior in international institutions;
5. De-dollarize the global economy and increase the role of the Chinese currency.

Economy concluded by sharing that China has “a number of big ambitions, none of which actually coincides with us,” and although there are certainly areas for collaboration between China and the U.S., she’s not sure the current U.S. administration is interested in exploring them.

Economy’s address was a highlight of the SCCEI China Conference, which featured panels and presentations from leading scholars and practitioners on China’s economy, governance, and international strategy. The event reflects SCCEI’s mission to promote policy-relevant research and open dialogue on China’s role in the global economy.

A full recording of Dr. Economy’s talk is available on YouTube and below.

Jessie Kong: Every year, SJEC puts on a week-long, entirely student-run, exchange program for 20-25 visiting Japanese students from Keio, Doshisha, and Kyoto Universities. Through this programming, we strive to provide authentic insights into Stanford academics, extracurriculars, and lifestyle by having the Japanese students join our lives and develop bonding experiences. 

As one of the co-presidents of SJEC this year, my work has centered around coordinating the entire team of Stanford officers, delegating tasks between teams, communicating with and preparing the Japanese students, and facilitating activities during the conference.

Through leading SJEC this year, I have realized the importance of dedication and commitment when planning these activities. My previous years in SJEC leading the social team has also shown me how to plan events from start to finish in an efficient way that leverages the capabilities of everyone on the team while focusing on the experience for the Japanese students. I think being able to put the group's interest above my own was also a good skill I learned while in the co-president position.

Socially, I have been able to build connections both for myself and other Stanford students with the Japanese student community. Starting with SJEC, I was able to meet and take care of visiting Japanese students at Stanford, and this effort was reciprocated when I went to study abroad through the BOSP Kyoto program. Being able to feel the reciprocity of my efforts in SJEC only makes me more motivated to continue working in SJEC to create a good experience for more Japanese students who visit in the future.
 

Yifei Cheng: The main event from our organization this year is the FACES annual summit that took place in January 2025. We invited 40 college students from Chinese and American universities to engage in dialogue about US-China relations on Stanford campus. As the president of FACES, I was involved in candidate selection and planning the summit schedule. I also took the initiative to organize the summit field trip at the Angel Island Immigration Facility. 

Through the lecture of Professor Gordon H. Chang on the persecution of Chinese scientists during the McCarthy Era, I learned about the repeated interlocks between politics and academia in the US, which has significant contemporary repercussions with the current administration's restrictions of student visas and immigration process. 

The FACES summit also enhanced my understanding of diplomacy on a personal level. This experience taught me that cultural exchange isn’t about reaching agreement—it’s about creating a shared space where different truths can coexist. I learned to listen across differences, become comfortable with discomfort, and see the value in ambiguity. These lessons have reshaped how I engage in conversations not only about geopolitics, but also about identity, equity, and belonging more broadly.

I gained concrete organizational skills with managing timelines, delegating tasks, and staying calm when things went wrong—like when the hotel rooming list gets wrong and messy. I also learned that leadership is less about control and more about creating the conditions for others to grow. I facilitated the daily reflection session during the summit. As the discussion facilitator, I found it rewarding to moderate discussions where sometimes disagreements arise. I think this is a valuable skill for my academic and professional development. 
 

Aimen Ejaz and Luv Jawahrani: This year, in its inaugural term, the Stanford Indo-Pak Dosti Forum (SIPDF)achieved what many said was impossible: bringing together Indians and Pakistanis in the same room – voluntarily – twice a week.

In the fall, we launched INTNL REL 47SI: Bridging the Divide, a student-initiated course focused on the political and economic dimensions of India-Pakistan relations. The class brought together prominent individuals concerned about peace-building, ranging from former Indian and Pakistani ambassadors who’d been involved in negotiating peace to professors from the Stanford Graduate School of Business (GSB), to research fellows at the Hoover Institute and the Center for International Security and Cooperation (CISAC), and veteran journalists who have covered the subcontinent for decades.

In spring, we co-taught GLOBAL 47SI: Building Bridges—a course that spotlights cross-border entrepreneurship as a tool for soft diplomacy. We invited legendary South Asian entrepreneurs and venture capitalists from both sides of the border: Mamoon Hamid (Managing Director at Kleiner Perkins), Samir Kaul (Managing Director at Khosla Ventures), Amit Patel (Managing Director at Owl Ventures), Bilal Zuberi (Partner at Lux Capital), and Anand Swaminathan (Senior Partner at McKinsey), among others. The goal? To explore how venture-building, innovation, and chai-fueled resilience can outpace political gridlock.

Academically, co-leading our student-led initiative taught us more than any textbook ever could, mostly because we had to build the syllabus ourselves. And we didn’t just co-lead — we co-dreamed and co-hustled, getting the syllabi approved by multiple departments and cold-emailing, even chasing down, speakers from across the U.S.

In designing INTNL REL 47SI: Bridging the Divide, we dove headfirst into the complexities of India-Pakistan political and economic relations. But we didn’t stop at reading IR theory. We debated it with the very diplomats and policymakers who once shaped those theories in real time. Every week became a crash course in postcolonial statecraft, regional security, and the surprisingly human side of high diplomacy.

Then came GLOBAL 47SI: Building Bridges, where we shifted from conflict to collaboration, exploring how entrepreneurship can serve as a tool of soft power. Through case studies, guest lectures, and our own classroom debates, we began asking whether a startup pitch can accomplish  what politicians can't. What happens when innovation moves faster than diplomacy? And what does it mean when the biggest South Asian venture capitalist in the world funds a startup founded by someone from the "other" side?

More than anything, we learned how to turn theory into action. Whether it was teaching concepts like diaspora diplomacy or moderating discussions between venture capitalists and undergrads, we were constantly translating complex ideas into real-world conversations. We didn’t just learn. We taught, we built, and we questioned everything along the way.

Culturally and socially, our student-led initiative felt less like organizing a class and more like hosting weekly peace talks, with chai and biryani. We came in thinking we were building a curriculum; we ended up navigating generations of silence, suspicion, and identity.

We learned that Partition isn’t just a historical event–it’s a living memory passed down through stories and subconscious hesitation. It’s in the way some students avoid eye contact when the topic turns political, or how others lower their voices when mentioning where their family is really from. But we also learned that these barriers can soften when people feel safe enough to speak, and laugh, together.

We watched students from India and Pakistan, often meeting for the first time, begin to open up. Conversations that started stiffly turned into long debates, jokes, shared Desi Spotify playlists, and sometimes even plans to visit each other’s cities, if our countries ever allow it. We learned that vulnerability—especially in a region taught to fear it—is a radical act. And that our generation is more ready than we think to rewrite the script we inherited.

There were moments when we questioned whether this initiative was worth it. When we received backlash online for platforming certain voices. When a class discussion got tense and uncomfortable. When friends warned us that this was “too political,” “too idealistic,” “too risky.” And we didn’t always have the perfect response.

But leadership, we realized, isn’t about always being right. It’s about being rooted in a vision that peace isn’t naïve — it’s necessary. That bridging divides isn’t weakness—it’s the only strength that can outlast hate. And when things fell apart — when a high-profile speaker pulled out at the last minute, or a student pushed back hard in class — we didn’t pivot away from our mission. We dug deeper. We turned cancellations into teachable moments. We turned criticism into conversation. Most importantly, we learned to trust ourselves and to trust that our generation doesn’t have to inherit the silence, the suspicion, and the separation.

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.”