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At the end of 2021 China Evergrande Group—one of China’s biggest property developers—finally defaulted on its bonds. The default didn’t spark a Lehman Moment—as widely prophesied—or any significant market upheaval, but it’s increasingly clear that Evergrande’s problems mark the start of a momentous shift in how China’s economy grows. Over the past 18 months, Beijing has induced a slowdown of the property sector with the goal of better ensuring financial sector stability and the sustainability of property sector growth. However, it has resulted in defaults, restructuring, and consolidation among China’s largest developers, and has implication for local government finance and the pace of economic growth. This talk will discuss the challenges posed by Evergrande’s decline and imminent restructuring, what Beijing is trying to achieve by reining in the property sector, and what risks are involved.

 



Portrait of Dinny McMahonDinny McMahon is the author of “China's Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle,” a ground up look at the mechanics of China’s political economy, which he wrote while a fellow at the Woodrow Wilson Center for International Scholars. He later moved to MacroPolo, the Paulson Institute’s think tank in Chicago, where he researched China’s efforts to clean up its financial system. Dinny started his career as a financial journalist in China, spending six years in Beijing with The Wall Street Journal, and four years with Dow Jones Newswires in Shanghai, where he also contributed to the Far Eastern Economic Review. Dinny is currently working on a project for the Wilson Center on China’s efforts to reduce its reliance on the US dollar. He also provides independent research on China’s financial system for financial services firms.

 


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Chinese 100 yuan bills

This event is part of the 2022 Winter webinar series, The Future of China's Economy, sponsored by the APARC China Program.

 

Via Zoom Webinar. Register at: https://bit.ly/3pkTQfE

Dinny McMahon Global Fellow, Woodrow Wilson International Center for Scholars
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Taiwan. Hypersonic missiles. The South China Sea. In the last few months, China’s activities have grabbed headlines and fueled speculation about its intentions. But how much of this action is posturing, and how much should U.S. policymakers and strategists take seriously?

To help explain what’s going on with our biggest competitor, FSI Center Fellow Oriana Skylar Mastro, a specialist on China’s military and an active member of the United States Air Force Reserves, joins Michael McFaul on World Class to debunk some of the myths that persist about China’s capabilities and reframe how the U.S. needs to think about strategic competition with Beijing. Listen to their full episode and read highlights from the conversation below.

Click here for a transcript of “We Need To Rethink Our Assumptions about China’s Strategic Goals”

Where China Was in the 1990s


Twenty years ago, the Chinese-Taiwan invasion plan was to take a couple of fishing vessels and paddle their way across the strait. In the 1990s, China had very limited, and often no ability to fly over water, or at night, or in weather, and their ships had no defenses.

For many, many years we knew that China was willing to fight if Taiwan declared independence. Fighting a war in any country that is big and resolved is problematic. But it was never the case that the United States was going to lose that war; it was always a matter of, “How many days?” How many days is it going to take us to win?

Where China Is Now


In the intervening years, China's military has changed both quantitatively and qualitatively. Now they have the largest navy in the world, and those ships are some of the most advanced surface ships that can be comparable to those of the United States. Same with their fighters; they have fifth generation airplanes and the largest airforce in the region. They’ve put all these capabilities online, and at the same time, they [have also] started developing capabilities to reach out and touch the United States with.

They developed the capability to hit moving ships at sea, which is something the United States doesn’t have the capability to do. They have a huge cruise and ballistic missile program that basically can take out a U.S. base like Kadena  in the region in a matter of hours, should they ever be willing to make a direct hit on the U.S.

This doesn't mean that China is more powerful than the United States; China still can’t project power outside the Indo-Pacific region, and even there it’s mostly through space, cyber, and nuclear weapons. But most of the contingencies we're talking about are really close to China, so it doesn’t really matter that they can’t project power. So, on the conventional side, I’m very concerned.

Why Taiwan Matters


The whole goal of the Communist Party, since its founding in 1949, has been to resolve this Taiwan issue.

Now they have the ships, the aircraft, and they’ve reorganized their whole military so that they can do joint operations, so that the navy and the air force can do an invasion of Taiwan. And a lot of those efforts came to a successful conclusion at the end of 2020. And that's why people like myself, not because of  the capabilities, but because when I was in Beijing and talked to the Chinese military and government officials, they said, “We could do this now, and maybe we should think about it.”

We know from behavioral economics that countries and people are much more willing to take risks to not lose something that they think is theirs, versus when they are trying to get something which they don't think is theirs. In the Chinese mindset, Taiwan, the South China Sea, East China Sea, etc. is already theirs, and the United States is trying to take it from them. That makes the situation even more problematic. 

What the United States Should Do


The Biden administration is doing a lot of political maneuvering to show that the United States is willing to defend Taiwan. And I think it’s just upsetting Beijing, because they think we’re changing the political status quo. It also does nothing to enhance our deterrence, because it doesn't signal anything about our capability to defend Taiwan.

The Chinese basically assume the United States will intervene. Their big question is, can they still win? We need to show China that they cannot win, and that’s about showing out capabilities in the region. It’s about aggressively negotiating new host arrangements, more access for the U.S. military, and new international institutions and treaties that constrain the ways China leverages power.

I'm a military person, but I'm totally on board with leading with diplomacy. But I don't see those types of efforts coming out of the Biden administration. They seem to want to double down and do the same things, just with more allies and partners.  I'm supportive of it, but I just don't think it's enough.

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Chinese military propaganda depicting the Second Taiwan Strait Crisis of 1958.
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On the World Class podcast, Oriana Skylar Mastro argues that in order to set effective policy toward China, the United States needs to better understand how and why China is projecting power.

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Scott Rozelle introduces his recent publication, "Publishing and Assessing the Research of Economists: Lessons from Public Health" in a blog post for the China Economic Review's official Wechat account to celebrate its 30th anniversary.

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Callista Wells
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On October 21, 2021, the APARC China Program had the opportunity to host Peter Martin, Defense Policy and Intelligence Reporter for Bloomberg News, for a program on Chinese displomacy. In honor of his recently released book, China's Civilian Army: The Making of Wolf Warrior Diplomacy, Mr. Martin gave us a deep dive into the origins of this contentious diplomatic style and what it tells us about domestic politics in China. The panel was moderated by Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program.

As many who follow Chinese politics will be aware, Chinese diplomacy in the past several years has become increasingly assertive and its diplomats have used sharper language. Based on Chinese action movies of the same name, this pointed style of communication has earned these diplomats the title "wolf warriors." Some of the more stand-out examples of wolf warrior diplomacy include China’s Ministry of Foreign Affairs spokesperson Zhao Lijian's claim that COVID-19 was actually created by the United States, or the uncomfortable exchange between American and Chinese diplomats at the US-China Alaska summit in March, 2021.

In this program, Mr. Martin traced the roots of China's approach to diplomacy back to the communist revolution of 1949 and told the story of how it has evolved through social upheaval, famine, capitalist reforms, and China's rise to superpower status. His book draws on dozens of interviews and--for the first time--on the memoirs of more than 100 retired Chinese diplomats. The program was followed by a robust Q&A session between Mr. Martin and the audience. Watch now: 

For more information about China's Civilian Army: The Making of Wolf Warrior Diplomacy or to purchase a copy, please click here.

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Peter Martin discusses the advent of Wolf Warrior Diplomacy in Chinese politics — is it really such a new phenomenon after all?

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The  Neue Zürcher Zeitung recently published an interview with SCCEI's co-director Scott Rozelle. The article was originally publshed in German and later translated to English. You can read the full article in either language online:

 

Full Article in German: Im Südwesten Chinas haben die Kinder Würmer im Darm

Full Article in English: Rural Poverty is the Biggest Obstacle to China's Rise, Says Economist

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Katrin Buchenbacher from Neue Zürcher Zeitung interviewed Scott Rozelle about his recent book on China's rural population.

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Callista Wells
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On October 6, 2021, the APARC China Program hosted the panel program, "Engaging China: Fifty Years of Sino-American Relations." In honor of her recently released book of the same title, Director of the Grassroots China Initiative Anne Thurston was joined by contributors Mary Bullock, President Emerita of Agnes Scott College; Thomas Fingar, Shorenstein APARC Fellow; and David M. Lampton, Professor Emeritus at Johns Hopkins School of Advanced International Studies (SAIS). Thomas Fingar also moderated the panel.

Recent years have seen the U.S.-China relationship rapidly deteriorate. Engaging China brings together leading China specialists—ranging from academics to NGO leaders to former government officials—to analyze the past, present, and future of U.S.-China relations.

During their panel, Bullock, Fingar, Lampton, and Thurston reflected upon the complex and multifaceted nature of American engagement with China since the waning days of Mao’s rule. What initially motivated U.S.’ rapprochement with China? Until recent years, what logic and processes have underpinned the U.S. foreign policy posture towards China? What were the gains and the missteps made during five decades of America’s engagement policy toward China? What is the significance of our rapidly deteriorating bilateral relations today? Watch now: 

For more information about Engaging China or to purchase a copy, please click here.

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Was the strategy of engagement with China worthwhile? Experts Mary Bullock, Thomas Fingar, David M. Lampton, and Anne Thurston discuss their recent release, "Engaging China: Fifty Years of Sino-American Relations."

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*For fall quarter 2021, CISAC will be hosting hybrid events. Many events will offer limited-capacity in-person attendance for Stanford faculty, staff, fellows, visiting scholars, and students in accordance with Stanford’s health and safety guidelines, and be open to the public online via Zoom. All CISAC events are scheduled using the Pacific Time Zone.

 

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Seminar Recording

About the Event: The Afghan government’s collapse in August demonstrated that two decades of donor-driven state-building efforts failed to build a foundation for a stable, democratic, and prosperous Afghanistan. Why did the United States and its allies fail, and what should donors learn for similar state-building efforts in the future, both large and small?

Spanning the U.S. government’s problematic strategies, inappropriate timelines, and poor understanding of the Afghan context, lessons learned reports by the Special Inspector General for Afghanistan Reconstruction (SIGAR) have warned for years that the Afghan government was exceptionally fragile and that many of the gains alleged by the U.S. officials were hollow and unsustainable. This CISAC seminar will detail how and why the U.S. government should reform its own institutions to more effectively stabilize conflict-affected environments around the world. 

Download SIGAR’s 20th anniversary report, What We Need to Learn (2021)

Download SIGAR’s report, Stabilization: Lessons from the U.S. Experience in Afghanistan (2018)

 

About the Speaker: David H. Young is a supervisory research analyst at the Special Inspector General for Afghanistan Reconstruction and a conflict and governance advisor with experience in six conflict/post-conflict environments: Afghanistan, the Sahel, Israel/Palestine, the Balkans, the Caucasus, and Northern Ireland. At SIGAR, he was the lead author of three comprehensive lessons learned reports: 1) A study of U.S. efforts to stabilize contested Afghan communities, 2) A review of U.S. efforts to build credible and transparent Afghan electoral institutions, and 3) the agency’s 20th anniversary report, What We Need to Learn. He was a civilian advisor to ISAF in Nuristan and Laghman provinces during the Afghanistan surge and subsequently served as a governance advisor to the World Bank, the U.S. Institute of Peace, and Afghanistan's Independent Directorate of Local Governance. His writing and commentary has appeared in the New York Times, the Atlantic, the Christian Science Monitor, Foreign Policy, and the Daily Beast, among others.

Virtual Only. This event will not be held in person.

David Young Special Inspector General for Afghanistan Reconstruction
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According to the Freedom House project’s 2021 Freedom in the World assessment, 2020 saw a sharp acceleration in the global decline of democracy. By their measure, fewer than a fifth of the world’s population now live in fully free countries. This is part of a longer trend of democratic decline and rising authoritarianism that’s been underway across the globe for the last 30 years.

Why is this happening? That’s the question Ben Rhodes, former Deputy National Security Advisor for Strategic Communications and Speechwriting under President Barack Obama, tries to tackle in his new book, After the Fall: Being American in the World We’ve Made.

Rhodes joined FSI Director Michael McFaul on the new season of the World Class Podcast to discuss the book and the stories it tells of incredible individuals pushing back against autocratic regimes around the world.

Click here for a transcript of "Understanding the Global Rise of Authoritarianism."

On the inspiration for the book:


I wanted to investigate this trend of nationalist authoritarianism through the prism of people, particularly [people] in opposition who are living it. I ended up looking at Hungary, Russia, China, and the U.S., all of which I think are representative of a kind of a different flavor of the same authoritarian trend that we're getting. That's really what the whole book is: me pulling on this thread of what is the interconnection between why this is happening, and how are people thinking about it? How can I approach it not as just pure analysis, but through the stories of these human beings?

On why nationalism and authoritarianism is spreading globally:


The first was the excess of globalization, the excess of capitalism, and the creation of exploding inequality happening at the same time that globalization is kind of encroaching on people's national identity or tribal identity

Another trend through line was the post-9/11 securitization of the American superpower. When we turn our national purpose into this war on terror, not only do we militarize our engagement with the world, which I think was generally bad for democracy, but we also provide a template and a justification for autocrats to expropriate that for their own purposes.

Then lastly, technology is big difference maker in the sense that these platforms that at first were connecting people became the perfect vehicles for disinformation and surveillance

On China:


China may look different [from regimes like Russia or Hungary], but I don't think they're nearly as different as people think. Right? You have to look at Xi Jinping, first and foremost, as a nationalist Chinese leader, not a communist Chinese leader. And in his brand of nationalism, he's very similar to Putin, and Orban, and Trump, and all the other leaders I could have done in this book.

How did [the Chinese Communist Party] survive post-Tiananmen? They reestablished who they were as a Chinese Nationalist Party. They had been a revolutionary communist party, then they give up a big chunk of the communism to move to capitalism

On authoritarianism in America:


In this country, you have a major political party, that has completely gone off the deep end. They're literally setting up a playbook where they can overturn the results of an election through the laws they’re are passing at the state level. And if Trump does come back, which is a 50-50 proposition, he's clearly going to run and it will be another 50-50 election, right? And even if he loses, maybe they'll succeed this time overturning the result. They will start from such a more advanced authoritarian position than even in 2016 when he was elected.

On the future:


There's a lot of reason to be concerned that the overall trajectory of society globally is still moving in the wrong direction. What makes me optimistic, though, is that I don't believe that that's how most people want to live. And I also find, in most places – not all places, but most places – generationally, there's an overwhelming preference to not live like that. If we can hold the line and weather the storm for the next few years, and begin to figure out some structural things like, I do think we can come through in the backend to a place where the pendulum starts swinging pretty hard in the other direction.

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National security analyst and veteran podcaster Ben Rhodes joins Michael McFaul on World Class to discuss his new book, After the Fall: Being American in the World We've Made, and the reasons nationalism and authoritarianism are on the rise across the globe.

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Noa Ronkin
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While the coronavirus pandemic has captured the world’s attention, non-communicable chronic diseases (NCDs) such as hypertension, heart diseases, and diabetes continue to be the leading cause of mortality worldwide, accounting for about two-thirds of deaths globally. Their financial and social burden is also immense, as individuals with chronic diseases face high medical spending, limited ability to work, and financial insecurity. Primary health care (PHC) is a crucial avenue for managing and preventing chronic diseases, yet many health systems, especially in low- and middle-income countries (LMICs), lack robust primary health care settings. How can policymakers improve PHC to reduce illness and death from chronic diseases?

There is little rigorous evidence from LMICs about the effectiveness of programs seeking to improve the capacity of PHC for controlling chronic disease. Now a new study, published by the Journal of Health Economics, helps fill in this gap. It offers empirical evidence on China’s efforts to promote PHC management, showing that better PHC management of chronic diseases in rural areas can reduce spending while contributing to better health. We sat down with APARC’s Asia Health Policy Program Director Karen Eggleston, one of the study co-authors, to discuss the research and its implications beyond China. Watch:

[Sign up for APARC newsletters to receive updates from our scholars and experts.]

Challenges for Primary Health Care Services

China, a large and rapidly developing middle-income country with a hospital-based service delivery system for its aging population, makes a suitable case study of efforts to promote PHC management. Over the past several decades, PHC use in China has significantly decreased relative to hospital-based care. This trend is a natural consequence of the country’s unprecedented increases in living standards and improvements in financial risk protection, which increase patients’ demand for quality care and spur self-referral to providers with higher-perceived quality like hospital outpatient departments.

The performance differences between PHC and hospital-based care are especially stark in China’s rural areas, where management of chronic diseases relies heavily on grassroots physicians, who have limited medical education and training. That is why Eggleston and her colleagues set out to provide new empirical evidence about the effectiveness of a program that promotes PHC management of hypertension and diabetes for rural Chinese. Part of the National Basic Public Health Service Program for rural Chinese, it financially rewards PHC grassroots physicians for managing residents with chronic diseases.

Collaborative Research in the Era of Great Power Competition

Eggleston’s co-authors include her colleagues at the Zhejiang Provincial Center for Disease Control and Prevention (Zhejiang CDC). Their study is the culmination of Eggleston’s multiyear collaborative research project with the Zhejiang CDC team, "Addressing Health Disparities in China," which looks to Tongxiang county in Zhejiang as a case study of China's responses to healthcare inequalities and population aging challenges in rural and urban areas. The project also involved two Stanford doctoral students who worked with Eggleston.

The team worked together to develop the quantitative analysis even during a time of sometimes-tense bilateral relations. “We found it very important to be able to communicate directly and collaborate on an important question not only for rural China but for many other parts of the world,” says Eggleston.
Karen Eggleston speaking to staff at Zhejiang Provincial CDC, China
Eggleston with her colleagues at the Zhejiang CDC during a field visit in 2018.

“This kind of collaboration, where we utilize the data that's available to answer an important question while respecting the privacy of the individuals and hopefully delivering benefits to them through more effective or affordable programs in the future perhaps is a promising model for researchers here and elsewhere to undertake,” she notes.

Disentangling the Effect of Primary Health Care Management

To study the program’s effectiveness, the researchers assembled a unique dataset linking individual-level administrative and health information between 2011 and 2015 for rural Chinese diagnosed with hypertension or diabetes in Tongxiang, a mostly rural county of Zhejiang province in southeast China. Collected by the Tongxiang CDC and Zhejiang CDC, the compiled database links basic demographic information, health insurance claims, PHC service logs, and health check-up records — four sets of data that are rarely linked and analyzed in combination in China healthcare research.

Focusing on neighboring border-straddling villages allows us to use only variation in PHC management within pairs of neighboring villages to identify the effect.
Karen Eggleston

Targeting the program’s effects on healthcare utilization, spending, and health outcomes, Eggleston and her colleagues compare residents in neighboring villages that straddle township boundaries. These residents are similar in their individual and environmental characteristics that shape health care use but are subject to different PHC management practices. This “border sampling” allows the researchers to disentangle the effects of PHC management from other underlying spatial differences that impact health care utilization. For each township, the researchers use a management intensity index that reflects the cumulative efforts of PHC physicians to screen their communities and keep patients within the PHC management programs for controlling hypertension and diabetes. Each township’s experience with PHC management over the 5-year study period is thus a case study for rural China.

Net Value in Chronic Disease Management

The results are encouraging for China's investment in primary care management of chronic diseases. Eggleston and her colleagues find that patients residing in a village within a township with more intensive PHC management had a relative increase in PHC visits, fewer specialist visits, fewer hospital admissions, and lower spending compared to neighbors with less intensive management. They also tend to have better medication adherence and better health outcomes as measured by blood pressure control.

If we can gradually scale up these kinds of effective programs at primary care then we can build more resilient, cost-effective, affordable health care systems for populations in many different settings.
Karen Eggleston

The results suggest that PHC chronic disease management in rural China improves net value in multiple ways — increasing PHC utilization, reducing avoidable hospitalizations, decreasing medical spending, and improving intermediate- and long-run health outcomes — all while leveraging existing resources rather than restricting care.

The findings also help inform investments in primary health care in LMICs. They highlight the latent potential of frontline healthcare workers in such settings to be more productive and show that financially rewarding these grassroots workers for managing residents with chronic diseases helps improve health outcomes. Moreover, they offer empirical evidence that supports the effectiveness of chronic disease management programs as part of broader regional initiatives to address population health.

Read the study by Eggleston et al

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A village medical clinic in China.
Marie Anna Lee, University of the Pacific, CC BY-NC-ND
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Empirical evidence by Karen Eggleston and colleagues suggests that better primary health care management of chronic disease in rural China can reduce spending while contributing to better health.

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