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Barry Naughton

Biography: 

Barry Naughton is an economist who specializes in China's transitional economy. He has written on economic policy-making in China, and issues relating to industry, foreign trade, macroeconomics and regional development in China. Naughton teaches at the Graduate School of International Relations and Pacific Studies of the University of California at San Diego. In 1998, he was named the first So Kuanlok Professor of Chinese and International Affairs, and he currently (2001–2002) serves as Associate Dean. His study of Chinese economic reform, Growing Out of the Plan: Chinese Economic Reform, 1978–1993 (New York: Cambridge University Press, 1995) won the Masayoshi Ohira Memorial Prize. His research on economic interactions among China, Taiwan and Hong Kong, focusing on the electronics industry, led to the edited volume The China Circle: Economics and Technology in the PRC, Taiwan and Hong Kong (Brooking Institution, 1997).

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Economic Policy

The Scramble to Maintain Growth

by Barry Naughtonvia China Leadership Monitor
Friday, January 9, 2009

The reversal of economic conditions China has undergone since mid-year 2008 has occurred with a speed and thoroughness rarely, if ever, seen in history. In July, policymakers were still concerned with legitimate worries about inflation and overheating. By the end of October, they were scrambling to cope with an alarming economic slowdown. Given the centrality of economic growth to Chinese social and political equilibrium, policymakers returned to an intense focus on economic growth. The Chinese political system then did what it arguably does best: It concentrated policymaking resources on the most critical priority, in this case, propping up economic growth. By the time of the postponed Economic Work Conference (8–10 December), the entire apparatus of Chinese policymaking had been concentrated on the practical elaboration of a multidimensional and multiphase stimulus package. The leadership has been united on this push.

Economic Policy

A New Team Faces Unprecedented Economic Challenges

by Barry Naughtonvia China Leadership Monitor
Tuesday, September 2, 2008

Following the 11th National People’s Congress in March 2008, a new economics team was installed in the Chinese government. The distribution of responsibilities among this new team was hammered out very late in the day, months after the key vice-premiers were chosen. Whether because or in spite of its late inception, the new division of labor crumbled in the face of a global economic environment of unprecedented complexity that requires difficult and urgent policy choices. At mid-year, the economic leadership responded with a highly scripted and formalized policy exercise that culminated in a significant loosening of macroeconomic policy. Through this process we may dimly perceive a big increase in the behind-the-scenes influence of Wang Qishan, the vice-premier with the strongest economic background.

Economic Policy

The Inflation Battle: Juggling Three Swords

by Barry Naughtonvia China Leadership Monitor
Tuesday, June 17, 2008

Inflation has once again become a serious problem in China. While the government’s quick and effective response to the Wenchuan earthquake reassured Chinese citizens and helped consolidate support for the government and the current administration, inflation presents the opposite image of the regime. In China, inflation causes political failure. It contributes to a subjective feeling of instability and may also lead to erosion in living standards for some segments of society. Historically, inflation in China is strongly associated with a government that is losing control and with the prospect of social disorder. To fight inflation, the government has three potential weapons: tighter monetary and fiscal policy; RMB appreciation; and price controls. Facing enormous economic uncertainty and unprecedented natural disasters, the government has vacillated among these three approaches. There is no immediate prospect of breaking out of this triangular trap.

Economic Policy

SASAC and Rising Corporate Power in China

by Barry Naughtonvia China Leadership Monitor
Wednesday, March 12, 2008

Since the middle of 2007, a number of episodes have thrown light on the relationship between SASAC (the State Asset Supervision and Administration Commission) and the large and increasingly wealthy and powerful state-owned organizations that SASAC is entrusted to manage and “own.” The most important news has been the provisional implementation of SASAC’s long-standing program to harvest dividends from state-owned corporations. SASAC can claim some success in finally achieving a long-sought goal. However, the limited nature of the achievement also highlights the difficulty SASAC has in extending its authority and its reform agenda. A failed effort by China Eastern Airlines to bring in Singapore Airlines as a strategic investor provides a similar lesson. These episodes highlight the rising influence of powerful corporate groupings in China.

Economic Policy

China’s Economic Leadership after the 17th Party Congress

by Barry Naughtonvia China Leadership Monitor
Wednesday, January 23, 2008

The 17th Party Congress in October kicked off the process of selecting China’s economic policymakers. The Party Congress was the key step in a top-down process of leadership determination that assigned politicians oversight of economics portfolios. However, not until the end of November did the assignment of one of the most important economics jobs become clear. That was when rising star Chen Deming was designated the new minister of commerce, moving over from the National Development and Reform Commission. Chen will work closely with State Council Secretary-General Ma Kai, under Premier Wen Jiabao and Executive Vice-Premier Li Keqiang. The political process has shaped the economic leadership in some surprising and unexpected ways, and some key posts are still unfilled.

Economic Policy

China Anxiously Faces a Future of Rising Prices

by Barry Naughtonvia China Leadership Monitor
Friday, October 5, 2007

Inflationary pressures have been building in China for the last year, and they erupted into the open in July. Policymakers have responded strongly, and the issue has taken center stage. After recounting current events, this article examines the economic background and implications of the recent changes and then looks at some of the political implications. The emergence of inflation heightens the economic and political dilemmas facing China’s leaders in the run-up to the 17th Party Congress.

Economic Policy

Strengthening the Center, and Premier Wen Jiabao

by Barry Naughtonvia China Leadership Monitor
Monday, July 16, 2007

In recent months, several important initiatives to strengthen central government authority have moved ahead under Premier Wen Jiabao’s supervision. Three particularly important efforts were apparent as of mid-2007. First, a long-anticipated decision to have central government state-owned enterprises begin paying dividends to the government was finally made in May 2007. Second, a recent series of industrial policy measures has given the central government a more coherent, but also more intrusive position. Finally, the center has continued to strengthen its monitoring of local land use and planning. These initiatives together make up an important trend in policymaking that complements the general “left” or populist tilt to policymaking in the Hu-Wen administration. These initiatives also have an impact on Wen Jiabao’s political fortunes. Wen has shored up his position and made himself nearly indispensable in the run-up to the 17th Party Congress.

Economic Policy

The Assertive Center: Beijing Moves Against Local Government Control of Land

by Barry Naughtonvia China Leadership Monitor
Wednesday, February 28, 2007

Over the past year there have been numerous signs of an increasingly assertive central government in China. Now, Beijing has promulgated a series of measures that aim to change dramatically the way urban land markets work, curtailing local government discretion, and greatly increasing central government oversight. These measures strike directly at the most important single source of power and income for local government officials. Combined with the fall of Shanghai Party secretary Chen Liangyu, these actions indicate a significant shift in the balance of political power in China away from local governments and toward the center.

Economic Policy

Another Cycle of Macroeconomic Crackdown

by Barry Naughtonvia China Leadership Monitor
Tuesday, October 24, 2006

During the summer of 2006, Chinese leaders focused economic policy on the danger of overheating. As it did in the 2004 round of economic contraction, policy involved a potent combination of monetary and administrative measures. However, unlike 2004, policy instruments this time have been well coordinated across financial, macroeconomic, and administrative measures, even including a slight acceleration in the rate of appreciation of the RMB exchange rate. The result is an economic policy package that is stable and consistent, but that may not be bold and flexible enough to meet the needs of the extremely dynamic Chinese economy. The recent visit to China by U.S. Treasury Secretary Hank Paulson should be interpreted as an effort to nudge China out of this extreme policy stability. Paulson’s meeting with President Hu Jintao injected some flexibility into the balance of forces that determine Chinese economic policy, but probably not enough to result in a major change at this time.

Economic Policy

Claiming Profit for the State: SASAC and the Capital Management Budget

by Barry Naughtonvia China Leadership Monitor
Friday, July 7, 2006

One of the most important economic issues playing out in China today is the control of state enterprise profits. State firms have become very profitable over the last several years, so there is a lot of money on the table. At the same time, control over profit is a central component in a network of interlocking issues, including corporate governance reform, fiscal reform and even social security reform. The State Asset Supervision and Administration Commission (SASAC) has taken major steps in 2006 toward establishing a claim on these profits and advancing its own agenda for reform of the state sector.

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