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Economic Policy

An Economic Bubble? Chinese Policy Adapts to Rapidly Changing Conditions

by Barry Naughtonvia China Leadership Monitor
Friday, January 30, 2004

During the first half of 2003, rapid growth in China led many to proclaim the emergence of an economic "bubble." Extremely rapid growth of money and credit was accompanied by rapid growth in investment, especially in the housing market. Chinese policymakers have taken steps to restrain the bubble, and these measures are now having an impact. During this first phase, the emergence of the bubble and the way that it was handled seem to have strengthened the positions of both Premier Wen Jiabao and Central Bank Governor Zhou Xiaochuan. However, the rapid emergence of the bubble economy reveals some unsettling realities about the Chinese economy. Moreover, the bubble portends important shifts in the economic payoffs and challenges that lie ahead for the political leadership.

Political Reform

The Third Plenary Session of the 16th Central Committee

by Joseph Fewsmithvia China Leadership Monitor
Friday, January 30, 2004

The recent Third Plenary Session of the 16th Central Committee suggests that despite obvious signs of tension within the leadership over the past year, Chinese Communist Party (CCP) General Secretary Hu Jintao has begun to put his distinct stamp on policy. A long "Decision" on the goals of further economic reform—the only document emerging the plenum to be made public—indicates a greater concern with balanced growth and the social dimensions of economic development than did the political report adopted at the 16th Party Congress in fall 2002. Although the plenum did not take up the issue of political reform explicitly, it adopted a new party procedure that called for the Politburo to report on its work to the whole Central Committee, a step advertised as a step toward "inner-party democracy." Recent articles in party journals indicate that discussions continue on political reform, albeit of a limited sort, and that there are likely to be significant developments in this area in the future.

The Provinces

China's Northeast: From Largest Rust Belt to Fourth Economic Engine?

by Cheng Livia China Leadership Monitor
Friday, January 30, 2004

China is arguably undergoing the most challenging phase of its economic reform: revitalizing the old and stagnant industrial bases in its northeastern region. Once the "cradle of industrialization" of the People's Republic of China (PRC), the northeastern region, with a population of over 100 million, is today often called the nation's "last fortress of a planned economy." The ultimate goal of the so-called northeastern rejuvenation scheme is to transform the country's "largest rust belt" to its "fourth economic engine," after the Pearl River delta, the Yangtze River delta, and the Beijing-Tianjin corridor. This new phase of China's economic development not only will be crucial for the credibility and legitimacy of the Hu-Wen administration, but will also shape China's future. This article explores the broad political environment in which this strategic scheme has been formulated, outlines the main components of the northeastern rejuvenation, and analyzes the characteristics of top provincial leaders in the northeastern region.

The Outlook

by George P. Shultzvia Hoover Digest
Friday, January 30, 2004

Former secretary of state George P. Shultz surveys the current Asian political and economic landscape.

Can Dr. McClellan Cure the FDA?

by Henry I. Millervia Hoover Digest
Friday, January 30, 2004

Americans are dying for regulatory reform—literally. By Hoover fellow Henry I. Miller.

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Surviving Fidel

by William Ratliffvia Hoover Digest
Friday, January 30, 2004

The U.S. embargo against Cuba is an abysmal failure. Let’s end it. By Hoover fellow William Ratliff.

Analysis and Commentary

Shorting Russia's Banks

by Alvin Rabushka, Michael S. Bernstamvia
Thursday, January 22, 2004

Like all business decisions, the wisdom or miscalculation of the purchase of Bank One by J.P. Morgan Chase will be evaluated by future returns and share prices. How does this story compare with Russia?

Analysis and Commentary

Who Could Be against "Adequate" School Funding?

by Eric Hanushekvia Hoover Daily Report
Monday, January 19, 2004

A massive amount of evidence indicates that spending on schools is not closely related to school quality or student learning.

LAND OF THE SETTING SUN? The Future of Japan

with Toshio Nishi, Steven Vogelvia Uncommon Knowledge
Tuesday, January 6, 2004

From the 1950s through the 1980s, Japan experienced dramatic economic growth as it transformed itself from a defeated militaristic empire into a democratic, high-technology powerhouse. The Japanese economy became so dynamic that, by the late 1980s, some American experts were arguing that Japan would overtake the United States as the world's dominant economic power. And then the Japanese economy collapsed. And for nearly fifteen years, the economic malaise has continued. Why? What does Japan need to do to snap out of its doldrums? And what are the risks and benefits to American interests of a reinvigorated Japan?

A CRASH COURSE IN DUBYANOMICS: President Bush's Economic Policy

with Robert J. Barro, Paul Krugmanvia Uncommon Knowledge
Tuesday, January 6, 2004

The decades of the 1980s and 1990s seem to offer two different fiscal models for promoting economic growth. The 1980s under President Reagan suggest that cutting taxes is more important than balancing the budget. The 1990s under President Clinton suggest the importance of balancing the budget with moderate tax increases. Yet the results in each decade were similar: sustained economic growth. President George W. Bush has clearly been following the Reagan model in his first term: enacting large tax cuts even as the federal budget approaches record deficits. But has the Bush team taken the correct lessons from our recent economic past? Do the Bush policies promote long-term growth or jeopardize it?


Economic Policy Working Group

The Working Group on Economic Policy brings together experts on economic and financial policy to study key developments in the U.S. and global economies, examine their interactions, and develop specific policy proposals.

Milton and Rose Friedman: An Uncommon Couple