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To illustrate the worst-case scenario for China in the near future, Scott Rozelle pulls up a picture from Mexico. It's a completely barren manufacturing warehouse, abandoned after wages in Mexico rose to more than four dollars per hour.

Following its manufacturing moment in the 1980s, Mexico has been struggling to create jobs in part because 40 percent of its workers lack a high school education, the Stanford University Professor of Economics said.

Contrast this to South Korea, where almost the entire workforce has attained a high school degree. After manufacturing jobs left South Korea in the 1980s, he said, well-educated workers were able to upgrade to technical jobs like chip manufacturing and computer assembly.

The question for China is: South Korea or Mexico? Rozelle said.

With rising labor costs, China is under pressure to upgrade from low-cost manufacturing to high-tech production. But it's still an open question as to whether China's labor force will have the education levels to take on these new roles, or if the jobs will move elsewhere as they did from Mexico in the last few decades.

The odds are stacked against China. In some parts of the country, China's labor force more resembles Mexico's than South Korea's, with about 40 percent of workers in the poorest rural areas (China's 592 "nationally-designated poor counties," as deemed by China's anti-poverty authorities) lacking a high school education, Rozelle said.

Furthermore, the financial hurdles to attaining higher education are the highest in the world, illustrated most recently by a series of studies conducted by the Rural Education Action Project (REAP)—an umbrella group that includes Rozelle's Stanford University, Tsinghua University, the Chinese Academy of Sciences, Peking University and the Xi'an-based Northwest University.

In one REAP study of 62 nations, China claimed the highest tuition price for public rural high schools: $160 per student per semester, not including costs like housing and everyday living expenses. This is nearly three times the world's second-highest tuition in Indonesia, which also fully subsidizes the education costs of children under the poverty line.

It's also a stark contrast to the fact that the vast majority of nations—93 percent of those studied—fully subsidize education, including places like Brazil, India and Kenya.

The high costs of education will become even more problematic, Rozelle said, once China's economy begins to restructure towards higher-value production. If the skill levels of the labor force cannot keep up, China will be caught in a middle-income trap, he said, possibly leading to high unemployment and social strife—not unlike what is plaguing Mexico now, he said.

Even a small subsidy could push thousands of students into high school. In REAP's most recent study, Rozelle and his colleagues took 250 junior high classes in Shaaxi Province and selected the two poorest students from each, providing one with a 1,500 to 2,500 yuan subsidy. The survey revealed that 51 percent of students who had received the subsidy were admitted to high school in the fall of 2010, while only 38 percent without the subsidy enrolled.

To some degree, the Chinese government has recognized the importance of limiting the costs of education. In 2009, officials enacted a policy to reduce high school tuition costs, providing 20 percent of students in central regions and 30 percent in the China's western parts with scholarships ranging between 1,000 and 3,300 yuan annually.

But the policy has proved somewhat illusory: In its 2011 survey of more than 3,000 students in Shaanxi Province, REAP discovered that less than five percent of the targeted students had actually received the subsidies.

A new study out of Stanford University finds extreme temperatures are cutting wheat yields by 20 to as much as 50 percent, a finding worse than previously estimated. FSE center fellow David Lobell and his colleagues used nine years of satellite measurements of wheat growth in northern India's breadbasket, the Indo-Gangetic Plains, to analyze rates of wheat ageing after exposure to temperatures higher than 34 degrees Celsius. 

Extreme heat beyond the plant's tolerance zone damages photosynthetic cells. This causes wheat to age faster, reducing the length of the growing season and the amount and size of the wheat grains. The team's crop models found that a two degree increase in temperatures would reduce the growing season by nine days, yielding 20 percent less wheat.

As the world's second-biggest crop, lost wheat yields may become a major threat to global food security. Especially given the projection that global yields need to rise 50 percent by 2050 to feed a growing, more affluent population. The results imply that warming presents an even greater challenge to wheat than previous studies estimated, and that the effectiveness of adaptations will depend on how well they reduce crop sensitivity to very hot days, particularly in areas of the world such as India already experiencing warming conditions.

Since opening its doors to the world in 1978, China has pursued a sometimes erratic but reasonably steady course leading to increasing global economic and political interaction. Its interests now extend from Pyongyang to New York and Sydney to Riyadh. U.S. President Barack Obama’s announcement of a new “pivot” toward Asia, recent events on the Korean Peninsula, and China’s upcoming leadership transition provide additional reasons to seek greater understanding of China’s goals and interactions with other nations.

Thomas Fingar, Stanford’s Oksenberg-Rohlen Distinguished Fellow, is leading a new multiphase Shorenstein Asia-Pacific Research Center (Shorenstein APARC) initiative to explore the nuances and complexity of China’s foreign relations and domestic issues. The China and the World research project aims to contextualize and better understand China’s regional and global interactions, both from the perspective of China itself and from that of other countries. Beginning with Northeast Asia, the project will analyze China’s relations region-by-region throughout the world, and will involve experts from Stanford, China, and the regions studied. It kicks off with a Shorenstein APARC-organized workshop held Mar. 19 and 20 at the new Stanford Center at Peking University.

Fingar discusses the development of China’s foreign relations since 1978, and describes the project and workshop’s background.

In the three decades since Deng Xiaoping enacted his 1978 Open Door reforms, what have been the main trends in China’s global engagement?

The general trend since 1978 has been for China to become increasingly active and engaged in a growing number of places around the world. There have been a number of phases to this.

The “honeymoon period” of U.S.-China relations (1979–1989) was a period of essentially no competition to China’s interaction within the U.S.-led world economic system. China concentrated on the OECD countries—especially the United States, Japan, and Western Europe—that had money to invest and willingness to trade.

After the 1989 Tiananmen Square Incident, China’s international options became more constrained as its relations with the developed world plateaued. It began to reach out to the places that would deal with it: Southeast Asia and particularly Africa. This was in part diplomatically motivated, and in part a search for new markets for the low-end goods it was beginning to produce. It was also the beginning of its search for energy.

Around 2000, China transitioned from building a more modern economy towards being one—beginning the era of its “rise.” China’s demand for resources went up, as did its capacity to supply more markets and its ability to invest more of its growing foreign exchange earnings. It became globally active, proclaiming that it had a new, less exploitative model than what the United States and Europe offered.

What Northeast Asia issues do you think China will focus on this year, especially as it plans for a major leadership transition?

North Korea’s stability and China’s growing investments in the DPRK. Beijing is acutely interested in whether Kim Jong Un will prove a viable leader and whether the regime will be able to manage its new challenges. China is concerned about possible North Korean provocations that might trigger responses by South Korea and/or the United States, putting at risk the peaceful regional and international situation China needs for its political and economic development.

The second issue is answering the question: what does the U.S. pivot toward Asia mean? What does it mean in terms of security, economics, and relations with Japan and Korea? China is the largest trading partner for each of these countries. They value it as a market, and as a source of resources. Yet they also worry about being excessively dependent on China. They appear not to have worried about this quite so much when their dependence on the U.S. market was comparable.

Two full workshop sessions will be devoted to Japan and South Korea, both countries with close U.S. ties. What are the most important factors with regard to China’s rise for these two countries? What about for Southeast Asia?

One of the reasons for our upcoming Beijing workshop is to develop a general template of questions we can ask for each region. We want to avoid focusing the questions too narrowly on Northeast Asia.

For Japan and Korea, one factor has to do with economic opportunities and with their own vulnerabilities. The other has to do with the security challenges of China’s rise, and the uncertainty of its military aspirations. Japan and Korea do not want to be drawn into U.S.-led activities, but they still value the United States for protection. They are concerned about managing the decoupling of economic and security dependence, about no longer being dependent on the same country for both.

Many regional issues are interrelated, such as maritime territorial claims and naval expansion. China is an economic player in Southeast Asia, and the Philippines and Thailand have an alliance with the United States. Indonesia is a rising county in Southeast Asia, and India is an outside player in the region. The U.S. 7th Fleet currently defends the shipping lanes to Northeast Asia that go through Southeast Asia, which probably is not the long-term solution.  

Russia played an important role in shaping the political ideology in the early days of the People’s Republic of China, and the politics of both countries—especially Russia—have changed so much. What is their relationship like now?

Correct and limited. The West imposed a military hardware embargo on China after Tiananmen, so Russia is a limited alternative for that, and it is also a source of energy and other resources. It is fair to say China has something close to disdain for Russia, for what it sees as political confusion and economic mismanagement. The idea of a strategic triangle—using Russia to balance U.S. influence—is something China sees as unviable.

As you move forward with this project, what is the ultimate goal?

The goal is to understand the dynamics of interaction—to understand the bigger picture. Other countries have objectives and concerns with regard to China, while China has objectives and concerns of its own. It is about identifying things such as where they see the same and different kinds of opportunities; what concerns they have about third country interests or involvement; and how they evaluate the success of policies to date.  

On January 31, Roni Hong, a human trafficking survivor and founder of the Tronie Foundation presented her testimony at the third installment of the Sanela Diana Jenkins International Speaker Series. Hong dramatically recounted her personal story of being trafficked into forced labor at the young age of seven in India. She spoke of the beatings and torture she suffered and ultimately her illegal, international adoption. Her story raises the controversial issue of legal and illegal international adoption.

Hong highlighted the fact that most of the framework for advocacy for victims of human trafficking centers on sex trafficking. Citing data from the Trafficking in Persons Report, Hong explained that globally there are more victims of trafficking for labor than sexual exploitation. In the United States, hundreds of thousands of children work on farms exempt from the minimum age and maximum hour requirements that apply to all other working children. This exposes them to work at younger ages, for longer hours — often ten or more hours per day — and under hazardous conditions. They are vulnerable to the risk of pesticide poisoning, heat illness, injuries, life-long disabilities, and even death.

Through the Tronie Foundation, Hong organized a network of survivors of human trafficking. She has been interviewed by Oprah and has been a key advocate for legislation that mandates training of health providers in identifying signs of human trafficking in Washington state. Hong hopes that her work and the survivors’ network will empower victims like herself to find their voice and speak out. Hong told the audience that by bringing their voices together, victims can advocate for policies that address the causes of trafficking and advance human rights.

In Kenya, 11 million people suffer from malnourishment. Twenty percent of children younger than five are underweight, and nearly one in three are below normal height. In a typical day, the average Kenyan consumes barely half as many calories as the average American.

But Kenya – and other underfed countries throughout Sub-Saharan Africa – have more than enough land to grow the food needed for their hungry populations.

The juxtaposition of food deprivation and land abundance boils down to a failure of national agriculture policies, says Thom Jayne, professor of international development at Michigan State University. Governments haven’t helped small farmers acquire rights to uncultivated land or use the land they own more productively, he said.

Speaking earlier this month at a symposium organized by the Center on Food Security and the Environment, Jayne said lifting African farmers out of poverty will require a new development approach.

The focus, he said, should be on increasing smallholder output and putting idle land to work in the hands of the rural poor.

Much of Sub-Saharan Africa’s fertile land, Jayne explained, falls under the ownership of state governments or wealthy investors who leave large tracts of land unplanted.

Meanwhile, population density in many rural areas exceeds the estimated carrying capacity for rainfed agriculture – approximately 500 persons per square kilometer, according to the U.N. Food and Agriculture Organization. Above this density threshold, farm sizes become so small, farming becomes economically unsustainable.

“As farm size shrinks, it’s increasingly difficult to produce a surplus,” Jayne said. “As it’s difficult to produce a surplus, it becomes difficult to finance investments in fertilizer and other inputs that could help you intensify.”

Agricultural development policies, Jayne said, have exacerbated these problems. One Zambian fertilizer subsidy program, for example, delivered support payments to over 50 percent of farms greater than five hectares in size – but only reached 14 percent of farmers whose holdings measured one hectare or smaller.

“This was a poverty reduction program that was targeted to large farms,” Jayne said. “Where’re the allocations to R&D appropriate to one hectare farms, tsetse fly control, vet services, all the things that are going to make that one hectare farm more productive?”

He stressed that investments in small farms could reduce poverty.

“Fifty to seventy percent of the population in these countries is engaged in agriculture,” he said. “There aren’t very many levers to reduce poverty and get growth processes going except to focus on the activities that that fifty to seventy percent are primarily engaged in.”

Smallholder-based growth strategies delivered stunning results in Green Revolution-era India – while large-farm strategies in Latin American countries have largely failed to alleviate rural poverty, he said.

Symposium commentator Byerlee, a rural policy expert and former lead economist for the World Bank, agreed with Jayne. In particular, Byerlee expressed skepticism about the benefit of large land investments by foreign agricultural interests.

“The social impacts aren’t going to be very much,” he said of the large-scale mechanized farming operations favored by foreign investors.

“They don’t create many jobs,” he said. “That’s really what we should be focusing on in terms of poverty reduction – job creation.”

Byerlee also stressed the need to formalize Sub-Saharan Africa’s land tenure systems. Currently, he said, about eighty percent of Africa’s land is titled informally under “customary” rights.

“When you have this population pressure, and on top of that you have commercial pressures coming in from investors, this system is just not going to stand up,” he said. “If you had better functioning land markets, it could reduce the transaction costs for investors, allow smallholders to access land, and provide an exit strategy for people at the bottom end.”

Jayne suggested reforms and new policies should include mechanisms to help small farmers gain access to unused fertile land. He called for comprehensive audits of land resources in Sub-Saharan African nations, a tax on uncultivated arable acreage, and a transparent public auction to distribute idle state lands to small farmers.

Additionally, he said, governments can help by improving infrastructure in remote rural areas and clearing fertile land of pests – such as tsetse flies – that threaten crops and human health.

But whatever particular policies they choose to pursue, Jayne said, African governments cannot afford to ignore the problems associated with inequitable land distribution and low smallholder agricultural productivity and. Failure to implement broad-based, smallholder-focused growth strategies will result in “major missed opportunities to reduce poverty in Sub-Saharan Africa,” he said.

This was the seventh talk in FSE's Global Food Policy and Food Security Symposium Series.

As incomes rise around the world, health experts expect a more troubling figure to increase as well: the number of diabetics in developing countries.

In China and India – two of the world’s most populous nations with fast-paced economies – the prevalence of diabetes is expected to double by 2025. Between 15 and 20 percent of their adult population will develop the disease as household budgets increase, diets change to include more calories and new health problems emerge.

But China, India and other developing countries are not fully prepared to deal with the rising trend of diabetes. And a growing number of diabetics aren’t getting the care they need to prevent serious complications, Stanford researchers say.

Even with insurance, many diabetics don’t have essential medications that could help them manage their conditions. In many cases, people are spending a great deal of their household incomes to pay for their treatment, said Jeremy Goldhaber-Fiebert, an assistant professor of medicine who led the research team.

“Public and private health insurance programs aren’t providing sufficient protection for diabetics in many developing countries,” said Goldhaber-Fiebert, a faculty member at Stanford Health Policy at the university’s Freeman Spogli Institute for International Studies. “People with insurance aren’t doing markedly better than those who don’t have it. Health insurance and health systems need to be re-oriented to better address chronic diseases like diabetes.”

Findings from the study are online and will be published in the Jan. 24 edition of Diabetes Care, the journal of the American Diabetes Association. The journal article was co-authored by Jay Bhattacharya, an associate professor of medicine and Stanford Health Policy faculty member; and Crystal Smith-Spangler, an instructor at Stanford’s Department of Medicine and an investigator at the Palo Alto VA Health Care System.

Failure to adequately manage diabetes will lead to more severe health problems like blindness, heart disease and kidney failure. It also harms the otherwise healthy, Goldhaber-Fiebert said.

Diabetes often strikes people at an age when they’re taking care of children and elderly parents. To sideline these primary caretakers as dependants will lead to a heavy burden for communities and create an obstacle for economic growth, he added.

Using responses to a global survey conducted by the World Health Organization in 2002 and 2003, Goldhaber-Fiebert and his colleagues examined data from 35 low- and middle-income countries in Asia, Latin America, Africa and Eastern Europe to determine whether diabetics with insurance were more likely to have medication than those without insurance.

They also wanted to know whether insured diabetics have a lower risk of “catastrophic medical spending,” a term the researchers define as spending more than 25 percent of a household income on medical care.

“Surprisingly, diabetics with insurance were no more likely to have the medications they need than uninsured diabetics,” Goldhaber-Fiebert said. “They were also no less likely to suffer catastrophic medical spending.”

There are many reasons why health insurance may not protect diabetics in developing countries against high out-of-pocket spending. In some cases, there’s a lack of sufficient medication – such as insulin – that regulate glucose levels. Without those drugs, there’s a greater risk of complications that often lead to more hospitalizations and more expenses.

In other cases, co-payments and deductibles are too high. Sometimes, drugs and medical services to prevent diabetes complications are not covered. And doctors and hospitals don’t always accept insurance.

“Better policies are needed to provide sufficient protection and care for diabetics in the developing world,” Goldhaber-Fiebert said.

Without medications to manage diabetes and prevent secondary complications, the condition will worsen and the burden of catastrophic spending will increase, he said.

“It’s important to get ahead of the curve and prepare so there’s an infrastructure in place to deal with these health and cost issues,” he said.

While preventing diabetes in the first place would be ideal, programs and policies must be established to care for the many cases that will surely continue to exist.

“There isn’t a single country that’s managed to entirely arrest or reverse the trend of diabetes,” he said. “Programs that focus on primary prevention are extremely important, but the reality is that the developing world faces hundreds of millions of diabetes cases that are unlikely to all be prevented.”