The Stanford Center at Peking University (SCPKU), the Center on Democracy, Development and the Rule of Law (CDDRL), and the APARC China Program jointly hosted a workshop on China’s Belt and Road Initiative (BRI) in early March. The workshop, held on March 2 and 3, welcomed researchers from around the world with expertise in the Initiative. Unfortunately, because of the rapidly developing health emergency related to the coronavirus, participants from not only China, but also Japan, were prevented from attending. As described by Professor Jean Oi, founding director of SCPKU and the China Program, and Professor Francis Fukuyama, director of CDDRL and the Ford Dorsey Master's in International Policy, who co-chaired the workshop, the meeting aimed to provide a global perspective on the BRI, consolidate knowledge on this opaque topic, and determine the best method and resources for future research.  

The workshop began with presentations from several of the invited guests. Dr. Atif Ansar from the University of Oxford’s Saïd Business School kicked off the first day by describing not only the tremendous opportunity that the BRI presents to developing economies, but also the serious pitfalls that often accompany colossal infrastructure projects. Pointing out the poor returns on investment of mega infrastructure projects, Ansar examined the frequest cost and schedule overruns, random disasters, and environmental degradation that outweigh the minimal benefits that they generally yield. China’s own track record from domestic infrastructure projects does little to mitigate fear of these risks, Ansar claimed. In response, he urged professional management of BRI investments, institutional reforms, and intensified deployment of technology in BRI projects. Dr. Ansar was followed by Dr. Xue Gong of the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore. Dr. Gong’s analysis centered on the extent to which China’s geopolitical motivations influenced its outward foreign direct investments (OFDI). Although her research was still in the early stages, her empirical analysis of China’s OFDI inflows into fifty BRI recipient countries from 2007-2018 nevertheless revealed that geopolitical factors often outweigh economic factors when it comes to China’s OFDI destinations.

Participants then heard presentations from Amit Bhandari of Gateway House: Indian Council on Global Relations and Professor Cheng-Chwee Kuik of the National University of Malaysia. Mr. Bhandari’s talk focused on Chinese investments in India’s six neighboring countries, which tend to center more on energy rather than connectivity projects. He first found that the investments are generally not economical for the host countries because they come with high costs and high interest rates. Secondly, he argued that these projects often lacked a clear economic rationale, appearing instead to embed a geopolitical logic not always friendly to India. Professor Kuik, by contrast, provided a counterexample in his analysis of BRI projects in Southeast Asia. He described how, in Southeast Asia, host countries’ reception of the BRI has varied substantially; and how various stakeholders, including states, sub-states and other entities, have used their leverage to shape outcomes more or less favorable to themselves. Kuik’s analysis injected complexity into the often black-and-white characterizations of the BRI. He highlighted the multidimensional dynamics that play out among local and state-level players in pursuit of their goals, and in the process of BRI implementation.

Professor Curtis J. Milhaupt and Scholar-in-Residence Jeffrey Ball, both at Stanford Law School, followed with individual presentations on the role of State-Owned Enterprises (SOEs) in the BRI and the emissions impact of the BRI on climate change, respectively. Professor Milhaupt  characterized Chinese SOEs as both geopolitical and commercial actors, simultaneously charged with implementing Party policies and attaining corporate profits. Chinese SOEs are major undertakers of significant overseas BRI projects, acting not only as builders but also as investors, partners, and operators. This situation, Milhaupt asserted, carries significant risks for SOEs because these megaprojects often provide dismal returns, have high default rates, and can trigger political backlash in their localities. Milhaupt highlighted the importance of gathering firm-level data on businesses actually engaged in BRI projects to better infer geostrategic, financial, or other motivations. Jeffrey Ball turned the discussion to carbon emissions from BRI projects and presented preliminary findings from his four-country case studies. He concluded that, on aggregate, the emissions impact of the BRI is still “more brown than green.” Twenty-eight percent of global carbon emissions may be accounted for by BRI projects, Ball asserted, underscoring the importance of the BRI to the future of global climate change.

The day concluded with presentations by  Michael Bennon, Managing Director at the Stanford Global Projects Center, and Professor David M. Lampton, Oksenberg-Rohlen Fellow at the Freeman Spogli Institute for International Studies. Bennon first presented findings from two empirical case studies of BRI projects and then went on to describe how the BRI is now practically the “only game in town” for infrastructure funding for developing countries. Lengthy environmental review processes at Western multilateral banks have turned the World Bank, for example, from a lending bank into a “knowledge bank,” he argued. He also highlighted that, in general, economic returns on BRI projects for China are very poor, even though recipient countries may accrue macroeconomic benefits from these projects. Finally, Professor Lampton turned the discussion back to Southeast Asia, where China is currently undertaking massive cross-border high-speed rail projects through eight ASEAN countries. He described how each host country had varying capacity to negotiate against its giant neighbor, and how the sequential implementation of these cross-border rail projects also had varying impacts on the negotiating positions of these host countries. BRI played out differently in each country, in other words, eliciting different reactions, push-backs and negotiated terms.

The second day of the workshop was dedicated to working toward a collaborative approach to future BRI research. The group discussed the key gaps in the existing research, including how to know what China’s true intentions are, how to measure those intentions, who the main players and their interests in both China and the host countries are, and even what the BRI is, exactly. Some cautioned that high-profile projects may not be representative of the whole. Participants brainstormed about existing and future sources of data, and stressed the importance of diversifying studies and seeking empirical evidence.

President Xi Jinping’s tenure has been marked by growing state influence over all spheres of governance in China, including a marked tightening of control over the economy.

Curtis Milhaupt, the William F. Baxter-Visa International Professor of Law at Stanford Law School, addressed the hardening of Party controls over Chinese corporate governance. His lecture to the China Program on February 6 was based on research conducted by Milhaupt in collaboration with Yu-Hsin Lin of City University of Hong Kong, and examined the expanding role of the Chinese Communist Party (CCP) within both state-owned enterprises (SOEs) and privately-owned enterprises (POEs). The influence of the CCP within these enterprises, Milhaupt says, is not as straightforward as it might seem.

Milhaupt posits that the level of control exercised by the CCP on SOEs is lower than one might generally expect. At the same time, the CCP exercises a surprisingly higher level of control over POEs than we would typically assume. To draw these conclusions, Milhaupt uses a set of ten model provisions deemed to be dangjian, or “party-building,” measures that were developed and released by the Central Committee of the CCP. From data compiled between 2015 and 2018 from the charters of publicly-listed companies, Milhaupt shows that 10% of SOEs chose not to adopt any of the provisions distributed by the Central Committee. Meanwhile, 6% of POEs had at least a low level of adoption, despite the fact that the provisions were not directed at them. The reason for such variation, according to Milhaupt, can be explained by the characteristics of the provisions, the SOEs, and the POEs.

Milhaupt breaks the measures into three distinct groups: personnel-related, decision-making, and symbolic. Nearly every corporation that amended its charter adopted the symbolic provisions. As the name suggests, these generally did not require any substantial or meaningful change on the enterprises’ parts. There was a steep drop-off, however, in the level of adoption for the other two types. Only 58% of SOEs who amended their charters adopted the more intrusive, decision-making provisions. Similarly, only 52% of such SOEs adopted the personnel-related provisions. The numbers were even lower for POEs, with only 25% of POEs who amended their charters adopting the decision-making provisions, and only 16% adopting the personnel-related provisions.

Which enterprises adopted which provisions was highly correlated to those enterprises’ characteristics. SOEs were far more likely to amend their charters if they had direct state shareholding, but less likely to amend if they had large non-state shareholders, were further down in the state-ownership chain, or were cross-listed on international stock exchanges. POEs followed a similar structure, with enterprises being more likely to adopt provisions the more politically connected they were or the more direct state shareholding they had.

It remains unclear how the government can actually enforce the dangjian policy, and how these policies will affect the enterprises that adopt it. Despite the official rhetoric behind the dangjian policy, with claims that greater loyalty to the Party will lead to more economic success, Milhaupt expresses doubts:

“What’s [the danajian policy] going to mean for firm performance? Certainly, from a . . . straightforward economics or corporate governance perspective, one would not be optimistic that infiltrating corporations with political influence is going to do good things for firm performance.”

Milhaupt also has concerns about how the strategy will impact international investment, noting the already high levels of suspicion surrounding Chinese motivations: “This [emphasis on loyalty to the Party] would certainly seem to add fuel to the fire, and heighten concerns or suspicions with respect to Chinese outbound economic activity.” As SOEs and POEs continue to navigate both domestic and international markets with their amended charters, the future feasibility of the CCP’s reassertions over the economy is far from certain.

Last fall, SPICE provided me an opportunity to design and organize its first post-collegiate online course. The Stanford-Hiroshima Collaborative Program on Entrepreneurship (SHCPE’s Japanese-friendly pronunciation, “shu-ppe”) was conducted in collaboration with the Hiroshima Business and Management School (HBMS) at the Prefectural University of Hiroshima (PUH). HBMS offers the only Master of Business Administration (MBA) program in Japan’s western region of Chugoku and Shikoku. Interacting with amazing individuals on both sides of the Pacific, this unique experience brought me priceless moments.

Innovation in Itself

SHCPE, a course to help nurture entrepreneurial thinking, was an innovation in itself. The program was born out of Governor Hidehiko Yuzaki’s vision to design and implement a social challenge to help accelerate Hiroshima’s regional growth. Harnessing the resources of Stanford and Silicon Valley, the new online class was launched to empower the students and to revitalize the business sector in Hiroshima. SPICE created the curricular content and HBMS provided the learning environment designed to maximize the academic experience for the students. As the course’s curriculum designer, I leveraged the expertise of my fellow SPICE online instructors and applied design thinking, a method developed by Stanford faculty, practiced widely in Silicon Valley, and popularized globally to understand the end-user, challenge our assumptions, and reconstruct alternative perspectives to generate innovative ideas.

Bridging Silicon Valley and Hiroshima

SHCPE’s 18 MBA students in Hiroshima met every Saturday morning for three hours from September 28 to November 16, 2019 to connect online with Japanese entrepreneurs, professionals, and scholars in Silicon Valley. The first virtual class focused on discussing the mindset expected for the course as well as the conceptual framework. In the following six weeks, we welcomed guest speakers who shared their diverse experiences. What were their prior experiences, expertise, and insights? What resources did they have to achieve their goals? What were the major promoters and impediments to their journeys? Through active exploration of these questions, the students were exposed to real-life case studies to analyze Silicon Valley’s ecosystem and think critically about entrepreneurial competence and qualification. The course was conducted entirely in Japanese.

The guest speakers engaged and energized the HBMS students. Akira Onozato spoke about the evolution of Silicon Valley over the past three decades. His diverse experiences as a serial entrepreneur painted a rich picture of the San Francisco Bay Area’s growth cycle. Akira’s story provided a great segue to Rika Nakazawa’s lecture on the mindset and culture surrounding startups. Rika highlighted grit, tolerance of failure, and branding as important assets of successful entrepreneurs. Dr. Fumiaki Ikeno spoke on the landscape and trends in the medical device industry. He pointed to Japan’s declining productivity and economic competitiveness and discussed the persistent fear of failure as a major impediment to promoting entrepreneurship. As an active venture capitalist on both sides of Pacific, Seiji Miyasaka explained the funding schemes and financial cycles surrounding the investment climate of startups. Using case studies, he highlighted the role of investors who act as coaches to aspiring entrepreneurs. Tatsuki Tomita’s definition of a startup was shaped by his own experiences of starting multiple companies. His discussion of the pivot pyramid provided a visual guideline for how startups can experiment with ideas and find their product-market fit. Tasha Yorozu shared her expertise as a legal counsel, walking through the steps of starting a business in Silicon Valley. Along with Jumpei Ishii, a visiting legal counsel from Japan, Tasha further discussed their observations of successful startup practices and common pitfalls. The diversity of SHCPE guests represented the vibrant Silicon Valley community. 

Active Learning and Knowledge Construction

While these professionals provided informative accounts of their expertise, SHCPE’s ultimate goal was to help each HBMS student to develop a mindset of an active learner. The MBA students were constantly challenged to think critically about the weekly theme, and work in pairs or teams to discuss assigned topics. The experience offered a dynamic and interactive learning environment for the Japanese students in their 30s, 40s, and 50s who had been accustomed to traditional lecture-style formats. SHCPE’s curriculum based on design thinking adopted an inquiry-based learning pedagogy, which engaged every student through weekly assignments and in-class discussions. During the first class, the students were informed that SHCPE would not teach them entrepreneurship. Instead, this course would provide them with the opportunity to reconstruct their knowledge of entrepreneurship and innovation based on what they observe, hear, and feel during the class. In addition, the students were required to provide feedback after each class, which was utilized to redesign the lesson plans for the following week.

This active and experiential mindset was envisioned by Dr. Gary Mukai, Director of SPICE and a renowned Japan–U.S. educator. “At SPICE, we provide students an opportunity to own their learning experience. Education is about empowering the students,” Dr. Mukai asserts. This tradition comes from the American philosopher and education reformist John Dewey, who said, “I believe finally, that education must be conceived as a continuing reconstruction of experience; that the process and the goal of education are one and the same thing.” SHCPE’s inaugural curriculum aimed to implement this philosophy through direct, real-life interaction with founders and movers in Silicon Valley, and through the iterative process to deconstruct and reconstruct their knowledge on entrepreneurship.

Innovation Through Education

What SHCPE aimed to achieve was innovation through education. The weekly three-hour online class was roughly divided into three parts: guest lecture, class discussion, and interview. Prior to the interview session, a pre-assigned team of three students met with me in a separate online room and brainstormed their interview questions. For the majority of the students, it was their very first time to formally interview a person, and the experience brought a novel learning opportunity to think critically about entrepreneurial competence. Many commented on the challenge and the excitement of getting to know strangers by engaging them in a thoughtful conversation. The weekly interview highlighted the philosophy, aspiration, and raw sentiments of the guest speakers, evoking passion, energy, and empathy among the students.

Through observations and discussions, the SHCPE participants built their own knowledge and understanding of what constitutes entrepreneurship. To conclude the eight-week course, I had the chance to visit Hiroshima to offer the last SHCPE class in person, and to observe first-hand their reaction to the curriculum design. Meeting the students as well as the HBMS faculty and staff who supported SHCPE, was an incredibly rewarding experience. My class focused on education and empowerment. The students discussed in teams how they might develop a curriculum to promote entrepreneurship in Hiroshima. Much to everyone’s delight, one of the students expressed his hope to apply what he learned in this course and serve as an angel investor to support local startups. The class culminated with a closing ceremony during which each student was presented an official Certificate of Completion. My trip to Hiroshima also provided a valuable opportunity to visit Governor Yuzaki as well as PUH President Ken-ichi Nakamura, who emphasized the importance of adding a real-life, global perspective to the HBMS curriculum. Programs such as SCHPE were made possible through these leaders’ foresight and support.

SHCPE strived to adopt the pedagogy of active learning and the toolsets of design thinking to implement Governor Yuzaki’s vision of “learning innovation.” The course appears to have succeeded in helping to realize his vision as one student reflected upon his experience:

This class does not intend to offer answers [to the question what entrepreneurship is]. Instead, it urges the students to constantly think on their own and engage themselves in learning. This is very different from the Japanese traditional pedagogy, which relies on rote memorization and mechanical process of practice problems. This class highlighted the fundamental difference in the philosophy of how we look at education, and I enjoyed this eye-opening experience.

SHCPE ’19 concluded with much enthusiasm. SPICE looks forward to continuing its partnership with HBMS to build upon the invaluable lessons learned from the inaugural program. With Stanford e-Hiroshima, an online course for high school students managed and taught by my colleague Rylan Sekiguchi, SPICE will continue its efforts to empower the people in Hiroshima.

Acknowledgement

I am greatly indebted to Dr. Gary Mukai for providing me this invaluable opportunity. Special thanks go to Carey Moncaster, Dr. HyoJung Jang, Jonas Edman, Meiko Kotani, Naomi Funahashi, Rylan Sekiguchi, Sabrina Ishimaru, Dr. Tanya Lee, and Waka Takahashi Brown for their valuable comments on the preliminary curriculum. I thank all of my colleagues at SPICE for their support and encouragement throughout the process.

My special gratitude goes to Akira Onozato, Dr. Fumiaki Ikeno, Jumpei Ishii, Rika Nakazawa, Seiji Miyasaka, Tatsuki Tomita, and Tasha Yorozu who took the time out of their busy Friday evening to participate in the virtual classroom. Their contagious enthusiasm energized the students.

Last but not least, I would like to express my deep appreciation to my collaborators at HBMS. I thank Professor Katsue Edo for his hard work and commitment to implement the program, Professor Yasuo Tsuchimoto for his technical expertise and dedication to administer the distance-learning, Professor Narumi Yoshikawa for supporting in-class discussions, and Kazue Hiura, Yoshihiko Oishi, and Kenji Okano for their capable assistance and thoughtful arrangements. Last but not least, my heartfelt congratulation goes to the 18 MBA students who successfully completed SHCPE ’19. The inaugural class will always have a special place in my heart.

---

To stay informed of news about Stanford e-Japan and SPICE’s other programs, join our email list and follow us on Facebook, Twitter, and Instagram.

---

Related article:

• Stanford Alumni Weekend (October 24–27, 2019) Feature: Hiroshima Governor Hidehiko Yuzaki & SPICE’s Dr. Mariko Yoshihara Yang and a New Online Course for MBA Students in Japan