This spring, we saw the collapses of Silicon Valley Bank, Credit Suisse, etc., and now we are observing collapses of Chinese real estate giants: Evergrande, and Country Garden. Would be there another financial crisis? 
Now, it is highly worthy to review the ‘lessons' of historically recent financial crises with significant seriousness, which happened in the two largest economies, the United States and Japan.

During the 1990s-2000s, Japan and the United States each experienced the same type of financial crisis, notably triggered by the collapse of major financial institutions, stemming from the real estate bubble burst. Namely, the Heisei Financial Crisis and the Lehman Brothers Collapse.

Both were under the political-economic conditions of one of the largest economies in the world, as well as of an advanced democracy. Enormous shock happened politically, economically, and historically, due to these two financial crises.

Then, as the research question, what were the ‘lessons’ of the United States and Japan's financial crises, concerning crisis response through public money injection, from the viewpoint of political economy? Where is the ‘learning’ between Japan and the United States?
Also, as the related research ‘puzzle’, why the difference in speed between these countries to respond and recover?

Based on his Ph.D. thesis, Senator Takinami, an alumnus of Stanford APARC, will elaborate on these issues by covering up and amending Hoshi & Kashyap(2010), thus establishing ‘7 lessons’ throughout the Japan and the United States financial crises on government bailout from the political economy viewpoint.

 

Speaker

Hirofumi Takinami (Ph.D.) is an Upper House Member of the Japanese Parliament, corresponding to a Senator in the U.S. He is a former Vice-Minister of Economy, Trade, and Industry, and also a former Vising Scholar, APARC, Stanford University. 

Dr. Takinami covers a wide range of policies, including not only energy, environment, and finance, but also innovation, infrastructure, welfare for the disabled, etc. He has been the Director of the Fisheries Division of LDP (Liberal Democratic Party) from last year.

Before starting his political career 10 years ago, he was a Director of the Ministry of Finance. During his about 20 years of service as a Japanese government official, he held management positions including Public Relations Director, and Deputy Budget Examiner at the Ministry of Finance. He also worked internationally, in charge of the Asia-Pacific Economic Cooperation (APEC) and the Asia Europe Meeting (ASEM) etc. 

He graduated from the University of Tokyo in 1994, earning a Bachelor of Law. He received a Master of Public Policy (MPP) from the University of Chicago in 1998. While in office as an upper house member, he obtained a Ph.D. in 2021 from Waseda University for the study on financial crises, which he started when he held research positions at Stanford University as a Visiting Fellow in 2009-2011 and as a Visiting Scholar in 2016. 

The Henan bank protest, the Evergrande crisis, and the ongoing local government debt issue in China all point to one thing: there’s something wrong with the country’s banking system. Beijing needs to better regulate the numerous small banks that are now intimately intertwined with much of China's economic challenges. 

They’re working on it, but there’s no easy solution.

Adam Y. Liu will tell us the origins of the dilemma, the increasing role of small banks in China and local development, and what tradeoffs China will likely have to make to prevent a run-away banking crisis.

Speaker

Adam Y. Liu is assistant professor at the Lee Kuan Yew School of Public Policy, National University of Singapore. His main research interests include Chinese politics and political economy. He is currently working on a book project that explores how central-local politics drove the formation, expansion, and operation of what he calls a "state-owned market" in China's banking sector. The project is based on his dissertation, which won the 2020 BRICS Economic Research Award. He received his Ph.D. in political science from Stanford University and was a postdoctoral associate with the Leitner Program in International and Comparative Political Economy at Yale University. 

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The fundamental reason for the extreme leverage today in China’s banks, enterprises and the state itself is found in the decentralized fiscal arrangements of highly self-reliant local governments. This problem has been compounded by the excessive stimulus lending over the past decade. As a result Beijing has promoted the creation of an extensive shadow banking system designed to protect the stability of the major state banks. Stepping back this has led to the state’s growing leverage. This presentation focuses on the impact of the shadow banking system on the state’s finances and compares the costs of China’s response to the global financial crisis with the US response.

Carl Walter joins the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC) as visiting scholar with the China Program for the 2021-2022 academic year. Prior to coming to APARC, he served as independent, non-executive Director at the China Construction Bank. He was also previously a visiting scholar with APARC during the winter and spring terms of the 2012–13 academic year after a career in banking spent largely in China. 

His research interests focus on China's financial system and its impact on financial and political organizations. During his time at Shorenstein APARC Walter will continue his book project on how fiscal reforms in China have impacted the banking system, the overall economy and the prospect for financial reform going forward. Walter has contributed articles to publications including Caijing, the Wall Street Journal and the China Quarterly. He is also the co-author of Red Capitalism: The Fragile Financial Foundations of China's Extraordinary Rise (2012) and Privatizing China: Inside China's Stock Markets (2005).

Walter lived and worked in Beijing from 1991 to 2011, first as an investment banker involved in the earliest SOE restructurings and overseas public listings, then as chief operation officer of China's first joint venture investment bank, China International Capital Corporation. Over the last ten years he was JPMorgan's China chief operating officer as well as chief executive officer of its China banking subsidiary.

Walter holds a PhD in political science from Stanford University, a certificate of advanced study from Peking University and a BA in Russian Studies from Princeton University.

 

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

 

Please note the event time has been changed to 10:30AM (PT) to 12:00PM (PT).

 

This is a virtual event. Please click here to register for the talk. 

 

This event is presented in partnership with Global:SF and the State of California Governor’s Office of Business and Economic Development.
 

U.S.-China economic relations have grown increasingly fraught and competitive.  Even amidst intensifying tensions, however, our two major economies remain intertwined.  While keeping alert to national security concerns, the economic strength of the United States will depend on brokering a productive competition with China, the world’s fastest growing economy.  Precipitous decoupling of trade, investment, and human talent flows between the two nations will inflict unnecessary harm to U.S. economic interests -- and those of California.  

Chinese trade and investments into California have grown exponentially over the last decade.  But they have come under increasing pressure following geopolitical and economic tensions between the two nations, particularly in the science and technology sectors.  This session will explore the role of Chinese economic activity in California in the context of the greater US-Chinese relationship. 

 

Craig Allen began his tenure in Washington, DC, as the sixth President of the United States-China Business Council, a private, nonpartisan, nonprofit organization representing over 200 American companies doing business with China. Ambassador Allen began his government career in 1985 at the Department of Commerce’s International Trade Administration (ITA) where, from 1986 to 1988, he worked as an international economist in ITA’s China Office. In 1988, Allen transferred to the American Institute in Taiwan, where he served as Director of the American Trade Center in Taipei. He returned to the Department of Commerce for a three-year posting at the US Embassy in Beijing as Commercial Attaché in 1992. In 1995, Allen was assigned to the US Embassy in Tokyo where he was promoted to Deputy Senior Commercial Officer in 1998. Allen became a member of the Senior Foreign Service in 1999. Starting from 2000, he served a two-year tour at the National Center for APEC in Seattle where he worked on the APEC Summits in Brunei, China, and Mexico. In 2002, Allen first served as the Senior Commercial Officer in Beijing where he was later promoted to the Minister Counselor rank of the Senior Foreign Service. After a four-year tour in South Africa, Ambassador Allen became Deputy Assistant Secretary for Asia at the US Department of Commerce’s International Trade Administration. He later became Deputy Assistant Secretary for China. Ambassador Allen was sworn in as the United States ambassador to Brunei Darussalam on December 19, 2014 where he served until he transitioned to take up his position as President of the US-China Business Council.
 

David Cheng is the chair and managing partner of Nixon Peabody’s China and Asia-Pacific practice. He is qualified in both the United States and Hong Kong. He focuses on cross-border transactions, litigations and investigations, advising on issues ranging from acquisitions, capital financing (initial public offering), intellectual property protection and disputes to fraud, FCPA and SEC investigations. He has a client portfolio from all over the world, including the United States, Middle East, Europe, Japan, Singapore, Taiwan, mainland China and Hong Kong.
 

James Green has worked for over two decades on U.S.-Asia relations. For five years, Green was the Minister Counselor for Trade Affairs at the U.S. Embassy in Beijing (2013-2018).  As the senior official in China from the Office of the United States Trade Representative (USTR), Green was deeply involved in all aspects of trade negotiations, trade enforcement, and in reducing market access barriers for American entities.  In prior government service, Green worked on the Secretary of State’s Policy Planning Staff and at the State Department’s China Desk on bilateral affairs. He also served as the China Director of the White House’s National Security Council.  In the private sector, Green was a senior vice president at the global strategy firm founded by former Secretary of State Madeleine Albright and was the founding government relations manager at the American Chamber of Commerce in Shanghai, Asia’s largest AmCham.  Currently, Green is a Senior Research Fellow at Georgetown University's Initiative for U.S.-China Dialogue on Global Issues and hosts a U.S.-China Dialogue Podcast.  He was most recently named as APARC's inaugural China Policy Fellow. 
 

Anja Manuel is Co-Founder and Principal, along with former Secretary of State Condoleezza Rice, former National Security Advisor Stephen Hadley and former Secretary of Defense Robert Gates, in Rice, Hadley, Gates & Manuel LLC, a strategic consulting firm that helps US companies navigate international markets. She currently serves on two corporate boards: Overseas Shipping Group, Inc., a NYSE listed energy transportation company, and Ripple Labs Inc., a leading blockchain payments company. Manuel also serves on several advisory boards, including Former Governor Brown’s California Export Council. From 2005-2007, she served as an official at the U.S. Department of State, responsible for South Asia Policy. She is a frequent commentator on foreign policy and technology policy, for TV and radio (NBC/MSNBC, Fox Business, BBC, Bloomberg, Charlie Rose, NPR, etc.) and writes for publications ranging from the New York Times, to the Financial Times, Fortune, The Atlantic, and Newsweek, among others. She is the author of the critically acclaimed This Brave New World: India, China and the United States, published by Simon and Schuster in 2016. A graduate of Harvard Law School and Stanford University, Manuel now also lectures and is a Research Affiliate at Stanford University. She is the Director of the Aspen Strategy Group and Aspen Security Forum -- the premier bipartisan forum on foreign policy in the U.S. -- and is a member of the Council on Foreign Relations.

 

 

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This Session is part of a larger conference series titled “The New Economy Conference – California’s Place in the New Global Economy”.   The New Economy Conference will broadcast public programs from April 21-May 25 on a weekly basis, designed to inform and identify the impact of COVID-19 on the economic competitiveness and resilience of the State of California.  Topics addressed will include Challenges and Opportunities Post-COVID in California (4/21); the International Dimension (4/28), Investing in the New Economy and Keeping Businesses in California (5/5); Sustainability and Urbanism (5/12); Navigating Chinese Investment, Trade and Technology (5/19); and Where do We Go from Here? (6/09).

 

This is a virtual event. Please click here to register and generate a link to the talk. 
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Corrupt countries are usually poor, yet China is an exception. President Xi Jinping acknowledges that corruption in the country has reached crisis proportions. If this is true, why has China nevertheless sustained 40 years of economic growth and deep transformation?

In this talk, Professor Yuen Yuen Ang will analyze how different types of corruption exert different effects on the economy.  Reminiscent of America’s Gilded Age during the 19th century, reform-era China has steadily evolved toward a particular type of corruption: access money (elite exchanges of power and wealth).  Starting in the 2000s, the central government effectively curbed directly growth-damaging types of corruption such as embezzlement and bureaucratic extortion. But access money fueled commerce by rewarding politicians for aggressively promoting growth and connected capitalists for taking on increasingly risky ventures. Such corruption has also produced systemic risks, distortions, and inequality, however—problems that define China's Gilded Age under Xi Jinping’s leadership. As a result, China today is a high-growth but risky and imbalanced economy. 

Despite popular perceptions that China and the United States are two polar opposites, therefore, contemporary China and 19th century America share some striking commonalities.

Yuen Yuen Ang is a PhD graduate of Stanford University, where she studied comparative political economy with a focus on China. She is the inaugural recipient of the Theda Skocpol Prize, awarded by the American Political Science Association for “impactful empirical, theoretical and/or methodological contributions to the study of comparative politics.” She was also named an Andrew Carnegie Fellow for “high-caliber scholarship that applies fresh perspectives to the most pressing issues of our times.” Her first, award-winning book, How China Escaped the Poverty Trap (2016), is acclaimed as “game changing” and “field shifting.” It received the Peter Katzenstein Prize in Political Economy, the Viviana Zelizer Prize in Economic Sociology, and was named “Best of Books 2017″ by Foreign Affairs. The sequel to this book, China’s Gilded Age: the Paradox of Economic Boom & Vast Corruption, is released in 2020. It was featured in The Diplomat, The Economist, and The Wire China. She is an associate professor in political science at the University of Michigan and previously a faculty member at Columbia University SIPA.

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This event is part of the 2021 Winter/Spring Colloquia series, Biden’s America, Xi’s China: What’s Now & What’s Next?, sponsored by APARC's China Program.