China Reading List

Some time ago, I put together a condensed reading list of things that have most shaped my understanding of China. My hope is that this can help others who are similarly interested, or are just setting out in understanding the language, trajectory, systems, and culture of China. Help me add to it in Google, and read my additional thoughts (some of which may be dated) after the jump:

News: 
Sinocism 
zgbriefs 
Tea Leaf Nation 
Chinese Media Project 
Danwei 
Chinafile 
Truth About China 
China Digital Times 
South China Morning Post 
Haohao Report History & Politics: Patrick Chovanec - Primer on China's Leadership Transition*** Congressional Research Service - Understanding China's Political System*** Jonathan Spence - The Search for Modern China Fox Butterfield - Alive in a Bitter Sea Richard McGregor - The Party James Fallows - Postcards from Tomorrow Square Peter Hessler - River Town, Oracle Bones, Country Driving Leslie Chang - Factory Girls (Hessler’s wife, also very good writer) Jung Chang - Wild Swans Evan Osnos - The New Yorker Nicholas Kristof - China Wakes (NYT correspondent, 1980s) Dan Harris - China Law Blog Carl Walter - Red Capitalism Henry Kissinger - On China Seeing Red in China Geopolitics & Security: The Diplomat Department of Defense - Military and Security Developments Involving the People’s Republic of China Foreign Policy Foreign Affairs Center for Strategic & International Studies Strategic Studies Institute Council on Foreign Relations European Council on Foreign Relations ... this section needs some work (more experts and specific works) Economics & Finance: Michael Pettis - Peking University*** Patrick Chovanec - Tsinghua University Richard Wong - University of Hong Kong Nicholas Lardy - Peterson Institute for International Economics Minxin Pei - Carnegie Endowment for International Peace Cheng Li - Brookings Institution Andy Xie - Caixin Matt Dale - Mao Money Mao Problems Greg Canavan - Daily Reckoning Also Sprach Analyst*** Stephen Green - Standard Chartered Global Research Zhang Zhiwei - Nomura Global Research Stephen King - HSBC Global Research
Charlene Chu - Fitch Ratings (formerly) Pranab Bardhan - Awakening Giants, Feet of Clay Netizen Sentiment: Chinasmack Shanghaiist Beijing Cream Language: Skritter MDBG NCIKU Pleco ICIBA

Some basic thoughts (a snapshot of present-day China): Economics & Finance:

• National accounting identities and how they explain the China and Asian growth model and its need to re-balance, as well as why growth will inevitably slow to a much more reasonable pace.
• Low interest rates --> favor (subsidize) manufacturers and infrastructure as a driver of the economy through easy borrowing, but penalize (tax) households through low wages.
• Easy borrowing (= low interest rates) --> leads to massive hidden debt, non-performing loans in the banking sector, and fraud in investment.
• Easy borrowing + lack of retail investment options (closed capital account) --> lead to makings of a real estate bubble --> as well as a huge shadow banking sector.
• Tax on households --> leads to low consumption and an economy that heavily leans upon investment, rather than consumption --> as well as leads to financial repression
• Undervalued currency --> favors exporters as a driver of the economy.
• Balance of payments surplus --> extra capital exported abroad to fund foreign debt --> enables persistent foreign fiscal deficits.
• Domestic stability above all else, and the importance of employment (and thus the economic growth model) in safeguarding that goal.
• The internationalization of the RMB, and how the mechanics (e.g. the need for capital account reform and governance) dictate the likelihood and desirability of that happening (bilateral agreements, etc).
• The degree of accounting irregularities, misrepresentations, scandals, and fraud (also read point 3 in this article) in China that accompany its overabundance of credit.
• The influence China exerts on global commodity markets and commodity-rich nations because of its major contributions to global demand (i.e. growth, building, etc. must be fed by raw materials), and the impact rebalancing will have upon these relationships (e.g. Australia).
• The relatively cash-rich position of Chinese companies and the Chinese sovereign wealth fund, how it has lead them to seek increasing amounts of foreign acquisitions in recent years, and the political resistance they have met.
• The old story about intellectual property theft, forced technology transfers, etc. What’s ironic is that IP theft is just as much an obstacle to domestic Chinese entrepreneurs as it is to Western corporations.:
• As for innovation, I do believe there is talent here but the local governments are the biggest obstacles. I've heard from and seen too many entrepreneurs complaining about IP theft from entities controlled by local governments. If you are doing a startup and have good tech, there is a 75% chance you will somehow have a competitor that's more well-financed from the local banks and have almost the identical IP in six months. It's a tale that's told again and again. So you have this disconnect: the central government wants China to stop being the world's workshop and become an innovator, thus giving all these tax breaks and incentives; but when a local guy or an overseas returnee builds up a credible product/service, it'll be stolen from right under them by the local government. What, then, is the incentive for innovation for the little guys? -- Lloyd
• The lack of a good social safety net, which generates incentives to save, rather than to consume, further exacerbating the imbalanced economy
• China and India's linked stories on their path to economic power, and the vastly contrasting models they use to get there.
• The role of Taiwanese companies and employers in China, and the importance of China-Taiwan economic integration, especially to Taiwan.
• China's urbanization, differently tiered cities, and special economic zones.
• Poor performance of Chinese capital markets linked to a general lack of profitability

Politics & Society:

• The domestic political landscape: the obstacle that the existing landed interests, stakeholders, and lobby represent to future reform (i.e. manufacturers, exporters, owners, and those who benefited from its 1979-current growth policies).
• The influence of the Guangdong vs Chongqing development models and how they have traditionally vied with each other within Chinese policy circles (also, how the Bo Xilai incident changed the balance of power).
• China's relative attractiveness and cultural influence (soft power), or lack thereof, and how various factors conspire to send a flight of capital and emigration abroad.
• The state of education, and how it prioritizes test-taking skills, rather than inspiring innovation.
• The state of pollution
• The Party's fixation upon stability above all else, and the ways it protects that interest.
• Factors that affect the Party’s stability
• The use of employment*, as previously mentioned.
• The potential for inflation to unite key constituencies
• The party’s procedures for reporting corruption and removal of officials
• China's views towards religious freedom, and its toleration of Christianity only insofar as it counters other religions (i.e. Buddhism, Falungong).
• China's fourth estate and censorship.
• Instability in China's western provinces, and growing inequality in spite of a growing middle class.
• The tension in policymaking between the central government and local government; how incentives at the local government level causes them to constantly frustrate central government objectives
• Local government debt
• Entrepreneurial incentives (central gov’t gives tax breaks and subsidies to foster innovation, but local governments steal startup ideas)
• Housing market (central gov’t wants to curb housing prices, but local governments have a monopoly on land)
• How interwoven corruption is into the status quo (e.g. Xi Jinping's assets, the Immortal 8 families, and the Bo Xilai corruption scandal).

Geopolitics & Security (hard power):

• Japanese aggression and Chinese concessions to Western nations in the past 200 years, and their importance to understanding the aggressiveness of Chinese security policy.
• String of Pearls strategy: China's energy security concerns, and how it informs their actions and diplomacy across ASEAN, and Africa. aligning the islands, etc against or with U.S.
• The importance of the Malacca strait in establishing energy security and independence.
• Strategic investments in Africa infrastructure:
• Korean Peninsula issue: the South Korea-North Korea-China-U.S.-Japan-Russia configuration.
• Indo-Pakistani nuclear issue: the China-India-Pakistan-U.S. relationship.
• Sino-Indian relations: the Sino-Indian war over contested territory near the McMahon Line and the Himalayas.
• U.S. pivot issue: U.S. → Japan, Korea, Taiwan, Australia, ASEAN (Philippines, Vietnam, Brunei, Malaysia, Singapore, Thailand, Indonesia) somewhere in between → China; or is it not that simple?
• Island issues: the source of island conflicts in energy exploration rights
• Korea-Japan-China-Taiwan: Senkaku/Diaoyu, etc (e.g. natural gas)
• Philippines-Vietnam--Malaysia-Taiwan-China - Spratlys and Paracels
• Indian Ocean and South China Sea disputes, legal bases, and the future importance of international arbitration.
• ASEAN issues: U.S.-Australia, island alignments, Taiwan, etc.
• China's increased role in providing global security and patrolling shipping lanes.
• Comparative military strength:
• China-Japan: Shinzo Abe and the expansion of the JDF; the Japanese Navy and submarine fleet as a relative strength compared to China's; and how its demographics subtract from the effectiveness of its Army, and any potential projection of power on land.
• China-U.S.: China's (now) two aircraft carriers, development of anti-carrier missiles, its own drone technology.
• China-India: mutual assured destruction as a stabilizing factor to the region?
• China as an originator of cyber attacks, espionage, and intellectual property theft; and Western corporations encountering failed joint ventures, and forced technology transfers (e.g. Huawei and ZTE)
• China's Taiwan strategy, which involves militarily deterring the U.S., and gradual economic integration with Taiwan. The CPC is patient.

California's Biggest Issues

California Pension Funds

One of the greatest challenges is that some of California’s pension funds are structurally underfunded and short millions of dollars per year, based upon their current set of assumptions (e.g., the number of workers and retirees, average retirement age, life span, rate of wage growth, and the investment returns offered to employees).  What this shortfall means is that California’s pension systems have promised retirees more than what they are currently able to pay. 

If the California pensions funding gap does not work mathematically, how can it be resolved?  Will the promise of employee pensions simply disappear?  After all, even if total contributions increase (from employers and employees), funds would still be severely underfunded.  One possible change, lowering assumptions from 7 ¼ to 6 ¼ percent, would conceivably bring contributions up over a 10 year horizon.  In the end, whatever the State takes to fund the teachers' pension funds, for example, will likely have to come out of the classroom—specifically, teachers’ take home pay. 

Demographics and State Politics

One of the broader underlying issues is the aging population.  The growing pool of retirees and shrinking work force at national and state levels means lessening revenues and increasing fiscal burdens for governments, which provide services to retirees.  This strain on the system means that immigration, particularly of young people, will likely play an important role in California’s future.  

If a public servant wishes to be elected in California today, she is confronted with the demographic reality that the real decision makers in the state are minorities from Latin America and Asia.  Minority groups are equipped to determine their future for themselves. 

As a result, the political power struggle between certain groups (e.g., Latinos and African Americans) occurs at the lowest levels, such as school systems, often determining who gets what.  Furthermore, California’s union membership has increased in part because Latino leaders see unions (not the mayor or governorship) as their bases of power, just as African Americans did twenty years ago. 

Education

Perhaps the single biggest issue in California, related to both the pension and political demography issues mentioned above, is the school problem.  If graduation rates do not improve, L.A. risks becoming a less attractive place to live and raise a family. 

Charter schools have been a great source of improvement.  For example, half of the schools in Washington D.C. are now public charter schools.  One charter school in California implements double math and English into its 9^th grade curriculum in order to bring students, who are often three years behind at that point, up to speed.  However, they alone are not enough.

Charter schools also have untold effects on communities.  Magnet and charter school bussing often means children don’t go to school with peers from their own neighborhood anymore.  This depresses real estate prices in those areas, whereas places with their own school systems have stronger pricing, forcing parents to decide whether to send their children to charter schools, or to stay and fight.

Though other occupations are more sheltered, teachers are often the closest to the ground.  In a sense, schools feel society and determine what society is, so fixing the schools means fixing society.  The family must be the unit that sees the value in education.  If not, then there is little the government can do about it.