2 weeks in Beijing, China for the London School of Economics & Peking University summer school. A description of the class, some insights, my thoughts and more...

1. LSE-PKU Summer
School - 2015
QUINN CAMPBELL, 08/2015

2. A great group of people

3. Class dinners…

4. Contents
 The Program
 The Course
 Meeting Times
 Assessment
The Material
Major Takeaways
 Insights & Observations
 Summary

5. Program
 2 week intensive course at the prestigious Peking University
 Jointly accredited by LSE and PKU
 15 courses offered
 Each approaches important issues facing China
 Taught in English by LSE or PKU faculty
 All are renowned specialists in their respective fields.
 Diversity of attendees
 Over 40 different countries represented
 Both students and professionals
 Cultural Experience
 Program includes cultural events and immersion.

6. The Course
THE GLOBAL ECONOMY:
Rethinking World Leadership and The Great Shift East
Professor Danny Quah
What does this
shift mean for the
future???
Source: D. Quah (2011). The World’s Shifting Economic Center of Gravity.

7. The Professor - Danny Quah
 LSE
 Professor of Economics and International Development
 Kuwait Professor
 Senior Fellow at LSE IDEAS
 Chair of the LSE-PKU Summer School Board
 National University of Singapore
 Tan Chin Tuan Visiting Professor in the Economics Department
 Malaysia’s National Economic Advisory Council
 Served from 2009 to 2011
 Studied at Princeton, Minnesota and Harvard
 Assistant Professor in the Economics Department at MIT prior to LSE
 Gave the 3rd LSE-NUS Lecture in 2013, a TEDxLSE lecture in 2012, and the inaugural LSE Big
Questions Lecture in 2011.
 Current research focuses on the shifting global economy and the rise of the east.

8. Meeting Times
 Daily
 Lectures
 Mornings from 8:30 to 12:30
 Taught by Professor Quah
 Do not miss
 Entertaining
 Seminars
 Afternoons from 1:30 to 3:00
 Led by very capable LSE PhD candidates
 Review and supplement lectures
 Attendance taken

9. Assessment
 Midterm Essay
 50% overall grade
 1000 word max
 Due Monday morning of the second week of classes
 Final Exam
 50% overall grade
 4 essay prompts. Instructed to respond to two.
 2 hours. Afternoon of the final Friday.

10. Certificates, Transcripts, and
Statements of Attendance
 Certificates, jointly issues by LSE & PKU, are awarded to students with
passing grades
 Transcripts are sent out a few months after the program
 Statement of Attendance
 Issued to students who attend at least 80% of seminars but do not wish
to submit the essay or sit for the exam

11. Target Audience and Ideas..
 Global Power Shift
 “Through Economics, and politics and international relations, and
history…”
 Mid-careerists or students with interests in applied economics.
 Ideas from Macroeconomics. Economic Growth. Open Economy
Macro. International Finance.
Source: D. Quah (2015) EC206 Course Presentation Slides. LSE-PKU Summer School 2015.

12. Major Themes
 Is China’s economic rise sustainable into the future?
 What economic and political challenges does China’s rise pose to
the established international system?
 Has the “American Century” come to an end, and is the U.S. no
longer the provider of world leadership?
 How do we design a “rational world order” that “does good for the
world” without any one country needing to act altruistically?

13. Reading List
 Syllabus & Reading List
 Extensive!
 Not required
 But supplemented the lectures very well
 Includes articles, essays, studies and even TED Talks
 Material from multiple disciplines:
 Economics
 International Relations
 History
 More…

14. The Lessons
1. Lesson 1: Overview – Growth and Evolution
2. Lesson 2: Overview – Governance and Leadership
3. Lesson 3: The Middle-Income Trap
4. Lesson 4: The Rise of Asia and China
5. Lesson 5: Global Imbalance and Trade
6. Lesson 6: International Financial Architecture
7. Lesson 7: International Spillovers and Coordination
8. Lesson 8: Global Hegemony and Leadership

15. Insights – China’s Growth Continues
 Continued Chinese growth faces a number of obstacles, such as
the Lewis-Turning Point, the Middle-Income Trap, high investment
rates & low domestic consumption, and more..
 BUT China’s economy will avoid any major slowdowns and will
continue to rise. China has astonished before:
 Pulled 600mn people out of poverty since 1980
 9.8% average annual GDP growth since 1980

16. Insights – Threats to China’s Growth
 The Middle-Income Trap but
 China has many similarities with other escapees (Japan & Asian Tigers)
 Over-Investment
 Chinese per-capita investment 1%, vs 10% in Japan & 5% in U.S.
 Dysfunctional Polity – corruption and extractive elites
 Xi is hard-set on removing the corruption that threatens the party’s
credibility

17. Insights – What’s next?
 China’s continued economic rise will give it much stronger political
power – potentially putting it on par with the U.S.
 By 2050 the world’s economic center of gravity will sit between India
and China – this area will also be the world’s most populous area…
 What will happen if world political power still resides in Washington D.C.?
 The age of U.S. unipolarity may well have come to pass.
 Are the US and China doomed to conflict?
 Offensive Realist IR theorists believe the answer is: yes.
 I do not. The US and China have the potential for a peaceful future:
 Americans must increase our understanding of China through study abroad.
 There are opportunities to work together in international institutions instead of
working against each other.

18. Insights – China’s Potential to Lead
 If China is to assume a world leadership position alongside the US, it
must make a few changes:
 Work on its Soft Power
 The Central Government cannot continue to be arrogant towards other
countries or towards the Chinese people.
 China must show greater respect for human rights.
 China must provide more public goods – the AIIB is a good start.
 China must accept what comes with this role
 It wants the good, like the yuan gaining admission to the IMF’s basket of
special drawing rights currencies
 Both won’t accept the bad, like helping in the Middle East.

19. Insights – Trade Imbalance
 America’s trade imbalance is with the world. The imbalance is only
highest with China because China is most capable of meeting U.S.
demand.
 If it wasn’t China, it would be another country (or countries).
 “We don’t have a bilateral trade problem with China. We have a
multilateral trade problem with over one-hundred different trading
partners.” – Stephen Roach
 Furthermore, today’s global value chain misrepresents trade deficits
 E.g. – the entire wholesale cost of an iPhone is added to China’s
bilateral trade surplus vs. the U.S.
 Actually, China only earns 3.6% of the wholesale cost

20. Insights – International Financial
Architecture
 World Reserve Currency
 USD – will remain reserve currency into foreseeable future
 Triffin Dilemma – difficulty in trying to simultaneously achieve domestic
monetary policy goals and meet other countries’ demand for USD.
 Federal Open Market Committee (US monetary policy making body)
cannot, by law, take into consideration the needs of other countries.
 Rework International Financial Architecture
 “Supranational Currency” – such as the IMF’s Special Drawing Rights (XDR)
 Further insulate the global financial system from problems in any one country
 Would prevent one currency from bearing the Triffin Dilemma
 Multilateral policy body tasked with managing the world reserve
currency could provide cooperative and coordinated monetary policy-
making.

21. Insights – Global Policy Making
 Game Theory – Mechanism Design
 Can the “game” (global system) be designed in such a way that
when each country acts in its best interest the greatest common
good is produced?
 Yes.
 Establishing a supranational currency governed by a multi-lateral
institution.
 Greater cooperation within existing international institutions.
 Governance reform of current institutions to provide greater
democracy.

22. Insights – Global Hegemon
 Hegemonic Stability Theory (HST) – belief that the world is more
stable when a single nation-state is the dominant world power.
 Does the world have a global hegemon today?
 No, unfortunately I’m afraid the “American Century” has ended.
 Weak recovery from global financial crises due to U.S. diminished influence.
 Failing to provide stability in the Middle East. Unwilling to stop Russia in Crimea
 Abstaining from helping Greece.
 What’s next? Hopefully a more balanced world.
 One that doesn’t need a global hegemon.

23. Outside of Class
On top of classes and the cultural events, LSE students were also
invited to attend these extra-curricular events:
 Keynote Speech from UK Secretary of State of Foreign Affairs: UK’s
perspective on global affairs
 LSE-PKU Round Table: “China’s Global Engagement: Domestic
Reforms and International Challenges”
 LSE China Conference 2015: “Telling the China Story: Media and
Communications in a Turbulent Age”

24. LSE-PKU Round Table
 Professors Michael Cox (LSE - IR), Danny Quah (LSE - Economics),
Qingmin Zhang (PKU - IR) and Jian Zhang (PKU – Domestic Policy) gave
frank assessments of China.
 Fielded questions afterwards
 Professor Jian Zhang gave a refreshing critique of President Xi’s weak
economic policy making.
 Event fell on the second day of Beijing’s surprise yuan devaluation
 Professor Quah was amongst the first to stand by the move, describing it as
allowing a greater role for market forces.
 Provided contrast to American media calling it a “currency way”

25. IT WAS FUN.

26. Recap Video
Watch the video here!

27. I gained…
Understanding of China
Economic Analytical Skill
Set
Trust in China

28. Conclusion
 Great Program
 LSE-PKU summer school is extremely well organized and provides highly
relevant courses to today’s world.
 Great course
 I recommend it for anyone interested in the economics or international
relations involved in China’s future.
 Great group of people
 Classmates came from all walks of life, from all over the world. All very
intelligent and enjoyable people.