Thursday, September 23, 2010

Geng Xiao on China's Next 20 Years

Executive Director of the East Asia Global Center and non-resident senior fellow at the Brookings Institution, Geng Xiao, was recently featured in a number of international media venues (CCTV, China Daily, “China: The Next Twenty Years of Reform and Development”, etc.) discussing his views on the economic challenges and likely policy responses for China in upcoming years.

According to Professor Xiao, in the broadest sense the macroeconomic challenge facing China today revolves around managing its exchange, interest and inflation rates to facilitate the stable and “harmonious” growth that has been so heavily emphasized by Chinese leadership, as Western economies shrink in size relative to emerging markets.

He points to prices in Chinese non-tradable goods— unskilled labor wages, property values, etc.— rising in comparison to tradable goods, whose price are dictated by the global market. Following this trend, he predicts that over the next few decades Chinese price levels will converge toward those of the US through structural inflation or structural revaluation of the yuan— or both.

Here Professor Xiao takes a stand: that structural inflation is the better of the two avenues, and that China must in fact permit a reasonable degree of structural inflation.

As a positive claim, this approach prioritizes employment, productivity gains, wage growth and price liberalization, while preserving the benefits of a stable exchange rate in curbing speculative capital inflows and the short-term shocks that they often carry.

In a more negative sense, Professor Xiao calls on the troubled experience of Japan in prematurely appreciating its currency during the Plaza Accord of 1985, and indicates that currency appreciation as a means of adjusting trade imbalances— a common stance among US policy-makers— is a misguided notion. The huge potential for cross-border investment and debt financing between the US and China, and the potentially larger size of cross-border capital flows as compared to trade flows between the two countries over time, encourage a stable exchange rate as being in both countries’ longer-term interests. Moreover, structural inflation will ultimately lead to a real revaluation of the RMB, which will then facilitate the shift to a flexible exchange regime along the way.

Of course, tolerating structural inflation will necessitate policymaking that will mitigate distortions and shocks that will occur during the adjustment process. Chinese policymakers must deal with property and stock-market bubbles currently being formed. As Professor Xiao makes clear, this will require raising Chinese interest rates (which currently lie at dangerously low, and even negative rates in real terms), and improving capital-control mechanisms as greater capital inflows ensue.

Read more on this discussion at:

Thursday, September 9, 2010

Review of “The Great Brain Race: How Global Universities are Reshaping the World” (Princeton University Press, 2010)

In The Great Brain Race, Ben Wildavsky, senior fellow at the Kauffman Foundation, guest scholar at the Brookings Institution, and former US News & World Report education editor, delivers a comprehensive overview of the globalization of academia.

Beginning with an introduction of the phenomenon and an outline of his basic project, Wildavsky dives into an examination of international student movement, the expansion of universities into a transnational context, and the development of competitive, world-class universities around the world. Key factors at work in this examination are the sheer number of students studying abroad, the dynamic globalization models of universities such as NYU and regions such as Qatar’s Education City, and the impressive rise of top-notch universities in non-traditional locales ranging from China, to India, South Korea, Singapore, and Saudi Arabia.

Wildavsky then turns to the global spread of university ranking systems, from the well-known US News & World Report, to up-and-comers like the Academic Ranking of World Universities, a research-focused publication by Shanghai Jiaotong University, and the arguably UK-centric Times Higher Education. Following the exploration of these metrics, he then assesses the rise of for-profit and online education facilities, which carry the benefits of providing readily accessible, career-oriented learning options, but suffer from questions regarding the quality of their educational services and their positive or negative impacts on the education systems around them.

While The Great Brain Race does an excellent job of examining the various angles at work in academic globalization, and while it provides many interesting facts regarding this ongoing movement, readers may find the book to be lacking as far as a core argument or motivational purpose. The introduction and final chapter of the book take a stab at establishing this sort of motivating theme, where Wildavsky discusses his worries about the obstacles facing academic globalization, and his support of its many benefits, which he stylizes as being part of a positive-sum “free trade in minds”. Despite this attempt, and in large part due to the dynamic nature and incredible breadth of his project, the book falls somewhat short of introducing a unique premise, and may instead be highlighted for its strengths as a broad-based survey and referential resource to better understand the globalization of the academic field.

Wednesday, September 1, 2010

Opportunities with the Global Centers in New York

Are you interested in getting more involved with international events and activities on campus? The Global Centers is hiring two workstudy-eligible students for administrative and communications support positions.  We are also looking for new bloggers to help develop the content on the blog. For all of the new students coming to campus, this is a great opportunity to learn about international studies opportunities, meet new people, and make Columbia a better place.

Contact Monique Smith at