Course Code


Course Name

Chinese Business and Economy


Monday 18.30 pm – 21.15 pm


YIA 402


Dr. Chan Pak Cheung, Patrick

Teaching Assistant

Wu Ka Wai

Course Description

The aim of this course is to offer a broad coverage of key issues in economy and business in contemporary China. It would be particularly appropriate for students who have not studied economic issues in any depth before.

The 1978 reform of China has produced a fastest growing economy in the world with an astonishing GDP growth rate annually. Since 2004, China has become the second largest economy of the world after USA. In addition, it carries the world’s largest foreign currency reserves.

Students will acquire a comprehensive understanding of Chinese business and economy in the light of its recent successes and the challenges that China may face in sustaining rapid economic growth. Understanding Chinese business and economic development requires a basic appreciation of her past. This course draws on research in history, foreign trades, and political, economic, socio-cultural, technological (PEST) perspectives.

Students will apply fundamental economic principles to illustrate a series of plausible of causes and effects brought about the advances of ‘China Inc.’ in relation to her impacts to the world economy and globalization. Finally, an emphasis is placed on encouraging students to adopt a common-sense approach in examining contentious issues about China’s ideology and technological development.

Course Outline

Week 1: Introduction to the Chinese business and economy (4 Sept.)
Explains course requirements and the themes, and introduces ideas about development of the Chinese economy, “Reform and Opening”, and China business environment.

– Naughton (2018). Chapter 1 & 2
– [optional] Yueh Linda Yi-Chuang (2019). “Unmaking China’s Development: The Function and Credibility of Institutions” by Peter Ho. Cambridge University Press, The China Journal 81, 193-195.

Week 2: Economic development of China in perspective (11 Sept.)
Looks at the impact that “Reform and Opening” brought to the Chinese business and economy. Introduces economic reform policies and legacies – under Mao, Deng, Zhu, Wen and Li.

– Naughton (2018). Chapter 3 & 4
– [optional] Lin Justin Yifu (2021). “State-owned enterprise reform in China: The new structural economics perspective”. Elsevier B.V., Structural change and economic dynamics 58, 106-111.

Week 3: China’s rise and fall (pre-1949): The Needham puzzle (18 Sept.)
Assesses the impact of technology and technology catch-up to China’s market transition from the command-economy system to a functioning market economy. Introduces different economists’ viewpoints about the Needham puzzle.

– Naughton (2018). Chapter 5 & 7
– [optional] Lin Justin Yifu, Wang Wei and Xu Venite Zhaoyang (2020). “Catch-up industrial policy and economic transitions in China”. Wiley Subscription Services, Inc., The World Economy 44(3), 602-632.

Week 4: Failure of Socialist revolution and the factor endowment structure (25 Sept.)
Examines the key drivers for economic growth and sustainability in pre-1979 and post 1979 Chinese economy. Introduces some ideas about political leaders and manpower issues in China.

– Naughton (2018). Chapter 8, 9 & 10
– [optional] Shalendra D. Sharma (2018). “A political economy of the United States, China, and India: Prosperity with Inequality”. Cambridge University Press, Perspectives on politics 18(1), 321-322.

Week 5: China and the world economy – International trade and foreign direct investment (9 Oct.)
Looks at the impact of endogenous and exogenous growth models to China’s market transition. Introduces the Foreign Direct Investment (FDI) development and World Trade Organization (WTO) driven reforms in China.

– Naughton (2018). Chapter 16 & 17
– [optional] Broz J. Lawrence, Zhang Zhiwen and Wang Gaoyang (2020). “Explaining foreign support for China’s global economic leadership”. Cambridge University Press, International Organization 74(3), 417-452.

Week 6: National strategy on economic growth – Comparative Advantages Defying (CAD) v Comparative Advantages Following (CAF) (16 Oct.)
Assesses the conditions and prerequisites of the implementation of CAD and CAF national economic strategies on Chinese economic growth. Introduces ideas about the Equilibrium Trap and the Soft Budget Constraints (SBC) in China.

– Naughton (2018). Chapter 11 & 12
– [optional] Yueh Linda Yi-Chuang (2020). “The China Paradox: the endogenous relationship between law and economic growth”. Routledge, Journal of Chinese Governance 2020-07-06, 1-26.
– [optional] Yueh Linda Yi-Chuang (2018). “What would the great economists do? How twelve brilliant minds would solve today’s biggest problems” (First US Edition). New York: Picador.

Week 7: Revision and Mid-term examination (30 Oct.)
Mid-Term Examination Week 7, 90 minutes

– Naughton (2018). Chapter 6 & 13

In Week 7, students should briefly share their research topics for final term paper with the lecturer.

Week 8: Looking to the future: China’s fundamental institutions and reform (6 Nov.)
Examines the impact of Chinese institutional topography: The Regional Decentralization Authoritarian (RDA) for future growth of the Chinese economy. Introduces some ideas about the distribution system and logistics sector in China.

– [optional] Xu Chenggang (2015). “China’s political-economic institutions and development”. Washington: Cato Institute, The Cato Journal 35(3), 525-548.
– [optional] Xu Chenggang (2011). “The Fundamental Institutions of China’s Reforms and Development”. Nashville: American Economic Association, Journal of economic literature 49(4), 1076-1151.

Week 9: “State Capitalism” and the reform of Chinese financial system (13 Nov.)
Assesses the impacts of restructuring the fiscal system to provide adequate revenues to build China into a middle-income economy. Introduces some ideas about banks, shadow banks, stock markets and bond markets in China.

– Naughton (2018). Chapter 20
– [optional] Lin Justin Yifu, Morgan Peter J. and Wan Guanghua (2018). “Slowdown in the People’s Republic of China: Structural factors and the implications for Asia”. Tokyo: Asian Development Bank Institute.
– [optional] Xu Chenggang (2017). “Capitalism and Socialism: A Review of Kornai’s “Dynamism, Rivalry, and the Surplus Economy”. Nashville: American Economic Association, Journal of Economic Literature 55(1), 191-208.

Week 10: Urban Economy: Ownership and corporate governance (CG) (20 Nov.)
Looks at the development and characteristics of Corporate Governance (CG) supporting the Chinese institutional transformation. Introduces different perspectives about the Corporate Social Responsibility (CSR) in China.

– Naughton (2018). Chapter 14
– [optional] Tricker Robert Ian and Li Gregg (2019). “Understanding Corporate Governance in China”. Hong Kong: Hong Kong University Press.
– [optional] Li Meng and Chan Kam Wing (2021). “The collective hukou in urban China”. Routledge, Eurasian Geography and Economics 2021-05-06, 1-12.

Week 11: Urban Economy: Technology and industrial policy (27 Nov.)
Examines the effectiveness of “techno-industrial” policies including a direct government role in the pursuit of technological advance. Introduces some ideas about the development of the Greater Bay Area (GBA) in China.

– Naughton (2018). Chapter 15
– [optional] Lin Justin Yifu and Wang Xiaobing (2021). “Dual Circulation: a New Structural Economics view of development”. Routledge, Journal of Chinese economic and business studies 2021-06-04, 1-20.

Week 12: Sustainability and knowledge-based economy (4 Dec.)
Assesses the impact of massive industrialization after 1978 and the challenges ahead including over-capacity and corporate governance (CG) that China may face in sustaining the growth of business and economy. Introduces ideas about “1 belt 1 road” and “The China Dream”.

– Naughton (2018). Chapter 9 & 21
– [optional] Wei Shang-Jin, Xie Zhuan and Zhang Xiaobo (2017). “From “Made in China” to “Innovated in China”: Necessity, Prospect, and Challenges”. Nashville: American Economic Association, The Journal of Economic Perspectives 31(1), 49-70.

Assessment & Assignments

1. Students will be required to research in group a selected industry in China (20%). The Group needs to write a report of about 2500 words to analyze one of the industries listed below in the appropriate business framework to be submitted by Monday 16 October. Each group will conduct research on one out of five selected industries in China according to their own choice:
• Movie industry
• Elderly care industry
• Lady shoes industry
• Tourism industry
• Cosmetic industry

2. Mid-term examination (30%). A series of short questions will be set for completion in class on Monday 30 October. Students are required to provide succinct answers to each sub-question
with clear logic, structure, and academic relevance.

3. Final term paper (40%). Students will be required to submit a term paper on a selection on contemporary issues relating to the development of Chinese economy by Monday 11 December. A selection of topics will be available for students to choose. The term paper should be of about 3000 words. Students are expected to show flair of academic research and ability to critique.

4. Class participation and attendance (10%). Credit will be given for good questions and comments, and evidence that students have read the course readings.

All written assignments should include a word count and be submitted by email in PDF format by 6pm on the date for submission. Late submission will be penalized. For Veriguide, assignment numbers should follow the order in the list above (e.g., final term paper is assignment number 3). A hard copy of the signed Veriguide receipt should be given to the Teaching Assistant.

Further guidance on all assignments will be given in class at the beginning of term. For the final term paper, students should review academic (secondary) literature relating to some aspect of contemporary China’s business and economy. Students are encouraged to select from the course bibliography for their review and should consult some material not on that list. The final term paper should be of about 3,000 words, including footnotes and bibliography. It will be graded on content, structure and organization, language and overall presentation, and references and citations.

Honesty in Academic Work

Attention is drawn to University policy and regulations on honesty in academic work, and to the disciplinary guidelines and procedures applicable to breaches of such policy and regulations. Details may be found at each assignment, students will be required to submit a signed declaration that they are aware of the policies, regulations and procedures.