Over the past three decades, the Chinese economy has experienced a transformation that is unprecedented in scale and speed. Since 1990, per capita income has increased by more than 900 percent, creating a robust and growing middle class. Poverty has plummeted, and innovation has soared—China now ranks second only to the United States in international patent applications.This remarkable growth has not come without serious challenges, however. From financial market and banking reform to environmental regulation, Chinese policymakers today are confronting a wide range of issues that will be critical to address in order to sustain further progress.
To bring the rigor of Chicago Economics to the forefront of addressing these challenges, the Becker Friedman Institute (BFI) is pleased to announce the launch of BFI-China. This groundbreaking partnership between UChicago economists and Chinese researchers and institutions will produce new insights on the most critical policy challenges facing China today, and will share those findings with the world.
BFI China will initially focus its efforts in three areas: (1) developing a deeper understanding the Chinese model of economic growth; (2) financial market and banking reform; and (3) environmental regulation. Across each of these areas and more broadly, BFI-China will work to support the research of economics faculty with an interest in working on issues related to China.
University of Chicago President Robert Zimmer and Tsinghua University President Qiu Yong sign an agreement forming the Joint Research Center for Economics and Finance on November 28, 2018.
Established in 1911, Tsinghua University is one of China's most prestigious and influential universities, with a tradition of academic excellence and strong international partnerships. On November 28, 2018, in conjunction with the opening of the Hong Kong Jockey Club University of Chicago Academic Complex and University of Chicago Francis and Rose Yuen Campus in Hong Kong, BFI was proud to announce a partnership with Tsinghua University’s School for Economics & Management to form the Joint Research Center for Economics and Finance.
The Research Center is a first-of-its-kind partnership that will support frontier economics research, faculty and doctoral student exchanges, and regular workshops and forums to share results and discuss areas of mutual interest. Calls for research proposals for UChicago and Tsinghua University economists will be sent in the first half of 2019.
To support research that produces timely, relevant insights, BFI-China is organized around three targeted research initiatives. Each initiative will draw from unparalleled skills, knowledge, and expertise of UChicago faculty working in collaboration with Chinese institutional partners.
The Research Initiative on the Chinese Model of Economic Growth
The Research Initiative on the Chinese Model of Economic Growth will conduct ground-breaking research to provide a better understanding of the factors driving China’s extraordinary economic expansion. A second objective of this Initiative will be access for Chinese and US researchers to reliable data about the impacts of its institutional structures on economic growth.
To facilitate this work, the BFI, the Chinese University of Hong Kong, and Tsinghua University have formed a collaborative research project to explore the role of various institutions in China’s economic growth model. This collaboration will leverage a unique combination of Chinese administrative and commercial data to produce rigorous, world-class research.
Faculty Director: Chang-Tai Hsieh, The Phyllis and Irwin Winkelried Professor of Economics, Booth School of Business, University of Chicago
“This partnership will include collaborations with both the Chinese government and the private sector to develop a systematic approach for analyzing real-time data from multiple sources. The goal is to improve the measurement of China’s current economic status, which will hopefully make the Chinese economy more transparent.” — Chang-Tai Hsieh
The Macro Financial Research Initiative (MFRI-China)
MFRI-China will explore financial market evolution, banking reform, debt, and reform of state-owned enterprises. Researchers will investigate the many questions facing China’s increasingly dynamic financial markets—from privacy issues to credit worthiness and systemic risk—including the emerging challenges facing China’s regulators.
As regulators are growing their new teeth in China, it becomes of particular value to have researchers explore systematically the costs and benefits of the proposed restrictions and to study the potential impacts of financial regulation on the future growth of the Chinese economy.
Lars Peter Hansen, David Rockefeller Distinguished Service Professor in Economics, University of Chicago
Zhiguo He, Professor of Finance, Booth School of Business; Director of the Fama-Miller Center, University of Chicago
“China has demonstrated an amazing ability to innovate within its financial sector, especially in terms of financial technology. However, such innovation is not the norm among its state-owned financial institutions. While the rise of a shadow banking system can help fill the gaps left by a slow-to-respond state infrastructure, it can also give rise to risks for which China’s regulators are unprepared to face.”
— Lars Peter Hansen
Energy Policy Institute at the University of Chicago, China (EPIC-China)
Once home to the world’s most severe air pollution, China has made important progress over the past five years, though at a high cost. In partnership with leading Chinese research institutions, EPIC-China will explore opportunities to achieve further, cost-effective pollution reductions that benefit Chinese citizens while fostering economic growth.
Michael Greenstone, Milton Friedman Professor in Economics, the College, and the Harris School; Director, Becker Friedman Institute and Energy Policy Institute at the University of Chicago
“EPIC-China would take the established research and existing partnerships of UChicago faculty to the next level, building a wideranging network of government partners and working to translate a deeper understanding of the structure and impacts of China’s energy system into actionable solutions for policymakers, resulting in a long-lasting, positive impact in China.” — Michael Greenstone
Additionally, in January 2019, EPIC formed a new research collaboration with the University of Chinese Academy of Sciences. The five-year collaboration aims to generate fresh insights into pressing energy and environmental challenges, offering Chinese policymakers new tools to tackle important priorities such as cost-effective reductions in air pollution.
In November 2018, BFI hosted the University of Chicago’s annual US-China Forum, focusing on China and the Global Economy. Video and audio of the dynamic panels, as well as interviews with participants, can be found here.