OVERVIEW

The course tells a coherent economic history of China and its policies, from the introduction of market reforms at the end of the 1970s to the support of frontier innovation nowadays, used as a lens to understand how economies work and grow. Students build an analytical toolkit — causal inference, productivity, trade, innovation — to explain the main engines of China’s growth: reallocation of labour and capital, firm productivity, trade integration and innovation.

AIMS AND CONTENT

LEARNING OUTCOMES

The course aims to give students a coherent economic history of China — from the planned economy to today’s market reforms — and the analytical tools to understand the main engines of its economic growth: causal inference, sectoral and firm-level reallocation, trade integration and innovation.

AIMS AND LEARNING OUTCOMES

• Describe China’s economic history leading to 1978 reforms, including the logic of the planned economy and the institutional lessons of the Great Leap Forward famine.
• Apply the core concepts and methods of causal inference (difference-in-differences, instrumental variables/shift-share, regression discontinuity) to critically read empirical studies on China’s economy.
• Analyse intersectoral reallocation induced by the market reforms — the hukou system as a labour-mobility wedge, and its relaxation over time — using a two-sector allocation model.
• Analyse within-sector (firm-level) reallocation and its contribution to aggregate productivity growth, including the case of state-owned enterprise reform.
• Evaluate the roles of trade integration and innovation (endogenous, Schumpeterian growth) as further engines of Chinese productivity growth, including the WTO-entry shock and the resulting trade tensions.
• Synthesise the four growth mechanisms studied — cross-sector reallocation, within-sector reallocation, trade and innovation — into a coherent account of China’s growth trajectory.

PREREQUISITES

A familiarity with core microeconomic concepts (supply, demand, productivity) and statistics is useful but not required — all the analytical tools used in the course are introduced from scratch during the lectu

TEACHING METHODS

Lectures with in-class discussion. An anonymous poll at the opening and at the closing of the course. Periodic, ungraded applied exercises to practise economic reasoning between lectures. Interactive models used in class (e.g. a simulation of the two-sector labour allocation model with a hukou wedge). Course material (syllabus and slides) made public online.

SYLLABUS/CONTENT

• Foundations (1800-1978): pre-reform economic history, the planned economy, the hukou system, the Great Leap Forward and the famine (3h)
• Causality: why it matters, regression and inference, omitted variable bias; methods (difference-in-differences, instrumental variables/shift-share, regression discontinuity), with examples from the China literature used in the course (6h)
• Intersectoral reallocation: from GDP to sectoral productivity, a two-sector model with a hukou mobility wedge, rural-urban internal migration and its end, the Lewis turning point (6h)
• Within-sector reallocation: firm-level productivity, state-owned enterprises and their reform (Hsieh-Klenow) (3h)
• Trade and endogenous growth: the shock of China’s WTO entry, tariffs and trade wars (6h)
• Innovation: the technological frontier, catch-up, Schumpeterian innovation (9h)
• Conclusions and synthesis (3h)

RECOMMENDED READING/BIBLIOGRAPHY

• Main reference text: Barry Naughton, The Chinese Economy: Transitions and Growth, MIT Press, 2007.
• Complemented by a large selectino of research articles on the course’s specific topics (among others: Meng, Qian & Yared 2015 on the famine; Lucas 2004, Tombe & Zhu 2019 and Khanna et al. 2025 on internal migration; Hsieh & Klenow 2009 on resource misallocation across firms; …). Specific reading guidance will be provided by the instructor during each lecture.

TEACHERS AND EXAM BOARD

Exam Board

FRANCESCO MANARESI (President)

ELENA SEGHEZZA (President Substitute)

LESSONS

LESSONS START

Classes will begin on Tuesday, October 20.

Class schedule

The timetable for this course is available here: Portale EasyAcademy

EXAMS

EXAM DESCRIPTION

Final written exam, with open-ended questions designed to verify students’ understanding of the economic mechanisms covered in the course and their ability to apply them critically to the China-related cases discussed in class. Periodic, optional, ungraded applied exercises are offered during the course as preparation tools; they do not replace studying the programme content.

ASSESSMENT METHODS

The written exam assesses the student’s ability to: correctly describe the economic facts and mechanisms studied; apply the theoretical models presented in class to China-related cases and data; critically evaluate arguments and empirical evidence discussed in class or in the assigned readings or directly related to them. Evaluation criteria: factual accuracy, appropriate use of economic terminology, critical reasoning, and the ability to connect the different thematic blocks of the course.

FURTHER INFORMATION

The full syllabus and lecture slides are made public on the course website: framana111.github.io/the-chinese-economy .