As the Asian financial crisis continues unabated in its second year, I , as a Chinese university student majoring in economics, feel duty-bound to pursue advanced studies. Only by so doing can I hope to make a significant contribution to the discourse on China’s economic development strategy as the country endeavors to dodge the economic debacle that has befallen its neighbors. I must help decipher the puzzle of how the dodge the economic debacle that has befallen its neighbors. I must help decipher the puzzle of how the Asian economic miracle has busted. It is my strong belief that my country can draw vitally important lessons from the failures of other Asian economies.
A senior of international economics at Fudan University, a most prestigious institution of higher learning based in the country’s business capital Shanghai, I understand that, in today’s world, the power of a nation lies in its economic strength. This is particularly so for China, which has to support almost a quarter of the humankind with only a fraction of the world’s resources and wealth. While the development of economy is essential to every country, no other country in the world has to shoulder the kind of responsibility that China does. With an economy the size of Canada’s, China has a population that increases by a Canadian population every two years, ever while it is enforcing a strict family planning rules. That means that, to just maintain the existing living standards of its citizens, China has come up with enough jobs every two years for what amounts to the employment of every Canadian, young or old, healthy or sick. This is a daunting task that no country has ever faced. The fulfillment of this task, no doubt, calls for ingenuity.
I am glad to see that China is following a path that it has chosen, first and foremost, in response to the realities within its own borders, even though it has not shunned from integrating its economy with that of the developed world. With almost 20years of vigorous economic reforms, the Chinese seem to have struck the right balance between answering the call of acceleration globalization and defending its national interests. This balance has paid off in many ways. The country’s average growth rate of nearly 10 per cent for almost 20 years makes its economy the fastest growing among all major economies. The economic strength it has thus accumulated is helping it to stave off the financial meltdown that has ravage the tiger economies. I want to know what China has done right that the other countries have done wrong and how China can build upon its impressive record so far for sustained growth in the future. Sophisticated answers to these questions require sophisticated training, which I hope I can achieve in your distinguished program.
My undergraduate studies, though far from enough for my long-term purpose, have adequately prepared me for advanced research. I am now solidly grounded in mathematics, statistics and basic theories of economics, all fundamental subjects in learning economics. I have been particularly interested in Game Theory and Money & Banking. To broaden vision, I have audited, by special arrangement for the gifted students, graduate courses like Futures & Securities Investment and International Marketing, taught by overseas professors. Through these courses, I have learned the concepts and theories of Western economics. All this has added to my intellectual depth.
With the vigorous training at Fudan, I have arrived at some basic understanding of the Asian economy, on which I would like to focus my graduate studies. I believe that, in spite of the breakneck growth in the 1997s and 80s of the tiger economies that gave rise to the “East Asian Miracle”, the East Asian countries failed to build up sound economic structures. Their economic growths were powered more by the injection of tremendous investments than anything else, which led to what has come to be called the bubble economies. In their rush to achieve grandiose growths targets, they set up only rudimentary systems of control over their financial industries. As a result, too many loans were allowed to be secured on overpriced real estate and stocks. Such a situation would result in grave consequences if either the real estate or stock market collapsed. When both of these markets crashed last year in one after another Southeast Asian country, their banks’ bad loans multiplied, setting off domino effects across whole economies throughout the region. The devastation was such that, more than a year after the crisis began, few people in Asia can see any light at the end of the tunnel today.
The big question in the Asian crisis is now on China. In the face of the Asian crisis, China has demonstrated remarkable strength and courage. Unlike in most other East Asian countries, the economy in China is still growing, and the Chinese currency is still stable. The difference is spelt, I believe, by the measures that China has taken in preventing the occurrence of a bubble economy. The Chinese government has not rushed to bless run-away speculation on the stock market, as some other Asian governments seemed to have done. Foreign investments, of which China has received more than any other country except the US, have been carefully channeled into infrastructure projects and industrial production. This, along with the inconvertibility of the Chinese currency on the capital accounts, has prevented the kind of capital flight that has undermined the financial systems in other Asian countries. Amazingly, China has become a powerful stabilizing force in Asian economies, although the country has been faulted by some in the West for not having embraced the free market concept as readily as other developing countries did. I think the stark contrast between the success of a somewhat more controlled economy and the failures of the free market economies begs for many questions.
The story on China is of course not over yet, nor will it be anytime soon. With the deepening Asian financial crisis mounting more and more pressure on China, the Chinese government and businesses are desperately trying to maintain economic growths while continuing the country’s structural reforms. We do not yet know whether China will in the end be able to tough out the current crisis that keeps knocking on its doors. Even if China can survive this round of crisis unscathed, it will have to continue integrating its economy further with that of other countries, thereby exposing itself more and more to the capricious forces of the international financial markets. In the process, Chinese economists will have to meet the challenge of answering difficult questions, questions that may not have been asked anywhere else. I would like to be one of those meeting this challenge.
In applying for acceptance into your program, I hope that, more than learning the staid concepts and theories of economics, I can sharpen my insights when treading on unmapped territories. I am attracted to your wide range of course offerings and the varied backgrounds of your faculty members. I am confident that, under your seasoned guidance, I will give full play to my intellectual potential in academic research. It should come as no surprise t you if I become one of the foremost authorities on the Chinese economy a few years after I graduate from your school.