Yao Yang: Chinese economists have yet to set their own topics, prioritize problem solving, and actively engage with society
The senior economist identifies three issues with Chinese economics and calls for greater ambition among economists in the field.
The following is an excerpt from the translation of Chapter 8, entitled 中国经济学的过去、现在和未来 The Past, Present, and Future of Chinese Economics, of Yao Yang's 2023 Chinese-language book 经济学的意义 The Meaning of Economics.
In this particular section, titled "Chinese Economics Today", Prof. Yao identified three major issues with contemporary Chinese economic studies:
Lack of initiative in topic setting
Difficulty in reconciling specialization and problem-orientedness
Lack of engagement with society
Yao Yang is Liberal Arts Chair Professor; Dean, National School of Development; Executive Director, Institute of South-South Cooperation and Development; Director, China Center for Economic Research at Peking University.
The chapter was first translated and published by David Cowhig, a retired U.S. diplomat who kindly authorized my colleague, Zichen, to share his translation. Prof. Yao was also conculted, and he himself agreed to this publication with a few minor changes.
Cowihg worked 25 years as a U.S. State Department Foreign Service Officer including 10 years at the U.S., Embassy in Beijing and U.S. Consulate General in Chengdu and four years as a China Analyst in the Bureau of Intelligence and Research of the State Department. Before State, he translated Japanese and Chinese scientific and technical books and articles into English for freelance for six years. Before that, he taught English at Tunghai University in Taiwan for three years.
The Chapter is made up of five parts:
III. Chinese Economics Today
IV. Which of China’s Problems are Worth Studying by Economists Today?
V. Can a Chinese School of Economics be Formed?
The first two parts have been published by Pekingnology. To expedite content delivery and broaden its reach, The East is Read will publish the subsequent Part III and Part IV, before Pekingnology resumes its role and provides closure to the overall discussion.
Please enjoy Part III:
Chinese Economics Today
There has been a notable improvement in the quality of research produced by Chinese-born scholars in the international academic community. In the past, the only exception who was able to publish in the top five international journals seemed to be Justin Yifu Lin. Porf. Lin published a couple of articles in the American Economic Review and the Journal of Public Economics. But now, we often see Chinese scholars publishing in these journals.
However, in these published articles, there are very few topics set up by the Chinese themselves, or no one follows them after publication, and they do not form part of a series of research articles. This is very different from Europe and the United States, where articles by well-known scholars are always followed by others and eventually form a "trend." The quality of publications by Chinese-born scholars has indeed gone up, but most of the articles are still at the stage of imitation. There are many things that need to be improved in Chinese economics, but one of the most important issues is how Chinese economists can learn to set their own topics.
In 1995, on the 40th anniversary of the founding of Economic Research, Mr. Justin Yifu Lin proposed that Chinese economics or social sciences should be "localized, standardized, and internationalized." It has been almost 30 years now, and I think we have done better in standardization and internationalization, but not so well in localization.
What does localization mean? My understanding is that we have to set up our own topics. Without your own topics, you can’t have your own economics, you can only run after others – when others do something, I hurry to take Chinese data to copy it. This kind of research can also be published, and sometimes it can be published in the top five journals, because the China issue is of great concern to everyone. Then some people will have a speculative mentality, "I'll write whatever kind of articles that foreigners are willing to read." These articles will be published quickly and become well-received, but this is no way to build China’s own economics.
This is a great pity, because today's era is one of the fastest changing times in China.
There are a lot of issues that we should study today. "We can't sit on the gold mountain and dig for coal" is what Justin Lin has always reminded the Chinese economics profession. But the reality is that many of our scholars are sitting on the gold mountain and digging for coal. They have mastered the methodology of modern economics, and then, regardless of the gold under their feet, they start to dig for coal because coal is better to dig. In their opinion, it is enough to get published, regardless of whether the topic is meaningful or not. In my opinion, if this continues, Chinese economics will reach a dead end.
China is a big country with its own set of problems. We need to be ambitious. Americans say the United States is a "country on the mountain peak," but China is not a "low-lying country" either; it is a country with a continuous civilization of five thousand years. Now, we should have our own ambitions and aspirations, aiming to establish our own economics. The research methods of economics are not confined by nationality, but the problems certainly are. In fact, even in natural sciences, you will find national boundaries, not to mention economics. At least the issues you study must be related to China, problems that China cares about. Therefore, I repeatedly tell students (and young scholars) that in my view, whether academic research is good or bad is based on two criteria: first, whether it is useful for China, and second, whether it contributes to academic progress.
The notion of usefulness for China is determined by whether one's research is beneficial for solving China's problems or understanding China. Why this citerion? On one hand, China’s economic development needs rational advice from economists, and on the other hand, economic research needs to be pursued as a vocation. Treating economics as a vocation means not staying in the position of an observer but paying attention to the object of study, immersing oneself in it, empathizing, and finding ways to improve or understand it. Additionally, economists are not merely policy researchers; they should contribute to the academic progress of economics. Of course, achieving both a focus on reality and contributing to economics is challenging, but it’s still worth trying for economists.
In addition to the issue of topic selection, the second problem facing current Chinese economics is the relationship between specialization and problem awareness, which is closely related to the previous issue. Because academic divisions in the United States are very detailed, with strong specialization, the majority of American economists study very narrow issues. Of course, good journals in the United States do not encourage this kind of research; journals like the American Economic Review (AER) still encourage research that is problem-oriented.
In this regard, the situation is the same in any country. Good journals do not like to see scholars doing research that “uses a cannon to kill mosquitoes.” Although a cannon may seem majestic and precise, it ultimately kills a swarm of mosquitoes, which is a waste.
However, we must also acknowledge that there is some tension here. If you want to study a problem in a way that is precise and meets the requirements of economics, you must go deep and specialize, but in this process, you may lose some problem awareness. Therefore, as the chairman of the Chinese Economic Annual Conference, I want to give the stage to young scholars and let them discuss this matter.
In the 2021 conference held in Xi'an, there was a special discussion among young scholars on how to do research. I found it particularly interesting that the discussion involved local scholars, such as Chen Zhao from Fudan University and Xu Xianxiang from Lingnan College of Sun Yat-sen University, as well as returnee scholars such as Lu Yi from Tsinghua University, Lu Fangwen from Renmin University of China, and our own Lei Xiaoyan. The first two returnee scholars emphasized how to publish, following the requirements for publication, which emphasize specialization. On the other hand, locally trained scholars emphasized the importance of problems, believing that, in the end, we must return to researching problems. Lei Xiaoyan, in the middle, said these two aspects are not contradictory; we can achieve both. I think this path is correct—to put problem awareness first and then use specialized methods to analyze. This is achievable, and the tension can be reconciled.
The third issue is the relationship between academia, policy, and society. In other words, should scholars step out of the ivory tower, should they focus on policy and society? Many people are puzzled by American economists. For instance, Robert Lucas Jr. refused to take any government position. With his qualifications, he could have become the chairman of the Federal Reserve, but he refused, saying that he prefers to engage in pure academic research. So, Chinese scholars have the impression that American scholars are not very concerned about politics and policy; they are solely dedicated to academic research.
However, this is actually incorrect. Most top-level American scholars are attentive to policy issues. Professors at universities like Harvard, Princeton, and MIT are very policy-focused. They are "coastal scholars" because these universities are located near the sea. But even scholars from inland universities, the "freshwater scholars" (those from universities in the Great Lakes region), are often involved in policy discussions.
For example, James Heckman, who specializes in econometrics, could have stayed hidden in his study, but for over a decade, what issue has he been focusing on? Early childhood development. This is a significant issue in the United States. Why? It starts with race. The U.S. invested a lot of money in the black community, but in the end, it seemed to have little effect. For example, the U.S. spent a lot of money on adult vocational training in the black community, but it did not have a significant impact. In the end, researchers found that the key was to start with young children. So, Heckman started researching the psychological and cognitive development of children. This is a problem that China should also study.
Scott Rozelle of Stanford University is an expert in researching rural issues in China, and his research depth far surpasses that of many Chinese scholars. His findings are startling: many rural children drop out of junior high school because their intellectual development before the age of three is insufficient. This research has strong policy implications.
In the United States, impactful economic research often carries strong policy implications. I obtained my Ph.D. from the Department of Agricultural and Applied Economics at the University of Wisconsin, where professors' research was highly relevant to policy. About a decade ago, a Chinese American professor there conducted research on ethanol gasoline. Ethanol gasoline is derived from corn, and at that time, shortly after the financial crisis, oil prices were particularly high, prompting a global shift towards ethanol gasoline. However, with the introduction of ethanol gasoline, corn prices surged. The professor's research calculated how much energy ethanol gasoline could save for the United States and how much it could reduce gasoline prices. Farmer organizations, upon learning of this conclusion, were delighted and advertised the research results on public buses in Washington. As for the professors in the Department of Economics at the University of Wisconsin who engaged in macroeconomic research, their participation in policy discussions was even more extensive. They frequently traveled around the world for conferences whenever they had free time, making it challenging to schedule appointments with them.
I believe that scholars participating in policy research serve as a stimulus for their own research. If you do not engage in policy discussions, gradually, you will run out of research topics because you won’t know what constitutes a good research question. Economics remains a discipline intertwined with the world; it cannot afford to stay secluded in studies every day, similar to humanities scholars—though, in my opinion, even humanities scholars should not adopt such an approach.
Many Chinese humanities scholars, primarily confined to the ivory tower for their research, are oblivious to the logic of ordinary people. The outcomes of such an approach seem to be detached from reality. Engaging in policy research and participating in policy discussions can broaden our research perspectives. Furthermore, effective research in the policy arena gives weight to one's voice, naturally resulting in more substantial social impact. Interaction with society is similar in this regard, complementing academic research. On one hand, scholars introducing their research results to the public can transmit positive energy to society, enlightening the public, which is a responsibility of scholars. On the other hand, scholars, through interaction with society, can understand public sentiment and identify social issues. For instance, my participation in discussions on the allocation of junior high school admissions provided me with a deeper understanding of public sentiments and facilitated personal growth.
Presently, there is an unfortunate trend in academia where many young scholars retreat into their studies.