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Kina: Towards a viable social welfare system and a sustainable economic development of China. Summary


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KINA: Towards a viable social welfare system and a sustainable economic development of China.

Summary:

Cooperation is planned with School of Social Development and Public Policy at Fudan University, Shanghai, China.

1. The Frisch Centre aims at conducting research at a high level. One of the mechanisms to achieve that aim is to develop an international network of researchers. Over the last years we have had project based cooperation with researchers in Sweden, Denmark, Finland, England, the United States, Japan, the Netherlands, Italy and Australia. We also have researchers and Ph D students from China at the Frisch Centre. With the expected development in Chinese Universities, academic cooperation with Fudan University will be strategically important for the Frisch Centre.
2. We hereby apply for a startup grant from the BILAT program to finance two workshops in cooperation with School of Social Development and Public Policy at Fudan University, during year 2007. Based on the workshops, we plan to develop a research proposal which will be sent to the Research Council of Norway. Depending on the discussions, this will be either for general social science research or targeted to a specific program, such as welfare or labor market research.
3. In the proposal, as in many of the projects at the Frisch Centre, we will apply for funding of a doctoral student which will be enrolled in the Ph D program at the Faculty of Social Sciences (in Economics). The Frisch Centre has long experience with this. At the moment we have 7 doctoral students.

Introduction

China has seen a vast economic growth after the “open door” policy implemented in the earlier 1980’s and become a more and more important global player in the world economy. The impact of openness of Chinese economy has not only changed the situation in China, but also influenced the western economy with the scale of unprecedented importance. Today China has undoubtedly become the “World Factory”, with low labor cost, unlimited human resources and fast pacing development of technology. Experts estimate that within the next 20-50 years, China would be the world’s largest economy.


As a small open economy, to understand the impact of the Chinese vast development is of vital importance for Norway towards future sustainable growth. The import of low cost products mitigates inflationary pressures in the Norwegian domestic market. The huge demand of capital and high technology provides a welcome opportunity for Norwegian enterprises. Especially the ever growing Chinese demand for energy has made great impact on the global energy market. Norway as a major oil exporting country outside OPEC shall see more of Chinese influences on the global energy market.
The challenges that both China and the west face now are complex. The sustainability of Chinese economy has been an important factor both for the welfare of Chinese people, and for the growth of the global economy. After 30 years of fast paced development, China has now begun to experience challenges that western developed countries have faced: increasing labor cost, aging population, inequality of new founded wealth, needs for well balanced and egalitarian public health policies and social welfare systems. In particular, the Chinese are very interested in learning from Nordic experiences, as the Nordic countries, among these Norway, are regarded the leading examples of welfare states.
The strategic cooperation in economic research between Norwegian institutes and Chinese counterparts can be very important for both countries. This could be seen in several aspects: firstly, as china’s role in the world economy becomes more and more important, the sustainable and healthy development of Chinese economy is not only vital to china, but also important to other small open economies such as Norway. Therefore to understand the challenges of Chinese economy is the first step to understand the impact of China’s growth on global economy. Secondly, due to the unimaginable large scale and heterogeneousness of Chinese economy, provide variation along a number of dimensions, among them institutional arrangements. This creates a near-experimental settings which is scientifically very promising there are many issues that have not yet happened in Norway have already happened in China. Experiences from research within this setting dealing with such issues could provide lessons for Norwegian economy. Thirdly, since China is a rapidly changing economy, it has provided opportunities in shaping and reforming public policies. This could invite the possibilities of social experiments of large scale, which generally might not be possible in Norway. Through such social experiments, economists and policy makers may gain valuable experiences, and acquire scientific knowledge of general interest.
Proposed projects cooperation with the School of Social Development and Public Policy, Fudan University, Shanghai, China.

1. Unemployment and social welfare

As moving from planned economy to market economy, China has experienced major reform of its industrial sector. Structural reforms, deregulation, and privatization of state-owned enterprises involve large scale reallocations of the labor force, which inevitably introduce massive layoff. Unemployment has become a new phenomenon for the previously state-owed factory workers. Although the government has made substantial efforts in reallocation and requalifying of the laid-off workers, unemployment has created major challenge for the social security system. How to create a well-balanced unemployment insurance system, which not only ensures the welfare of the unemployed, but also provides incentives to rejoin the labor force, can be an interesting subject for joint project. The Frisch Centre has long experience in analyzing the impact of both of active labor market policies and unemployment insurance systems.


2. Aging population and Pension

The aging of the population in China has received increasing attention recently, particularly in the major cities. Although china China seemingly has unlimited vast human resources, the introduction of the one-child policy in the early 1980’s have long term effects for China’s sustainable development with the labor intensive industries. For the aging population, a dominant source of income is pension. But for the time being the Chinese pension scheme consists mainly of pension from the social insurance system, and occupational pensions are is rare. We have not yet seen many studies on the retirement decisions or the relationship between pension entitlements and savings behavior.



3. Public health policies

Recent debates on whether the government should provide a general health care system or let the market provide such health care services have been overwhelming in the Chinese media. To date, the reform of public health care system has not yet been successful. This certainly invites new ideas and thoughts. Experiences from other countries could hopefully shed lights on the subjects. We have great interests in investigating the situation to provide suggestions in design and evaluation of alternative health care systems.




The potential cooperation partners
The Ragnar Frisch Centre is a leading research institute in Norway, with competence within social welfare, labor markets, health economics, energy policies and environmental and social efficiency research. The Frisch Centre has good contacts with the School of Social Development and Public Policy, Fudan University. It has been our joint ambition to develop a formal partnership and cooperation within academic fields of common interest.
The School of Social Development and Public Policy at the Fudan University is a leading institute in analyzing and developing studies on social welfare and public policy in China. It has broad contacts and cooperation with researchers from academic institutions, officials from governmental bodies, employees from public relation division of enterprises, mass media groups, professionaland professional staff from NGOs etc. The research interests of faculties at the School of Social Development and Public Policy are: Public policy and public administration theory; Social policy and social fluctuations; Economics of the government; Labor economics; Demography; Social security and pensions.
We find the Frisch Centre and the School of Social Development and Public Policy have overlapping research interests and complementary qualifications in the field of economic research..

The proposed activities for BILAT startup-project
We have the intention to establish a strategic cooperative partnership with the School of Social Development and Public Policy at Fudan University. The startup-project will take place in year 2007. The first stage of our cooperation is a one or two days workshop at Fudan University, Shanghai, China, where both parties will present to each other current research activities and research results. The intended audiences for this workshop could also involve other faculties at the Fudan University, and possibly government officials or other NGO professionals. The two institutes will also discuss possible projects for cooperation. This workshop will most likely take place in April/May 2007.
The second stage of startup-project will involve a visit of faculty from the School of Social Development and Public Policy to Frisch Centre in autumn 2007. A range of seminars will be arranged for exchange of ideas and project proposals.
Given a fruitful outcome of the startup-project, a subsequent project proposal will be developed, with grant applications from the Norwegian Research Council as well as other sources such as Chinese government. The intended subjects of project proposals will stem from the joint interest within the framework of project topics in section 2. The actual projects will involve at first stage exchange of faculties from both institutes, and establish one doctoral student position at Frisch Centre and possibly one or two post doc positions at each institute.
Participants of BILAT startup-project
The Frisch Centre:

Erik Hernæs (Research Director)

Knut Røed (Senior Research, Dr.Polit)

Tao Zhang (Researcher, Dr. Polit)

Steinar Strøm (Professor, Department of Economics, University of Oslo)
School of Social Development and Public Policy

Peng, Xizhe (Dean, Professor, Ph.D)



Chen, Yuan (Associate Professor, Ph. D)
The startup project will be led by Tao Zhang (Dr. Polit). Tao Zhang is a Chinese national who studied at the Fudan University before he came to Norway and joined the Department of Economics, University of Oslo in 1993. Zhang has acquired his Dr. Polit degree in economics in 2004 and became a tenured researcher at the Frisch Centre from 2005.

Budget
300,000 NOK, where we apply for 150,000 NOK from BILAT grant. The other half of the total budget will be covered by internal sources and grants from Chinese side. The total cost will cover expenses for travel, workshop and project proposal.


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