The post Editor’s Note appeared first on China Research Center.

Before 1950: A Century of Missionary Work

Historically, Christianity has made several forays into China, first with Persian Nestorian monks in the seventh century, followed by Catholic Franciscans in the 12^th century, and Jesuits in the 16^th century, but failed each time to establish a lasting presence as anti-foreign politics and culture played a big role in how Christianity was accepted and rooted in Chinese soil.^[1]

The arrival of missionary Robert Morrison (1782-1834) to China in 1807 marked the introduction of Protestantism and the fourth major entrance of Christianity to China. Coinciding with the most violent period of expansion into Asia by all the Western imperialist nations, the Protestant missionary movement remained in China for almost 150 years before the Communist takeover. Gunboats indirectly enabled the missionaries to penetrate all levels of Chinese society, but the message of their barking cannons deafened many Chinese to the serene sound of the Gospel.^[2]  Nevertheless, by 1920 rapid Christian expansion had resulted in not only Protestant churches with 500,000 partisans, but also a burgeoning sense of nationalism that manifested with the birth of indigenous churches.^[3] In 1922, the Church of Christ in China (CCC) organized its first National Christian Council (NCC) in Shanghai with the inaugural announcement of the Chinese Christian Movement under the “Three Self” Principles: self-support, self-governance, and self-propagation.^[4] Chinese Protestant leader Cheng Jingyi (C.Y. Cheng, 1881-1939) was elected as the General Secretary and strived to promote an independent, unified, and non-denominational base for Christianity in China.^[5]

The turbulent forces of history in first half of the 20^th century, which shaped all aspects of China’s politics, economy, and culture, once again changed the fate of Protestant missionaries and Chinese Christians. In October 1949 the Communists took power, and under the banner of patriotism the new regime started rooting out the influence of Christianity in China. As Wolfgang Franke commented, “The Christian missionaries had to pay a particularly heavy price for the mistakes of their predecessors, and reaped the hatred that had been sown in the past.” ^[6] All 130 foreign missionary institutions and organizations, including schools and universities, were shut down; the missionary funds were frozen, and all foreign missionaries were expelled. By 1951 not a single Protestant missionary remained in mainland China, marking the ending of 150 years of Protestant missionary work. Left behind were 700,000 Chinese Protestants facing an uncertain future.^[7]

1950-1966: From Liberation to the Cultural Revolution

In keeping with Marxist orthodoxy, the Chinese Communist Party (CCP) declared itself atheist. Maoism or Mao Zedong Thought (as it is known in China) was the dominant, state-enforced ideology. As such, the Communists condemned religion as “the opiate of the people.” Christianity in particular was seen as something brought to China under the protection of Western gunships, and foreign missionaries, as its propagators, were representatives of imperialist powers. The activities of missionaries in modern Chinese history were not so much a religious or social problem as they were an international political problem, that is, “cultural imperialism.”

However, when this “foreign religion” became an integral part of the culture and life of the people, it was impossible for the government to eradicate it. Therefore, a political compromise was made. As former Premier Zhou Enlai (1898-1976) stated, the CCP government allowed domestic churches to function after 1949 as long as they would not collaborate with Western imperialism and were loyal to the government.^[8] In 1954, the proclamation of the Chinese Constitution Article 88 declared that Christians as “citizens of the People’s Republic of China enjoy freedom of religious belief,” but they were placed under the jurisdiction of state and party bodies. ^[9]

No doubt, Protestant Christianity faced serious challenges when the churches desperately needed to remove the historical stigma of their religion by distancing it from its foreign heritage. As early as December 1949, Protestant church leaders had signed a long open letter entitled “Message from Chinese Christians to Mission Boards Aboard” that declared an end to the missionary era in China and the contestation of its legacy:

We Christians in China feel the urgent necessity of re-examining our work and our relationship with the older churches abroad in the light of this historical change…The Christian movement will have its due place in the future Chinese society and will have a genuine contribution to make. Its future road will not be a bed of roses…It will suffer a purge, and many of the withered branches will be amputated.^[10]

Six months later, “The Christian Manifesto” was issued by the CCC in response to pressure from Premier Zhou as a “Declared Direction of Endeavor for Chinese Christianity in the Construction of New China”:

Recognize clearly the evils that have been wrought in China by imperialism; recognize that in the past imperialism has made use of Christianity itself; and be vigilant against imperialism, especially American imperialism, in its plot to use religion in fostering the growth of reactionary forces.^[11]

Forty Protestant church leaders initially signed the document, followed by 180,000 members; eventually a total of 400,000 signatures would support this declaration of independence from the churches in the West. ^[12] The CCC also pleaded unconditional compliance by accepting the direct supervision of the State Administrations of Religious Affairs (SARA), which operated underneath the United Front Work Department (UFWD) to manage the government’s relations with domestic religious organizations. In addition, the CCC called for a new Three-Self Church that was as ecumenical as it was indigenous, a church that was patriotic while remaining committed to the tenets of global Protestantism. After the Korean War, at the first National Christianity Conference in July 1954, the CCC rebranded the Three-Self Reform Movement (TSRM) as the Three-Self Patriotic Movement (TSPM). It called all Christians in China to unite under the leadership of the CCP government. At the conference Wu Yaozong (Wu Yao-tsung or Y.T. Wu, 1890-1979) was elected chairman.^[13]

Despite a few discordant voices inside of the TSPM, Protestant churches continuously operated. In 1958 the churches started “joint worship services” to enter a so-called post-denomination period.^[14] For 17 years, Protestant Christians survived numerous political campaigns. Then the Cultural Revolution broke out.

1966-1976: The Cultural Revolution

The “Great Proletarian Cultural Revolution” ironically turned out not to be cultural, proletarian, or even a revolution. It was instead a manmade disaster affecting the whole country, and Protestantism was just one of its victims. Like all other religious institutions in China, the Protestant National CCC and TSPM stopped operating. Local churches, YMCAs, and YWCAs were closed. Christian life was banned, Bibles were destroyed, church buildings were confiscated, and Christian homes were looted. Christians were subjected to public humiliation, beatings, and labor camps. The catastrophe lasted for 10 years, but in the end Protestant Christians survived by practicing their faith underground.

1978 – Present: The Reform Era

The death of Mao Zedong in 1976 marked the end of the Cultural Revolution and the era of fanatical Maoism. Under Deng Xiaoping’s (1904-1997) leadership, sweeping changes took place in China that had a profound impact on Protestants.

Deng Xiaoping initiated the “Four Modernizations” movement to reform the economy, agriculture, national defense, and science and technology. He adopted a new stance on the issue of church-state relationships by calling for “seeking unity, preserving differences” through a fully utilized United Front to make constructive use of religion. Deng wanted his party to rally all positive features and social strength to advance the reform movement.^[15] In so doing the Party relaxed its ideological control in Document 19:

What is primary at the moment is the common goal of building a modernized powerful Socialist State, so the difference between believers and nonbelievers at this time is secondary…According to Marxism, the religion will naturally disappear when the people are sufficiently educated and understand the secrets of science. It is useless then to persecute religion as was done during the Cultural Revolution. ^[16]

In Article 36 of the 1982-implemented Constitution, the government promulgated religious freedom:

Citizens of the People’s Republic of China enjoy freedom of religious belief. No state organ, public organization or individual may compel citizens to believe in, or not to believe in, any religion; nor may they discriminate against citizens who believe in, or do not believe in, any religion. The state protects normal religious activities. No one may make use of religion to engage in activities that disrupt public order, impair the health of citizens or interfere with the educational system of the state. Religious bodies and religious affairs are not subject to any foreign domination. ^[17]

The government also formulated several important documents to further clarify the intent of the constitutional clause of religious freedom, such as the Regulation on the Management of Places for Religious Activities (1994), the Regulation on the Management of Foreigners’ Religious Activities in the PRC (1994), the laws for normal missionary affairs and religious services, and the principle of separating religion from state education. The government conceded the fact that over the country’s long period of historical development, religious culture in China had become a component of traditional Chinese ideological culture.^[18]

Growth of Protestantism

The CCP’s new religious policy allowed Christianity to surge once again. In September 1979, the first Protestant church reopened in Shanghai, followed by 11 others in addition to four in the outskirts of the city. Every Sunday morning the total congregation worshiping at these churches was more than 20,000 people.^[19] In 1980, the third National Protestant Christian Conference (NPCC) was held in Nanjing and estimated that the total number of Protestants in China exceeded two million. The NPCC called all Protestants to unite under biblical scripture while applying the “Three-Self” principles to guide church activities. The NPCC also reopened the Nanjing Theological Seminary (NTS) and, as a parallel to the National TSPM, formed the China Christian Council (new CCC) to manage church international affairs such as Bible printing and distribution, hymnal publications, and building church leadership. The Anglican bishop Ding Guangxun (K.H. Ting, 1915-2012) was appointed chairman. ^[20]

Reopening more churches was hardly a straightforward endeavor. Recovering church property that had been occupied by other organizations during the Cultural Revolution often proved difficult. With the aid of new policies, however, church properties were returned to respective churches with repair costs and daily operating budgets covered by the state. The reopened NTS enrolled 52 students including 20 women selected from more than 1,000 applications. Despite its small size, the NTS regularly published more than 20,000 course syllabi for use in rural areas and some cities through short-term training institutes organized for volunteers and laypersons.^[21]

By 1982 more than 1,100 Protestant churches had reopened nationwide. In 1991 the CCC joined the World Christian Council (WCC).^[22] The number of Chinese Christians continued to grow. In 2002, the Three-Self churches had 15 million baptized Protestant Christians. There were 50,000 TSPM churches and registered “preaching points” in the country. ^[23] According to the national TSPM and the CCC, by 2010 there were 53,000 TSPM churches, of which 70 percent were newly built, with almost 20 million Protestant partisans, 70 percent of them in rural areas. To date the TSPM has opened 19 theological seminaries nationwide with a large number of young clergy.^[24]

In 2014, the national conference for the 60^th anniversary of the Three-Self Church claimed that China has about 23.05 million to 40 million Protestants, or about 1.7 percent to 2.9 percent of the total population. Each year, about 500,000 people are baptized as Protestants.^[25] The figures released by the TSPM or the CCC are routinely quoted around the world. However, they are still an extremely conservative estimate as they exclude all youth and children under the age of 18 who may attend church worship but are not regarded as church members.^[26]

Political Harmonization

The 1982 Constitution provided new breathing space for the revival of Protestantism. The CCP is aware of the current popularity of Christianity in China as well as the historical contribution of Christianity to the economy in the West. It hopes that Christian faith along with Chinese traditional values can foster social stability and economic development in order to balance the pervasive materialism in Chinese society. ^[27] Therefore it encourages Chinese scholars to reassess the ecumenical value of Christianity and its potential impact on Chinese economic reforms.

Many Chinese scholars have answered the call. Researchers from the Chinese Academy of Social Sciences (CASS) found that Christianity can be an important strength in Chinese society. They report that Christianity has shaped the structure of Western society from the bottom up and has been beneficial to the development of Western civilization. They believe that Christianity could bring similar benefits to China to promote economic growth, social stability, and common morality. Among them, the market economist and ethicist Peter Zhao was the first to argue that China’s economy would benefit from the spread of Christianity. ^[28] His article, “The Real Story behind Chinese Economic Growth”, was approved by Premier Zhu Rongji (1928- ) as required reading for the State Council’s economist conference in 2002. Later Zhao converted to Christianity and started the Business Christian Fellowship (BCF), focusing on the urban Christianity movement in order to find roles for Christianity in China’s social transformation. Zhao claimed “God is My Chairman of the Board” and openly praised the contribution of Christianity to the expansion of world civilization and the impact by Christian missionaries in 19^th century Chinese history. The BCF published Ten Commandments for Business People:

No fraudulent accounting book; no tax evasion; no adultery; treat employees fairly; no destruction of the environment; not to engage in immoral business (in terms of both products and service); no violation of covenants (including oral and written covenants); honoring your father and mother; loving your spouse, children and family; and loving your community, the earth and justice.^[29]

Some government officials have echoed the CASS scholars’ perceptions of Christianity. These CCP cadres, although bonded with the atheist Communist ideology, also believe that the borrowing of Christian practices from the West will bring positive effects on Chinese society. In his Religious Media and Social Harmony, Zhuo Xinping, director of the Institute of World Religion of the Chinese Academy of Social Sciences (CASS), stresses the ecumenical values of Christianity in the current Chinese society as these values help with social harmony. ^[30] Wang Zuoan, director of the SARA, also points out that Christianity promotes love, peace, and mutual understanding among peoples, which makes it a facilitator to enhance the relationship between China and the United States. ^[31]

Methods of Religious Control

The receptiveness of Christianity in Chinese society seems to not be in conflict with the CCP political agenda of building the “Harmonious Society,” although the churches are still under the direct supervision of the SARA and subjected to national, provincial, and local regulations. In fact, the CCP has not relinquished control of religion, as it still believes that religion is the social ideology opposite to Marxism, and Christianity is one of the major elements among foreign enemy forces to subvert Communism and undermine the regime. Therefore “peaceful evolution” and foreign infiltration of Christianity must be condemned and the government must control and supervise the degree and extent of religious activities. ^[32]

Indeed, the Chinese state tolerates Christianity only if it is developed along the principles of the TSPM without any outside interferences, such as foreign missionary work, in the administration. This is particularly true regarding the nation’s numerous underground churches. ^[33]

The underground churches organized as independent churches in the 1950s. Most of them are rural or urban house churches not registered with the official TSPM. The government views them as legal entities. Some unregistered churches, such as True Jesus Church, Little Flock, and Seventh Day Adventists, are not registered but still operate in the TSPM format. The CCP certainly knows the exact locations of these churches and their respective organizers, but their non-affiliation with the TSPM does not seem to endanger operations. These churches actually enjoy a limited autonomy. However, unregistered churches, such as the Conditional Church, Basement Church, the Shouters, the Established King sect, the Disciples Sect, Three Grades of Servants, the Lightning of the East, Weepers, China Gospel Fellowship, and Fangcheng Church, do not enjoy the same tolerance from the government and are constantly watched by the local police. The leaders of these churches are frequently interrogated, their teaching materials are confiscated, and members are persecuted. The government claims that the punishment is “meted out in accordance with the law to those who know of the matter but did not report and to those who masterminded the scheme.”^[34]

Conclusion

Protestant Christianity has a burdened past in China, yet it not only has survived but also has become the fastest-growing religion in contemporary China. Today, Protestant Christianity is a significant part of Chinese culture. Combined from all denominations, this vibrant Chinese Christian Church has become the most diverse religious institution in the world.

Nevertheless, popular Protestant Christianity also brings tensions between nationalism and cosmopolitanism.^[35] In 2013, the National Committees of the CCC and TSPM announced a five-year campaign of indigenization of Protestant Christianity through the construction of Chinese Christian theology.^[36] At the 2014 Shanghai Forum of “Sinicization of Christianity,” SARA Director Wang Zuoan reminded the TSPM leaders that the implementation of the government’s religious policy made possible the fast development of Protestant churches in China. The government would continue to boost the development of a unified indigenized Protestantism with Chinese characteristics. Thus, the five-year campaign of construction of Chinese Christian theology must adapt to China’s national condition and integrate with Chinese culture.^[37]

Apparently, the rapid growth of Protestantism in China and the popularity of Christian culture are particular troublesome for the CCP given the fact that its own virtual abandonment of Marxism has created an ideological vacuum. In its place, the CCP has increasingly turned to Chinese nationalism as the ideational complement to economic growth and prosperity. Thus, a five-year campaign of “Sinicization of Christianity” would be consistent with its drive to push Chinese nationalism. On the other hand, the campaign could simultaneously help the government to crack down on the large network of underground churches in China, especially 14 “evil cults” listed for eradication. Moreover, the drive to nationalize Christianity could be aimed at cracking down on foreign religious influences in China.

Currently, Protestant Christianity is following the TSPM’s principles to harmonize with the Chinese political and cultural climate. It is ironic that in an era of continuing restrictions on the freedom of religion, Protestantism in China recognizes its ultimate challenge is not about survival or religious freedom, but a meaningful and realistic evangelization to “encourage more believers to make contributions to the country’s harmonious social progress, cultural prosperity and economic development.”^[38]

Bibliography

Primary Sources

Central People’s Government of PRC. “History of Christianity in China.” Accessed July 18, 2015.

 http://www.gov.cn/test/2005-07/26/content_17214./htm.

China Christian Council Three-Self Patriotic Movement. “History of the NCC and the CCC.” Accessed July 18, 2015. http://www.ccctspm.org/.

— “The Third National Christian Conference Resolution.”

Merwin, Wallace C. and Francis P. Jones. Documents of the Three-Self Movement: Source Materials for the Study of the Protestant Church in China. New York: National Council of the Churches of Christ in the USA, 1963.

National Christian Conference in Shanghai 1922: The Chinese Church as Revealed in the National Christian Conference. Shanghai: Oriental Press, 1922.

National Committee of the Chinese People’s Political Consultative Conference. “CCP’s Religious Policies.” Accessed November 11, 2015. http://www.cppcc.gov.cn.

State Administration for Religious Affairs of PRC. “Religious Freedom in China.” Accessed November 11, 2015. http://www.sara.gov.cn/zwgk/17839.htm.

Secondary Sources

Aikman, David. Jesus in Beijing: How Christianity is Transforming China and Changing the Global Balance of Power. Washington, DC: Regnery Publishing, 2003.

Bays, Daniel H. A New History of Christianity in China. UK: Wiley-Blackwell Publication, 2012.

Franke, Wolfgang. China and the West: The Cultural Encounter, 13^th to 20^th Centuries. New York: Harper Torchbook, 1967.

Ho, Louis K. The Dragon and the Cross: Why European Christianity Failed to Take Root in China. UK: Xulon Press, 2009.

Johnstone, Patrick. Operation World. London, Paternoster, 2001.

Lambert, Tony. “Counting Christians in China: A Cautionary Report.” International Bulletin of Missionary Research, Vol. 27:1. CA: Biola University Press, 2003.

Latourette, Kenneth Scott. A History of Christian Missions in China. New York: MacMillan Company, 1929.

Lee, Joseph Tse-Hei and Christie Chui-Shan Chow. “Christian Revival from Within.” Christianity in Contemporary China: Socio-cultural Perspective, ed. F.K.G. Lim. New York: Routledge, 2013.

Shen, Guiping. “Long-term Policy of Religious Freedom – Commemorate 30^th anniversary of Document 19 Issued by the CCP in 1982.” Chinese Nationalities, March 13, 2012.

Wang, Hongyi. “China Plans Establishment of Christian Theology.” China Daily, August 7, 2014.

Wang, Zuoan. “Protestantism We Want to See. China Religions, No. 12, 2006.

— “Preaching, Expansion, and Future of Christianity in China.” China Religions, No.11. Beijing: State Administration for Religious Affairs of PRC, 2010.

Wenger, Jacqueline E. “Official vs. Underground Protestant Churches in China: Challenges for Reconciliation and Social Influence.” Review of Religious Research, Vol. 46, No. 2, 2004.

Wenhan, Jiang. “The Present Situation of Christianity in China.” Missiology: An International Review, Vol. XI, ed. Rich Starcher. CA: Biola University Press, 1983.

Yang, Fenggang. “Between Secularist Ideology and Desecularizing Reality: The Birth and Growth of Religious Research in Communist China.” The Association for the Sociology of Religion, Vol. 65, No.2, 2004.

Zhao, Xiao. “Christianity and China’s Transformation.” Accessed January 15, 2015.

http://www.brookings.edu/~/media/events/2014/06/03-christianity-in-china/zhao-xiao-ppt.pdf.

Zhuo, Xinping. “Religious Media and Social Harmony.” China Religions Academic Network. Accessed November 11, 2015. http://www.sara.gov.cn/zwgk/17839.htm.

^[1] Kenneth Scott Latourette, A History of Christian Missions in China (New York: MacMillan Company, 1929).

^[2] David Aikman, Jesus in Beijing: How Christianity is Transforming China and Changing the Global Balance of Power (Washington, DC: Regnery Publishing, 2003), 44.

^[3] Daniel H. Bays, A New History of Christianity in China (UK: Wiley-Blackwell Publication, 2012), 94.

^[4] National Christian Conference in Shanghai 1922: The Chinese Church as Revealed in the National Christian Conference, Shanghai, 1922 (Shanghai: Oriental Press, 1922), 495-503.

^[5] Ibid., 19-22.

^[6] Wolfgang Franke, China and the West: The Cultural Encounter, 13th to 20th Centuries (New York: Harper Torchbook, 1967), 138

^[7] The Central People’s Government of PRC. “History of Christianity in China,” accessed July 18, 2015,

 http://www.gov.cn/test/2005-07/26/content_17214./htm.

^[8] Louis K. Ho, The Dragon and the Cross: Why European Christianity Failed to Take Root in China (UK: Xulon Press, 2009), 108-09.

^[9] Bays, A New History of Christianity in China, 159.

^[10] Wallace C. Merwin and Francis P. Jones, Documents of the Three-Self Movement: Source Materials for the Study of the Protestant Church in China (New York: National Council of the Churches of Christ in the USA, 1963), 18.

^[11] Merwin and Jones, Documents of the Three-Self Movement, 19-20.

^[12] Bays, A New History of Christianity in China, 162.

^[13] China Christian Council Three-Self Patriotic Movement, “History of the NCC and the CCC,” accessed July 18, 2015, http://www.ccctspm.org/.

^[14] Ibid.

^[15] Ho, The Dragon and the Cross, 110.

^[16] Shen Guiping, “Long-term Policy of Religious Freedom – Commemorate 30^th anniversary of Document 19 Issued by the CCP in 1982,” Chinese Nationalities, March 13, 2012.

^[17] State Administration for Religious Affairs of PRC, “Religious Freedom in China,” accessed November 11, 2015, http://www.sara.gov.cn/zwgk/17839.htm.

^[18] Ibid.

^[19] Jiang Wenhan, “The Present Situation of Christianity in China,” in Missiology: An International Review, Vol. XI, ed. Rich Starcher (CA: Biola University Press, 1983), 259-65.

^[20] China Christian Council Three-Self Patriotic Movement. “The Third National Christian Conference Resolution,” accessed July 18, 2015, http://www.ccctspm.org/.

^[21] Jiang, “The Present Situation of Christianity in China,” 264.

^[22] State Administration for Religious Affairs of PRC, “Religious Freedom in China.”

^[23] Tony Lambert, “Counting Christians in China: A Cautionary Report,” International Bulletin of Missionary Research, Vol. 27, (CA: Biola University Press, 2003), 1:7.

^[24] China Christian Council Three-Self Patriotic Movement, “History of the NCC and the CCC.”

^[25] Wang Hongyi, “China Plans Establishment of Christian Theology,” China Daily, August 7, 2014.

^[26] Patrick Johnstone, Operation World (London, Paternoster, 2001), 165.

^[27] Wang Zuoan, “Protestantism We Want to See,” China Religions, No. 12, 2006; Joseph Tse-Hei Lee and Christie Chui-Shan Chow, “Christian Revival from Within,” in Christianity in Contemporary China: Socio-cultural Perspective, ed. F.K.G. Lim (New York: Routledge, 2013), 45-58.

^[28] Zhao Xiao, “Christianity and China’s Transformation,” accessed January 15, 2015,

http://www.brookings.edu/~/media/events/2014/06/03-christianity-in-china/zhao-xiao-ppt.pdf.

^[29] Ibid.

^[30] Zhuo Xinping, “Religious Media and Social Harmony,” China Religions Academic Network, accessed November 11, 2015, http://www.sara.gov.cn/zwgk/17839.htm.

^[31] Wang, “Preaching, Expansion, and Future of Christianity in China,” China Religions (Beijing: State Administration for Religious Affairs of PRC, 2010), No. 11.

^[32] “Religious Policies by the CCP,” The National Committee of the Chinese People’s Political Consultative Conference, accessed November 11, 2015, http://www.cppcc.gov.cn

^[33] Wang, “Protestantism We Want to See.”

^[34] Ho, The Dragon and the Cross, 116.

^[35] Jacqueline E. Wenger, “Official vs. Underground Protestant Churches in China: Challenges for Reconciliation and Social Influence.” Review of Religious Research, Vol. 46, No. 2 (2004):169-82; Yang Fenggang, “Between Secularist Ideology and Desecularizing Reality: The Birth and Growth of Religious Research in Communist China,” in The Association for the Sociology of Religion, vol. 65, no.2 (2004):101–19.

^[36] Wang, “China Plans Establishment of Christian Theology.”

^[37] Ibid.

^[38] Ibid.

The post Protestant Christianity in the People’s Republic appeared first on China Research Center.

China’s rapid economic growth coupled with an unprecedented level of real estate development have resulted in an almost wholesale destruction of traditional siheyuan (四合院) courtyard houses since the 1990s. For example, until 1949, Beijing was a completely traditional courtyard city. In the early 1950s, Beijing’s inner city had 11 square kilometers of single-story siheyuan floor space, of which only five-to-six percent was dilapidated. In 1990, the inner city had a total single-story siheyuan of 21.42 square kilometers floor space, of which almost 50 percent was decaying. The increased floor space from 11 to 21.42 square kilometers was because of the proliferation of improvised extensions, an indication that not much courtyard space was left. A large-scale demolition started between 1990 and 1999, when a total of 4.2 square kilometers of Beijing’s siheyuan were demolished; by 2005, another 14 square kilometers disappeared, leaving only three (Tan, 1998; Yuan, 2005).

Table 1. Destruction and conservation of siheyuan in inner Beijing

Sources: the author’s summary based on Abramson, 2001; Beijing City Planning Chart, 2007; Collins, 2005; Kong, 2004; Ornelas, 2006

Table 1 shows a drastic decline of siheyuan between 1949 and 2004. There is no current data on the number of siheyuan remaining in Beijing, as it is increasingly more difficult to count them because of their impoverished conditions. One can expect the number has further decreased since 2004.

In 2002, the Conservation Plan of Historic and Cultural City of Beijing created 25 protected conservation zones and provided detailed guidelines for siheyuan preservation. In 2004, the State Council approved a revised Beijing Master Plan 2004-2020, which designated another eight conservation zones, making a total of 33 protected areas in the inner city (and 10 in the outer city). The zones occupy a land area of 18 square kilometers, about 29 percent of the old city area. The revised plan calls for an end to large-scale demolition and reconstruction and implementing small-scale, gradual, organic renewal (Beijing City Planning Chart, 2007, pp. 261-266).

Today, the few well-preserved hutong (lanes) with refurbished siheyuan serve only high-level officials and those who can afford such homes (Trapp, 2003; Zheng, 2005) because these houses are sold at soaring prices. In 2015, the price range for a siheyuan is ¥70,000 − ¥250,000 CNY ($11,000 − $39,288 USD) per square meter, depending on the location, condition, and total area of the house. In the eastern district of Beijing, for example, a 230-square meter (160 square meter floor space) siheyuan has an asking price of ¥19 million CNY (almost $3 million USD) before renovation or ¥25 million CNY (almost $4 million USD) after renovation (Beijing Shun Yi Xing Real Estate Brokers Ltd., 2015-9-10).

History and Significance of Chinese Courtyard Houses

The Chinese have lived in courtyard-type houses for several thousand years. The earliest courtyard house unearthed by archaeologists so far was built during the Middle Neolithic period, represented by the Yangshao culture (5,000-3,000 BCE) (Liu, 2002). The ancient Chinese favored this housing form because enclosing walls helped maximize household privacy and protection from wind, noise, dust, and other threats; and the courtyard offered light, air, and views, as well as acting as a family activity space when weather permitted.

A distinctive variety of traditional courtyard houses exists because of China’s wide-ranging climates, 56 ethnic groups, and notable linguistic and regional diversity even among the Han majority. Traditional Chinese courtyard houses were grouped as northern, southern, and western types according to their geographic locations in relation to the Yangzi River (Knapp, 2000). The shape and size of the courtyards are determined by the amount of sunlight desired in the space. For example, in southern China, the courtyards are smaller, called tianjing (天井), or “lightwells,” to reduce the summer sunlight; in northern China, the courtyards are relatively large to allow abundant sunlight in the winter. A traditional Chinese courtyard house would normally host an extended family of three or four generations (Knapp, 2005; Ma, 1999).

Figure 1 A standard classical Beijing courtyard house (siheyuan) accommodating a single extended family. Computer model by Donia Zhang 2014

Chinese Housing in the Communist Era

Although China’s population has more than doubled between 1953 and 2010 (Census 1953; Census 2010), the family structure has decreased from extended to nuclear families, a trend echoed elsewhere in the world (Amato, 2008; UN, 2003; Van Elzen, 2010). Statistics show that until recently, the average household size in China had remained relatively constant at about 5.2 persons (Jervis, 2005); it reduced to 3.96 persons in the 1990 Census, 3.44 persons in the 2000 Census, and 3.1 persons in the 2010 Census. The drop is due to the 35-year state-imposed one-child policy (introduced in 1978, enacted in 1980, and officially phased out in 2015), and free choices under circumstances of rapid modernization. The vertical, parent-son relationship typically found in traditional Chinese families is being replaced by the horizontal, conjugal tie as the axis of family relations in contemporary China (Yan, 2005). Thus, Chinese family structure evolved from a complex corporate organization to a relatively simple conjugal unit, in which family life revolves around a couple’s pursuit of financial independence, privacy, and personal space (Cohen, 2005; Yan, 2005; Zhang, 2010). The change in Chinese family structure demands a change in the housing form, which has implications for new housing design (Cohen, 2005; Jervis, 2005).

Between 1949 and 1978, urban housing in China had been under a very strong centralized administration system. The urban housing policy, under the influence of socialist economic principles, was based on a centralized state housing provision and delivery system with socialist public ownership as a major characteristic (Dong, 1987). During the “Cultural Revolution” (1966-1976), the process of rationalization and the policy of low housing prices were driven to the extreme. All the construction elements of residential buildings were reduced in their dimensions to the utmost. A number of “Urban Village” kind of residential settlements were built in various parts of China at the time. The new concept was the ultra-economic habitation standard, praised as the “new socialist lifestyle” in political propaganda. The new housing type was basically 4-5-story parallel blocks, called “Socialist Super Blocks,” constructed under the influence of the former Soviet Union in the late 1950s. The buildings were normally 12 meters deep, with all rooms standardized as 3-by-5-meter modules, with a 2-meter wide, centrally located corridor as the main circulation space for all the families. Several families shared the service facilities, such as a kitchen with a water tap and a single toilet, along the public corridor within the building (Dong, 1987; Gaubatz, 1995, 1999; Schinz, 1989). It was very communal-like.

Between 1974 and 1986, the Beijing Municipal Government built about seven square kilometers of new housing in the inner city which accounted for 70 percent of the city’s total housing redevelopment since 1949 (Wu, 1999), most of which consisted of residential tower blocks of more than 10 stories made up of individual apartments. By the end of 1996, new housing projects numbered more than 200, covering 22 square kilometers of inner Beijing (Tan, 1997, 1998). For comparison, in Suzhou between 1994 and 1996, nearly three square miles of new housing were added each year (Zhu, Huang, and Zhang, 2000).

Chinese Economic Reform and the Rise of Housing Market

China’s housing development has a direct link to its economic reform, which refers to the program called “Socialism with Chinese Characteristics” or “Socialist Market Economy” in the People’s Republic of China, started in 1978 and led by Deng Xiaoping. China’s economic reform has caused many of its sectors to privatize, one of which is the land and housing market.

In 1988, urban land leasing and housing privatization were introduced, with demands that the production of housing had to be commercialized. Subsequently, real estate development was increasingly drawn into national building and urban renewal processes. Nevertheless, work units were involved in housing provision until 1998. The result was a hybrid approach to housing provision, in which the work units purchased commodity housing and sold them to their employees at discounted prices (Wang and Murie, 1999; Wu, 2005).

In 1992, Beijing issued a policy statement entitled Methods for Implementing the Central Government’s Provisional Regulations for Leasing and Transfer of State-Owned Urban Land-Use Rights (Wang and Murie, 1999). This policy significantly stimulated the development of a real estate industry in China and unleashed the value of urban land, especially land within the inner city. High land prices have led to larger-scale renewal projects and have made them increasingly market-driven. In 1994, the Beijing municipal government delegated the granting rights of dilapidated housing renewal projects to district governments, which became the leading actors in housing renewal, real estate development, and other urban construction projects (Wu, 1999).

Since 1998, work units have stopped welfare housing provision and allowed state workers nationwide to purchase their own apartments. This transaction primarily involved the subsidized sale of work-unit owned public housing to sitting tenants because reformers argued that housing shortages were caused by the housing welfare system, and the only effective way to solve the urban housing problem was to allow rents to increase and encourage urban dwellers to own their own housing units. This housing privatization was consistent with the broader market reforms that had already taken place in China since the 1980s. Commodity housing has become a major source of housing stock in China since the late 1990s. The Chinese government has planned to use commodity housing development as a catalyst to drive urban economic development (Wang and Murie, 1999; Wu, 2005; Zhou and Logan, 2002).

The Issue of Housing Affordability

The success of China’s economic policies and the manner of their implementation have resulted in immense changes in Chinese society. Although large-scale government planning programs with market characteristics have increased incomes and reduced poverty, income inequality has also increased (World Bank, 2013).

Commodity housing in Chinese real estate markets has created a significant financial constraint on affordability; housing prices are simply outside the range affordable to most urban workers without substantial state subsidies. In an entirely private housing market, only a small number of urban residents could afford housing at the construction costs. The annual house payment could exceed 70 percent of the average household income (Khan, 2012; World Bank, 1992). Thus, the actual pricing scheme for commodity housing is complex. It can be sold to work units or directly to urban workers at either the government-discounted standard price or the full standard price. Housing built or purchased by work units is usually sold to workers at further discounted prices; however, the purchaser owns only a proportion of the housing unit equivalent to the proportion of the full price they have paid, the remaining proportion of the property belongs to the work unit (Bray, 2005; Zhou and Logan, 2002).

The Renewal and Redevelopment of Chinese Courtyard Houses

Since 2005, the Beijing municipal government has implemented a 25-year plan (2005-2030) to invest ¥0.5 billion CNY ($783 million USD) annually to renew dilapidated siheyuan, and to improve the living conditions of those households in the inner city. However, one third of the old-city population has to be relocated (Yuan, 2005).

For the 2008 Summer Olympic Games, 340,000 households in inner Beijing were required to leave their traditional homes (King, 2004, p. 120), to relocate to the suburbs, which have substandard educational, health care, and other service facilities. While in the inner city, new housing units in the redeveloped areas are sold at such high prices that only wealthy homebuyers can afford to pay. Relocation-related disputes have become a serious social issue since 1995 (Wu, 1999).

The author’s 2007-2008 empirical research into one inner-Beijing traditional courtyard housing renewal project and five new courtyard housing redevelopment projects in Beijing and Suzhou likewise showed that gentrification has occurred in these Chinese cities. There was a breakdown of neighborhood structure due to the fact that only a small number of the original residents could afford to move back after redevelopment, and only the old residents socialized with one another; the new neighbors were unable to re-establish social networks as in the past (Zhang, 2013).

A more socially sustainable renewal and redevelopment method is urgently needed. For example, a participatory approach involving residents to create their own designs onsite and offer their own facility upgrade strategies in the renewal and redevelopment process may generate more satisfactory results as they are the final stakeholders for whom the housing product is ultimately intended.  Moreover, reducing residents’ socio-economic polarity can be an effective way to solve the social issues in housing renewal and redevelopment (Zhang, 2015b). This matter is critical for Beijing before the 2022 Winter Olympic Games, and for China to move forward in the 21st century.

As traditional Chinese courtyard houses with their established social relationships are fading away, maybe a new courtyard housing form could help restore them. The author here offers two evidenced-based designs based on her research findings (Zhang, 2013, 2015a).

Figure 2 shows Scheme A, a design for a new courtyard garden house compound based on a system of 60 m × 60 m standard block size, a communal courtyard of 26 m × 26 m shared by eight nuclear families, with each household enjoying a private garden at the back. Each housing unit measures 6 m × 10 m (total 180 square meters) with a semi-basement and two-and-a-half stories. Design and computer model by Donia Zhang based on her doctoral research findings (Zhang, 2013)

Figure 3 shows Scheme B, a design for a new courtyard garden house compound based on a system of 78 m × 78 m standard block size, the communal courtyard is 26 m × 26 m shared by eight nuclear families, with each household enjoying a private garden of 12 m × 6 m at the front and the back. Each housing unit measures 10 m × 12 m (total 240 square meters) with a semi-basement and two-and-a-half stories. Design and computer model by Donia Zhang based on her postdoctoral research findings (Zhang, 2015a)

Acknowledgements

The author would like to thank Dan Williams for his careful editorial reviews and constructive comments on the essay.

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Khan, T.S. (2012). Asian housing markets: bubble trouble? (Report Number 67883: An Eye on East Asia and Pacific. World Bank: East Asia and Pacific Economic Management and Poverty Reduction). Retrieved November 5, 2015 from: http://documents.worldbank.org/curated/en/2012/01/16211688/asian-housing-markets-bubble-trouble

King, A.D. (2004). Spaces of global cultures: architecture, urbanism, identity. London: Spon.

Knapp, R.G. (2000). China’s old dwellings. Honolulu: University of Hawai’i Press.

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Zhou, M. and Logan, J.R. (2002). Market transition and the commodification of housing in urban China. In J.R. Logan (Ed.), The new Chinese city: globalization and market reform (pp. 137-152). Oxford: Blackwell Publishers.

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The post Chinese Courtyard Housing under Socialist Market Economy appeared first on China Research Center.

Enormous revenues derived from gaming activity – a key driver of Macau’s prosperity – have suddenly diminished. In 2014, monthly casino revenue peaked at almost $5 billion per month, and a year later the figure had fallen by almost half to a level last seen in 2010, according to the New York Times.

A number of forces have coalesced to prompt this decline. Perhaps most challenging for Macau has been President Xi Jinping’s vigorous campaign to eliminate corruption by officials, including those who gamble and move money through Macau and its casinos.  Thousands of officials have been charged with corruption, and the fear of punishment in China has spread. Authorities have focused on “VIP rooms,” where many of China’s elites had been doing their gambling. Large junket operators – who loan incentive funds to gamblers from China – also have been hurt because of a growing failure of gamers to repay large debts.  In addition, the courts in China will not enforce rules on repaying gambling debts.

At the same time, China’s economy has been slowing for several years, undercutting the wealth and affluence that had been fueling gambling and reckless spending among officials and elites.

Local government and political forces in Macau also have tightened regulations on the hotel/casinos and limited the number of gambling tables. Unlike in Las Vegas where much of the revenue is generated from lower-return slot machines, the big money in Macau has come from gaming tables and VIP rooms where high rollers wage huge sums on games such as baccarat.  Casino executives including Steve Wynn have been highly critical of these restrictions.

Another indication of the seriousness of the crackdown is a proposal to ban smoking in casinos and hotels. Smoking is common in China, and it is prevalent among casino goers.

The declines have taken place just as new gaming facilities have come on line. In May 2015, the first of several new billion-dollar-plus hotel/casinos opened, the Galaxy Macau, Phase II. In October, another great hotel complex opened, the $3.2 billion Studio City with its Gotham City design features.

More are promised. Six casino operators are slated to invest more than $20 billion in new resorts in the Cotai zone, the landfill area that is the Macau equivalent of the Las Vegas strip. This zone was created between the two islands, Coloane and Taipa, just south of the Macau peninsula and linked by bridges and causeways.

Evoking Macau’s History

The current challenges evoke the territory’s long history as colonial entrepôt and former role as a gateway for the early China trade. Once the British developed Hong Kong after the Opium War and Treaty of Nanjing (1842), Macau went into a steady decline as Hong Kong captured the China trade and became the main entry portal to south China and the Pearl River Delta. Such were the vagaries of Portuguese colonial administration that for more than a century after the arrival of the British in Hong Kong, Macau struggled to find new sources of revenue to maintain its viability. Sadly, for most of its history prior to the last few decades, it was a sleepy backwater, neglected by its Portuguese colonial administration and visited by a modest tourist trade for gambling or other salacious activities.

In the early 1960s a new authority was installed over the poorly organized gambling houses, as a monopoly license was awarded to a new syndicate, Sociedade de Turismo e Diversoes de Macau (Macau Tourist and Amusement Company, or STDM). This finally brought in new investment capital to create casinos and hotels such as the original Grande Lisboa. The STDM also brought much-needed revenue to the government to create new infrastructure to support more and better facilities and arrival terminals for tourists coming by high-speed hydrofoils from Hong Kong. One of the very special opportunities for Macau was that it is the only place in China that allowed casino gambling, adjacent to a country with more than a billion people, many of whom enjoyed gambling.

The creation of VIP rooms for high-stakes players encouraged the tourist and gambling trades. These private rooms were designed for anonymity. Once economic reforms began to take hold in China in the 1980s and 1990s, the VIP rooms, supported and funded by junket operators, began to attract high rollers from China who were provided funds that could later be repaid in China with Chinese yuan. In this way, gamblers could avoid currency controls that limited the amount of cash Chinese visitors were allowed on each exit from China.

Major changes for Macau followed the return to Chinese sovereignty in December 1999. Macau became a Special Administrative Territory (SAR), and more new licenses were granted. Two were awarded to Las Vegas casino operators, Sheldon Adelson (Sands and Venetian) and Steve Wynn, and another went to Galaxy. The reason was because criminals were operating more openly in the last years of Portuguese control in the run-up leading to the handover, and the Chinese government desired to modernize and upgrade the quality and number of casinos and hotels with some other goals in mind for Macau.

Communist Takeover and New Directions for Macau as SAR

Granting new licenses for casinos and hotels signaled that the new SAR government (and implicitly the Chinese government in Beijing) had new plans for Macau. The broad and bold goal was for Macau to become the key recreation and tourist center for the Pearl River Delta city-region and south China.

China first introduced four special economic zones in the 1980s, three of which were in the Pearl River Delta city-region.  These were linked to Hong Kong and were to be used as tips of an economic spear to drive China’s economic growth with new innovations and trade links to the global marketplace as well as sources of capital from Hong Kong, Taiwan, and Southeast Asia.  This became especially prominent in the mid-1990s following the storied southern tour by China’s aging paramount leader, Deng Xiaoping.

The Pearl River Delta was then a densely populated region of roughly 40 million people with a network of cities and towns increasingly linked through new transport arteries. Factories producing consumer goods for the world marketplace attracted huge inflows of transient laborers to the area from the interior of China.

Guangzhou (formerly called Canton) at the head of the Pearl River in the north was the apex of a great triangle of which Hong Kong was the anchor point on the southeast leg of the Pearl River estuary and Macau was the anchor point on the west leg. All three cities were given key roles in an evolving regional urban plan for the long-term development of the Pearl River Delta city-region.

A 2009 Guangdong provincial document laid out a plan for the development of the greater Pearl River Delta region, and Macau was given a key role with high expectations as the leading recreation and tourist center.  While gambling was not identified as the centerpiece for Macau, any knowledgeable person would understand the subtext: the desire to develop Macau as a hub for gaming as well as for other tourist activities.

All of the recent prosperity and funds for Macau’s infrastructure were drawn from gambling revenues. The Macau government levied a 35 percent tax on gross gambling revenues and levied other special fees on casinos. The remarkable growth of the casino and hotel industry provided employment for many Macau citizens and attracted additional workers from the adjacent mainland.

Despite the best ambitions and aspirations for Macau to become a tourist destination with a multiplicity of activities, its key attraction has been gambling, and this has been the basis for the territory’s financial success and growth.

The numbers tell the story. The first of the new Las Vegas-style casinos opened in 2004; by 2009 there were 32 casinos overall, while there had been only 11 in 2002. The Macau government reports that gross gaming revenues grew during the period 2003 to 2008 from $3.6 billion to $13.7 billion, while the number of visitors almost doubled in the same period. More than half of these came from mainland China.

Pannell and Loughlin found in a 2015 paper that increasing numbers of the recent visitors were from China and many were one-day visitors who came specifically for gambling. This contrasts with the typical visitor to Las Vegas, who stays two or three nights and who may seek a variety of entertainment activities other than gambling. Consequently, the goal of transforming Macau into a tourist center for families does not appear to be working.

Hotel complexes in Macau are seeking to offset gambling revenue declines by becoming recreation centers for affluent tourists from China with Disney World-like attractions such as a Ferris wheel, a fake Eiffel Tower and gondolas on an ersatz Venetian Grand Canal. With these huge investments, and the reality of a diminution in gaming, can these hotels and their corporations survive?

The latest reports from Macau suggest that the government is beginning to feel pressure from hotel and casino operators to loosen up and allow more gaming tables. Such a relaxation also would ease a threat to jobs so critical to the social welfare and economic health of Macau. Of the territory’s 600,000 residents, 100,000 work in the casinos and hotels.

Macau, as it has done many times over the centuries, is again facing new threats to its well-being after a brief period in which it enjoyed unparalleled prosperity and wealth. The Macau SAR must walk a tightrope between local administrators and investors and the political forces in mainland China.

China wants Macau to be an attractive and wholesome recreation center for the Pearl River Delta region and south China: gambling would be allowed, but it would be done in a restrained and controlled manner. China’s citizens would enjoy the pleasures of a big entertainment center without the corrupting influence of excessive gambling as seen in the capitalist West.

Casino operators, meanwhile, seek the enormous returns that are so tantalizing in the gaming industry.  Yet they must face the vicissitudes of policy-making and competing political factions in a Leninist state. Will the anti-corruption campaign fizzle out after a couple of years, allowing high rollers to return to Macau and its VIP rooms? Or will a more modest and restrained atmosphere evolve that reduces the opulence and wealth, while recent investors lick their wounds and accept lower rewards? The bets are on the table, and the roulette wheel is spinning.

References

Boehler, Patrick, 2015. With new resorts, Macau places its bets on the Chinese middle class, New York Times, May 27.

Gaming, Inspection and Coordination Bureau, Macao SAR (2015) Macao gaming history. Direcção de Inspecção e Coordenação de Jogos (DICJ) http:// www.dicj/gpv.mo/web/enhistory/ondex/html

Gough, Neil, 2015.  Macau gambling industry faces challenges on multiple fronts. Nov. 26. New York Times. November 26.

Government of Macao, Special Administrative Region, Statistics and Census Service.

www://dsec.gov.mo

Guangdong Province, Hong Kong SAR & Macau SAR (2009).  Building coordinated and sustainable world-class city region.  Planning study on the co-ordinated  development of the greater Pearl River Delta townships.  Consolidated final report. Hong Kong: retrieved June 5, 2010 from http://www.pland.hk/pland_en/misc/great_prd/news/report-e.htm

Loughlin, Philip H. and Clifton W. Pannell, 2010. Gambling in Macau: A brief history and glance at today’s modern casinos. Focus on Geography. Vol. 53, no. 1, 1-9.

Pannell, Clifton W. and Philip H. Loughlin, 2015, Macau’s role as a recreation/tourist center in the Pearl River Delta city-region.  Urban Geography. Vol. 36, no. 6, 883-904.

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But the figures mask a disturbing reality. The Chinese education system is vastly unequal. Despite the tremendous expansion in education, wide, well-documented differences remain in educational access and quality between rural and urban communities. Rural areas have been left behind.

While academic access for rural children has risen, many students are casualties of the system. Many rural schools lack the outreach necessary to remediate students falling behind or differentiate teaching styles and curriculum for students with learning disabilities or different learning styles. Low-performing students and students with disabilities are simply overlooked and equipped with the tools of failure, guaranteeing them bleak chances for future academic success.

Admitting the Problem

Three years ago, I began a fellowship that brought me to a rural village school in southwest Yunnan, one of China’s poorest areas. As a primary school English teacher, I was exposed to an educational setting far removed from the highly rated classrooms of Shanghai, where assessment is based on an internationally recognized rubric. It was here that I realized I was not in Shanghai anymore. I had an awakening about the real plight of children learning in rural China.

Having just completed a lesson, I called upon a student to assess general understanding. When it became clear that this student did not know the answer, I pointed to the Chinese translation on the board, instructing the student to read the correct response.

After a moment of hesitation and silence, the student stated that he was unable to read. Other students immediately confirmed this claim. I would soon learn that not only was this student illiterate but dozens of other students were as well. I would discover that students also lacked skills in other subjects such as math, with no fewer than 60 out of approximately 900 fourth and fifth grade students scoring zeroes on standardized exams each year.

Nevertheless, these students routinely were promoted to the next grade with the implicit expectation that by middle school, they will drop out.  This is, by far, not a singular experience. Many of my colleagues in nearby village schools witnessed a similar phenomenon.

By accidentally shaming my student, I revealed a larger issue of illiteracy and learning problems that plague many rural schools and a lack the resources and willingness to address the issues. Many underlying factors produced these effects.

Where Rural Systems Fail

China’s strict language education was prohibitive for many students in the village. Classes were taught strictly in Mandarin by teachers often from outside the village, and therefore unfamiliar with the local dialect. I worked in a village where Mandarin was not used much or at all beyond the school grounds. Villagers mostly communicated in their own dialect.  In an environment where Mandarin may not be a first or even second language, many students struggle.

To make matters worse, students with learning disabilities, emotional trauma, and other issues fare even worse. Many of my head teachers would identify these students and suggest I not worry too much about them, stating nothing could be done. With a lack of resources not only to diagnose but also to treat and address such instances, sadly there is very little done to accommodate these students.

There is also a conceptual component. During my three years of teaching, I was consistently advised to focus on high-performing students, who would conveniently be seated in the front of all my classes, and not waste time on tiao pi^[1], or “mischievous” students, some of whom had clear learning disabilities or a different style of learning.

Mainstream beliefs hold that certain students possess a stronger proclivity for learning and academic success. Students from poorer and/or non-Han backgrounds are often regarded as underachievers. Resources are focused on high-achieving students to the detriment of low-achieving students.

Accordingly, there are clear structural problems that cause many students to fail. Students are knowingly promoted to the next grade without having grasped necessary core skills or mastering critical knowledge, and many lack basic literacy skills.

Pathways Forward

China must enact deliberate policies to maximize learning outcomes for all students and incentivize rural school systems and educators to work with all students equitably. Municipal education bureaus should invest in soft teaching resources. Currently, investment is largely devoted to technology, real estate, and materials.

Many rural school systems invest little or nothing in counseling or special education services, despite the fact that research indicates children living in poverty are more prone to suffer emotional trauma and setbacks. Soft teaching resources include creating remediated curricula, training and embedding counseling professionals, and prioritizing the identification and diagnosis of disabilities.

Stanford University’s Rural Education Action Program (REAP) has conducted preliminary research demonstrating how teacher performance pay can improve student achievement under proper implementation. The creation of a rewards system should focus more closely on student improvement rather than student performance, offering higher rewards for low-achieving students than high-achieving ones. Under this system, teacher performance pay is not strictly tied to the final scores of students but rather to their aggregate improvement over a given period. This system assesses teacher effort more precisely and encourages teachers to focus on every student.

Education for rural children is more necessary than ever if economic development in the rural southwest is to start to bear a resemblance to its eastern provincial counterparts. As more rural residents flock to urban centers all over the country, an uneducated population augurs badly for the Chinese labor force. If China wants continued economic development and sustainable growth, it desperately needs a well-educated labor force that is not just concentrated in its urban centers.

^[1]    Tiao pi is often translated as “mischievous,” which describes teachers’ view of these students. But the word in this case also carries the connotation that a student is a low performer.

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The book is a vivid account of a large epidemiological study spanning roughly 16 years, from the conversation that started the project in 1983 to the first published results in 1999. There were new cultural and physical environments to get used to, bureaucratic hurdles to overcome, and miscommunications to clear up. The dedicated public health professionals from the U.S. and China overcame these issues in order to achieve the common goal of preventing neural tube defects (NTDs), which can happen early in a pregnancy. All this is chronicled in the book, along with revealing anecdotes and side stories. Kowal, for example, notes how Centers for Disease Control and Prevention (CDC) visitors reacted to hearing the American cowboy song “Home on the Range” played on Chinese instruments — namely, “strange and eerily out of place.”

The book starts with a conversation between an American doctor from the CDC, the premier public health agency in the United States, and a Chinese doctor who was trained at the Peking Union Medical School, one of the most prestigious medical schools in China. They note the unusual rate of spina bifida and anencephaly in China and an opportunity to study the epidemiology of neural tube defects, which later materialize as the China-U.S. Collaborative Project for NTD Prevention. As the story unfolds, the Chinese collaborators are puzzled by the CDC budgeting and funding process, and the scale of participation and coordination in China surprise the CDC researchers. The Chinese researchers learn new concepts such as informed consent and Institutional Review Board protocol, while their American counterparts acculturate to their host country, consuming potent rice liquor and strange foods. Given the project is a unique collaboration between teams from two very different countries, unexpected developments in domestic and international politics always lurk and indeed pose serious risks to the project at times.

Aside from paying homage to those who have made critical contributions to the project, this book is a thorough account of the epidemiology study, providing more information and lessons learned to epidemiologists and economists than the author may realize. The detailed information, gathered by the author from the original documents and personal narratives, can help those who are interested in conducting and evaluating similar studies to be prepared for pitfalls, to avoid complications, and to learn better ways to manage both people and projects.

As an economist, I appreciate Kowal’s description of the cost-benefit equation. Just a year after the crackdown in Tiananmen Square, 1990 was not the best time for collaborative projects between public institutions from the U.S. and China. The U.S. Congress, however, approved the funding for this project in China, partly due to the cost-benefit considerations. From a practical standpoint, this was a bargain for the U.S. The project would have cost much more if it had been carried out in the United States. But the investment was an even bigger bargain when we consider how many children it enabled to grow up healthy and whole. In health economists’ jargon, this is an economic evaluation with a societal perspective that led to positive policy change.

As fine as the book is, there is a drawback for researchers. Many people contributed greatly to the project, and Kowal provides a complete list. But there is no bilingual index of names, something that could pose a challenge to readers interested in knowing more about the Chinese researchers. The Chinese language contains a large number of homophones, and it could be difficult to locate the exact Chinese names if the readers are not familiar with the players.

Despite that minor flaw, anyone interested in learning more about the collaboration between China and the United States in public health will find this book highly informative. Those interested international studies likewise will gain invaluable insights. A reader’s time will be well spent.

http://www.amazon.com/gp/search?index=books&linkCode=qs&keywords=9780826520272

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Center Director, Penelope Prime, spoke with Mitchell Kopelman, Tax Practice Group Director, and Wendy Lu, Tax Senior Manager, at Habif, Arogeti & Wynne, LLP in Atlanta, Georgia, on November 10, 2015 about working with Chinese clients investing in the U.S. This interview was edited for length and clarity. Habif, Arogeti & Wynne is not a financial sponsor of the Chinese Research Center.

Thank you both for joining me. To begin, please describe what kind of services HA&W provides for your international clients and for Chinese companies in particular. Which services do your Chinese clients need and are they willing to pay for?

MK: We provide our Chinese clients the same types of services we provide to clients from other countries and to U.S. companies. These services range from tax consulting to preparing tax returns. For example, there are companies that come into the U.S. that are performing R&D locally in the United States. They can benefit from R&D tax credits, which are worth a lot of money to a company in the U.S. doing that, and especially in Georgia. Georgia has the best R&D tax credit incentive in the country.

Many companies that come from China – whether they are family owned, state owned or publicly traded in China – typically need their U.S. financial statement audited, so we’ll provide services to audit financial statements of the U.S. subsidiary of the Chinese company in accordance with U.S. or China standards. Similarly, usually a company starting out in the U.S. will set up a retirement benefit for their employees, so we can help them set up a plan like a 401(k). We advise them on how to put the assets under management, and we will meet with the employees to explain the plan and to encourage them to save.

Other services include when employees get relocated here from China we would prepare their U.S. tax returns and interface with their Chinese tax advisor because in the year they move they might have to file returns in both countries. They might be here on a two- or three-year visa, so we would take care of their U.S. tax consequences that are unique to somebody who’s here on a visa. A lot of times the company is paying for us to do the employees’ tax returns, as well. If a company has a stock option plan, we need to do a valuation so they can establish the stock option award to the employees here in the U.S. of the Chinese parent company in accordance with U.S. rules. We also have to review how that stock option plan is written in China to make sure it conforms with U.S. law. So we may advise them to put an addendum to the stock option plan in China. We have a payroll joint venture so when a Chinese company comes here and wants to set up payroll to pay their employees’ salaries, file payroll tax returns, we can have them work with our partner to do the payroll. What other services, Wendy?

WL: Mergers and acquisitions

MK: M&A; we’ve done some very interesting M&A services for our Chinese clients.

And due diligence. We had a client that was a private equity fund that was state-owned in Beijing. It hired us to do due diligence on their behalf because they were making a sizable investment in a U.S. company, which was based in California and also had a subsidiary in China. So we performed financial and tax due diligence for the potential investor who ended up investing. Usually we issue these reports in English, but the investor in Beijing wanted the report in Mandarin. Of course, why not? All of the people who were going to evaluate the investment speak Mandarin. So we produced our report to them in Mandarin.

We work with companies that use different accounting methods. The U.S. is known for generally accepted accounting principles commonly referred to as U.S. GAAP. We have people here who are very familiar with, and consult with, other forms of accounting methods like International Accounting Standards, IAS.

So you don’t find that Chinese companies have a certain set of services needs that tend to be different than other international companies, or is it pretty standard?

MK: They need all the same services.

You would think so, but I’m not sure that they necessarily know that.

MK: Oh, no, they don’t. Most companies that come here from different places around the world, depending on the country they come from, have a perception as to which services they need that are required that they’ve heard of.

For example, what’s typical in other countries is that companies – even small companies – have to have what’s called a statutory financial statement audit. So small companies that come to the U.S. from anywhere in the world, including China where they have these statutory required audits, think they need that. We say, no, you don’t actually have to have your U.S. company audited and submit that to the government. That’s not required in the U.S., but it is around the world. So there are certain things that they’re used to doing but may not need to once they are in the U.S., though their bank or parent company may require an audit.

The other aspect is that there’s a certain comfort level that the Chinese clients want. This is similar to other cultures but it’s always unique in every culture where they have to be very comfortable with you and gain your confidence. And that takes a long time. It takes a few years. We see with other clients it happens much faster than with our Chinese clients. We have a client that actually just paid us for a number of services. And I can tell you that they pay our bills promptly today. Once they agree, we bill them, they pay. No problem. That wasn’t the case three years ago with them. We really had to educate them what it is that we need to do, why we have to do this, what the U.S. rules are. It’s not just about tax issues, it’s the accounting education and the whole philosophy of accounting. In particular, China is at the infancy as far as the profession goes including general bookkeeping and reporting requirements and transparency accounting. It’s pretty new in China.

For example, most companies in China – not unlike companies in Russia and Mexico and some other countries around the world – are used to keeping two or three sets of books: one for the government, one for the owners, one for the bank. It’s not too uncommon to see that in different cultures around the world. So part of that training when a company comes here is to advise them that you can’t have two sets of books here. It’s one set of books.

WL: Another example on culture difference: Chinese companies generally present themselves as those taxpayers that pay lots of taxes to the government. They are proud of this. They show to the media that they make profits by saying how much taxes they pay to the government. Therefore, Chinese companies in general do not put the tax saving as a key factor when they make the business decisions. But now, they are more and more adopting the American concepts and start thinking about tax planning.

So you found working with a single Chinese company they’re learning this, you’re teaching and they’re learning and it’s a back-and-forth. But when you have new companies coming to you, are they already more up to speed? Or do you start over again?

MK: With every company you’re starting over. If they’ve never been to the U.S., if it’s their first entrée, there’s a lot of training and education.

WL: A lot of times with Chinese clients I see a similar trend. As they are adapting to the U.S. rules, they get to some point to where they have to pay us a consulting fee even it’s just for our time spent educating them.

But they’re willing….

MK: Not necessarily at first. It is part of the education. They’re not used to paying too much professional fees for lawyers and accountants in China.

WL: I usually start with a small amount. For example, I spent an hour or two with them consulting. I give them advice. So they gradually understand the value of the information and adapt, and agree to pay. It seems to be much easier for us to work with the Chinese clients on a small project in the first place, so we gain the trust from them. Then we could suggest a bigger project later on.

MK: We’ve had some disagreements that we’ve worked through. We definitely have.

WL: And then the ownership of the company makes a whole lot of difference; that is, whether the company is state-owned, private or public.

Describe that a little bit.

WL: With the private ones, it makes a difference that a person owns the company. That’s their company. With state-owned companies, the CEO knows he is just a CEO, working with money that is not actually from his own pocket. It is just a job. So it’s a big difference. Ownership creates a different management style, or what we call enterprise culture. Then when it gets to the decision making process, it’s all different. The decision process for privately owned companies is more like what we see with U.S. companies. For instance, I deal with a lot of Taiwanese companies as well. They are mostly privately owned and they adapt more easily to the U.S. rules. Of course, Taiwanese people are more familiar with the U.S. system so it’s much easier to communicate. And I also deal with privately owned Chinese companies, too. But the culture is different and therefore still a lot of education is needed. The state-owned and public companies are probably the most difficult types of client to deal with. The management style is different, partly because of the hierarchy of the Chinese system and the need to report to different levels.

So even if you work to educate them, they’re not making the decisions so you’re not educating the right decision-makers. Is that part of the problem?

MK: Many times, that’s the problem.

WL: Another problem is the lack of management continuity. They change people often. They change the CFO every year.

MK: Even in the U.S. the lifetime of a CFO of a private company is under two years. Public company is the same. CFO lifetimes are relatively short, but in particular with Chinese companies, they’ll send a CFO over here from China and that person will be here for two years on a visa and then go back. Our other clients from around the world are more likely to look for a U.S. CFO. That’s actually one of your questions here, any advice I would give these companies coming here. They really need to entrust themselves to someone here in the U.S. who can be their CFO, because if they bring someone here from China who doesn’t know anything about the tax and accounting environment here, it’s really, really difficult, and they’re probably better off hiring a U.S. CFO. The challenge, of course, is finding one who is fluent in Chinese, but they’re out there. Or maybe they bring somebody in who is not to report to somebody but is responsible to deal with the U.S. providers and with the U.S. issues. They need to have somebody on the ground who can respect that this is a different country than China, and it has different rules.

MK: I can give an example. Years ago I saw that one of our clients had a category on their financial statement labeled “kickbacks.” They had no problem putting that on their U.S. financial statements. It was a kickback. They called it a kickback. They said it was paid to government officials here in the U.S. It’s maybe not such a good thing that they should have done that. We found that after the fact, and we counseled them and called their lawyer and made sure their lawyer counseled them on the ramifications of doing that. They said, “Well, we’re just paying a fee, you know, they did a good job and we’re recognizing them and thanking them.” I understand. It’s just not something you want to do here in the U.S.

Do the companies you work with tend to bring their upper-level management from China, as you’ve described, rather than hiring here? What about middle-level and lower-level?

WL: What I have seen is they do bring the high-level people here and try not to hire a CFO locally, for some reason. Even with other high-level positions they like to bring people from China.

What they usually like to hire here in terms of the high-level people is just the marketing functions like V.P. of business development. But for finance, accounting, tax functions, no. They still do not have that comfort level to trust the people locally, even Chinese-speaking people.

It’s the trust factor. They don’t want to hire someone because of the lack of trust.

That’s an important point.

WL: Except one of our prior employees, he now is hired by a big Chinese company. That’s the only one I have seen so far.

And he built that trust by advising them?

WL: Yes, that helped. But other than that, pretty much all my Chinese clients actually have people relocated here as a CFO or the controller to take care of the accounting and tax functions. And usually because they are a startup, they actually have somebody who does not know tax, accounting or legal. They prefer to be here in charge of everything. So that adds to the difficulty to communicate.

Like having a general manager doing all of those functions.

WL: Yes. Communication challenges span concepts, culture, and language. Sometimes I have a hard time translating some of the U.S. terms into Chinese because the Chinese language does not have that term. For instance, the concept of stock options and how it works in China might have fundamental differences from the stock options here in the United States. This will completely change the treatment in accounting and tax on the U.S. book and returns. So both we and the clients should be very careful on some of the terms. They might not be the same.

MK: Although the IRS has a bulletin that we’ve shared with some clients that includes common business terms translated into Chinese.

WL: It doesn’t cover everything. That just covers a small portion of the terms we need.

Do you see any characteristics of Chinese companies that make them more likely to be more successful in the U.S. environment as opposed to others, or does that really just depend on sector and management style and other factors, it’s not so—you can’t really put your finger on.

MK: From what I’ve seen, the ones that are most successful are driving some of the business development out of China before they get here.

So they’ve done some research and background.

MK: They may be exporting here initially so they already have business relationships. One of our clients that recently came here already had business relationships with companies here in Georgia, which is one of the reasons why they came here. So that, I think, is important for them to have had already some business relationships, which is I think typical.

A client I work with from Denmark used to just export here and then they set up an office here and now they’re manufacturing here. It’s a normal trend for any type of international business. Sometimes the Chinese companies think they can just come here, invest a ton of money and do really well. We’ve seen that where they’re not doing well is because they didn’t think through all the business issues. They just figured, build it and they will come. That doesn’t always work if you don’t have the business development strategy that matches with your investment strategy.

Are most of your clients from China in manufacturing rather than services?

WL: I think it’s a split between manufacturing and technology. And some are in distribution, real estate, and farming.

And by technology, you mean developing new products and services?

MK: Yes, new technologies. We have some manufacturers that actually do research and development for their products here in the states. There’s a talent pool here that can help them develop their intellectual property.

And farming and real estate development.

I think around the U.S. there have been many Chinese food companies that have been buying up resources in the U.S. for food resources to be able to export back to China. I think that’s a trend around the country.

WL: And they also export to Latin America.

Is that what they’re doing?

WL: Yes. They set up here but ship it to Latin America.

We always think of Georgia as having that comparative advantage. If international companies want to link Latin America to North America, we want a piece of that action.

MK: We’re a gateway. Savannah to Panama.

Do you have a sense that more and more companies will come to the U.S. from China? Do you see that?

WL: I can tell the trend, yes. There will definitely be more to come and particularly I think a lot of people still think of the United States, as their dream land. Freedom. So a lot of—yes. And not just investment; they also want to protect what they already have. For example, China has a new estate or inheritance tax starting in 2016. Then they start taxing on the real properties. Since you’re going to be taxed in China anyway, why not invest here to get the green card and get the freedom and get the dream land in the U.S.?

But those are more for personal reasons. What about business development?

WL: They will bring the business.

MK: The Chinese market is a huge market. The U.S. is still the biggest single consumer market in the world so other countries, people in China who have companies, really see the U.S. market as a huge market for them to sell into. Whereas U.S. companies see the Chinese market as a population that is growing financially and having more disposable income as their wages go up in China and the lifestyle increases.

The U.S. of course is looking at China as a huge market now and even more so in the future. Hopefully the Chinese economy will not continue to stall like it has. Part of that stalling may be because of infrastructure that’s been built over the last ten years that hasn’t been either needed or used, and inventories that have been built and not shipped or sold. So there’s an excess capacity, I think, in China relative to what they’ve been building internally.

But that being said, the U.S. is still the biggest consumer market in the world and good companies in China want to get their products in the U.S. market. They want to compete here and they’re able to do so and they’re actually finding in some cases it’s more beneficial to build here instead of exporting here. Just build it here.

States like Georgia are providing wonderful tax incentives and business incentives for companies from China to come here and build a facility and do manufacturing and hire people and use the port in Savannah. There’s an extra tax credit if you use the port in Savannah. I don’t know if you’re aware of that.

I didn’t know that.

MK: That’s for any manufacturer. You don’t have to be from a foreign country. Any manufacturing company, if they use the port in Savannah and are eligible for something called a jobs tax credit, can add to that jobs credit more dollars just for using the Savannah port. So that’s a huge benefit, and companies from anywhere can get that. It’s something that – when we meet with potential Chinese manufacturing companies that are going to come here – we talk about that with the representatives from the state, even if we’re meeting with them alone. So there are some really wonderful incentives. Ultimately what the U.S. and Georgia are looking for is companies to come here and employ people who live here or want to move here, and to employ them to increase the economy and to increase the money people are spending in the local economy. And there are great incentives to encourage companies to do that.

So if a company from China wants to come here and invest $20-$30 million or more and build a facility and hire people, incentives will be out there. They’re not going to come for the incentive. They might come here versus Alabama for the incentive or South Carolina for the incentive or New York for the incentive, but they’ve got to want to come to the U.S. to build the business. That’s going to continue because I think it will be some time before China and India become bigger consumers than the U.S. It will be another decade or two before those countries are at the U.S. level of consumption.

MK: We have a major client here that has an investment from a public company in China. We cannot disclose it because even though it’s a public company, what they’ve done is not public record. So there are public companies in China making minority investments in companies here. It’s a minority investment that they have in a client of ours here, a technology company, and they’ve partnered up with this company for technology distribution. This is a pretty big investment and they have several of them in the United States. They’ve got lots of capital and they chose to invest it as a minority investor in companies versus opening up their own shop here. That’s another interesting trend we have seen.

WL: So they’re taking a minority share in a joint venture with our U.S. client here. I feel like that is just a pilot.

MK: But they’ve done that with 10 other companies in the U.S. This one just happens to be one of our clients.

So it’s a strategy.

WL: It’s their strategy of deploying dollars.

But it’s also a learning strategy.

WL: It is. They’re learning how to do business.

MK: I think part of what they’ve done is they’ve invested in several companies around the U.S. and in other countries and some of those companies have been successful; they have then gone and bought the whole company and made it their wholly owned subsidiary. And I’m sure with the client of ours that they invested in, their goal will be if it’s successful, as they expect it to be over the next five or 10 years, they’ll buy the company outright and full. It will become one of their wholly owned subsidiaries. But it’s a strategy because of the capital availability that they have in China, which is immense. A lot of capital has been accumulated there, and that’s been invested in the economy and companies to drive the economy. This is a pretty unique company in China. They make money, and their stock trades very well. It of course got hurt pretty bad recently with the downturn in China, but they will be fine.

So lots of development in China that’s coming our way.

WL: Right, right.

Very interesting.

MK: And we’re prepared and positioned in a very unique way to work with those companies from anywhere they want to go in the U.S. We probably have the strongest Chinese team of professionals here at HA&W that you’ll find in North America at a single CPA firm. Our leader of the valuation group is Chinese, and several leaders in our audit and tax practice are Chinese. We have some very, very bright people who are leaders in our organization, and will continue to be leaders.

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