Far From Home: China’s Political Economy and Travel Policies 

We are honored to invite Dr Ramesh, a current Lecturer(Teaching) at UCL and a Part-Time Tutor at the University of Oxford, to this interview. The emphasis of the interview will be on evaluating China’s Political Economy embraced by travel restrictions as well as its past and its future. 

The last two years have impacted not only on the global economy, but also on the economies of individual countries, and the Chinese economy is no exception. China has adopted a zero-tolerance approach in dealing with Covid-19, and even if there is one person who has been infected with the virus, thousands may have to enter a lockdown. The global Chinese metropolis of Shanghai has recently entered a lockdown. 

In this case, over the past two years, traveling has been difficult both within and outside China. In addition to the Zero-Covid goal, air tickets back to China have become extremely expensive, at a few thousand pounds one way. This spring, finally, the EU decided to bring the pandemic to an end by allowing free entry from the rest of the world. However, China did plan direct test flights from the UK, but flights are still rare, tickets are still deer, and the quarantine policy is becoming increasingly strict. As international students from China, we care about this, and would love to talk about this. 

Dr Ramesh started his PhD in 2004 about China and China’s economic development, in the context of infrastructure and knowledge creation. He also worked on a number of publications about China and India. But the reason for him being interested in China was that China has been fast rising since the economic reforms in 1978. After 40 years from that, China is on its way of becoming an economic and military superpower despite COVID-19.  

Dr Ramesh was also impressed by how Premier Deng Xiao Ping made rapid plans to save China from a situation close to bankruptcy, such as how he brought privatization to the cultural sector, so that the building of institutions could take place and allow the economy to grow. By comparing Russia’s reform following the Washington Consensus, he suggested that the success of China making so many developments happen is highly related to the reform. 

In Dr Ramesh’s journal about the 2008 Financial Crisis, a concept called ‘continental drift’ was introduced. The ‘continental drift’ occurred because of factors like environmental regulations and labour protection. For coastal regions, multinational companies find it easier to locate their manufacturing sites and to take advantage of China’s cheap labour, as government incentives of infrastructures were ample. These made China’s coastal provinces evergreen manufacturing hubs. Dr Ramesh suggested that ‘continental drift’ did not suggest a shift of economic prosperity because even now, the wealth of China is still quite concentrated in the coastal area. Although President Xi’s ‘One-Belt One-Road’ project may spur China’s economy to expand even more. This will help to eradicate poverty and inequality even further by creating more jobs as China’s trade increases, in the interior as well as in the western provinces of China. And, even if the drift did not eliminate the inequality in wealth between the interior and the coasts, production did shift inwards or abroad to other developing countries. This is thanks to the rising costs of firms due to environmental and labour protection. 

The Covid-19 lockdown’s have virtually stopped economic activity in the regions of China in which the virus has been detected. For example, in Shenyang a German car manufacturer stopped production at its factory due to a lockdown. Furthermore, people find international travel expensive due to the need to pay for 14 days of self-isolation as well as the expensive airline tickets. The question arises as to how much damage the lockdown will do to China’s economy both in the short-term as well as in the long-term.  

In 2021, the GDP growth chart was led by Hubei, an interior province. At the same time, only two out of the top five rapidly growing provinces were coastal. So, we discussed if the travel restrictions are likely to cause another wave of ‘continental drift’ a decade after the Financial Crisis. 

Dr Ramesh said that it depends on which parts of China suffers from more COVID cases. The ‘zero-COVID policy’ means that places with cases will be locked down with no exceptions. Even megacities like Shanghai cannot avoid this from happening when cases keep rising this spring. Places free of viruses will be able to function more effectively, while those with high COVID incidence will not.  

‘continental drift’ in geography vs ‘continental drift’ in Economics

In our previous conversation, Dr Ramesh was not confident about China’s economic growth. So, we talked about how he felt about this now. 

Dr Ramesh suggested that the situation is true for all other countries, and China has some good qualities that help in fighting against it. The first quality highlighted was that Chinese people are entrepreneurial. He also stated this in his interview with China Daily in 2020, all Chinese families own their business. This means that people can generate by themselves rather than relying heavily on the government. 

Also, another major factor in China’s favor is the ‘One Belt, One Road’ Project started by President Xi.  

This is beneficial to China because it fosters a great level of equality of how economic prosperity was diffused through Chinese society. This aims for the welfare of Chinese people being prioritized. 

When we brought up the ‘zero-tolerance’ policy of COVID, which the western world has questioned China a lot, Dr Ramesh explained that this was inspired by the ideals of Confucianism–one should always put the greater good in the first place. Compared to the UK, where individual liberty is cared for more, we cannot deny that the safety and health of citizens was better protected by a thorough elimination of cases. 

According to the 2021 data, the GDP growth of China was 8.1%, which was much higher above the target. So, considering the situation international students are in, we discussed what economic performance will be like if travel barriers are removed internationally. 

Dr Ramesh said that China is currently prominent with technology. He gave an example of how everywhere went people using QR codes to pay rather than cash, when he was in China in 2019. The technology changes in China were fast, and this means shifts from manufacturing to services and knowledge. So, he concluded that payments are not related to whether lockdowns happen or not, as creativity and transactions are already unshakeable. 

China’s also making changes in terms of embedding innovation creation to its economic policies in terms of digital currency. Digital payments process skips the stage of commercial banks, and digital currency goes directly from households to the central bank. This means that if monetary policies are used, the effects are going to be much more direct. It also means that the government gains better knowledge of how much money there is in the economy. 

But the quicker access to monetary policies meant a danger of housing property bubbles, especially in cities like Beijing, Shanghai, Guangzhou, and Shenzhen. Evidence shows significant rises in housing prices and rents in these cities. Dr Ramesh thinks that there should never be markets for housing, education, food, and healthcare, as they are fundamental human rights. He found the bubble like the Japanese one that happened in the last century, and it is time for China to implement monetary policies to vanish the price rises. This is regarded as a greater worry than a COVID lockdown, as the latter is just a temporary shock. 

Based on the bubble, we imagined what will happen to the bubble if international traveling becomes easier, as trade-offs of economic impacts happen altogether–for example, inflation caused by stronger labour market competition and rising aggregate demand because of tourism. Dr Ramesh’s worried about the lack of highly technical employees (e.g., IT graduates), and the lack of creation of positions in a highly populated economy, with job seekers competing with both peers and AIs. Travel restrictions, still, should not be a permanent concern. 

Then there was a quick question about a petition signed by many Chinese university students, which was to let the UK government urge China to allow direct flights from and to the UK. We discussed what possible ‘urges’ might be if the parliament decided to proceed with this petition and do something. Dr Ramesh does not think any petition will work, as anti-pandemic decisions supported by Confucianism ideals cannot be simply changed by speeches. The difference between thoughts of China and the western polities exists, and this makes moves suitable for one ineffective to the other. 

We also asked a question based on Dr Ramesh’s book China’s Lesson for India, Volume 2. Hubei, Gansu, and Jiangsu are chosen for investigations of China’s provincial growth. We were curious about why these three provinces were chosen because they were neither the richest nor the most historically renowned. Dr Ramesh’s response about his choices was that he needed the geographical diversity of the provinces chosen to make data representative. Here he chose one from the interior, one from the coastal area and one from the western part of China. As mentioned previously in ‘continental drift,’ Jiangsu benefited a lot from western capitalism and its access to more advanced technologies for being coastal. Before the reformation, industries were placed in the interior and the west on purpose, to avoid invasion. This also meant that less information could be accessed with regards to the inner provinces of China than those geographically facing the rest of the world. Comparison showed that knowledge could be better diffused in coastal provinces than the interior, and this leads to inequality in performances. 

At the end of the talk, Dr Ramesh mentioned a final concern other than the housing bubble and the conflicts within the labour market competition, which is a demographic change. The introduction of the ‘three-children policy’ brings a potential risk of a widened gap between job creation and job-seeking, which was just like what we mentioned previously. But Dr Ramesh described the ‘one-child policy’ as an investment, which means that people would think more carefully about the costs and benefits of adding another person into a family. In addition to the fact that living costs are increasingly expensive, many people would still prefer having one child, which is lucky in the short term. The reason we used ‘short term’ is that China is an aging society, as China’s population will halve by the end of this century. This is like Japan, who is compensating for this risk by innovation in the form of robotics. Dr Ramesh suggested that this change in population will push China towards technological changes, which tends to make developments sustainable than population increases.


Article written by Carol Shi

Interview presented by Dr Ramesh, Carol Shi and Kitty Deng

Proofread by Dr Ramesh

Typesetting by Xin Huang

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