Nick Hope: Director of ‘SCID’ helps build US-China relations

Nick Hope is responsible for the World Bank's lending some $10 billion to China for about 50 development projects across a full range of sectors, including agriculture, industry, electricity, transport, urban development, education and health, and direct interventions to reduce poverty.

He supervised the flow of technical assistance to the Chinese government and had oversight of the economic and sector work programs, culminating in the seminal study: China 2020 which was released during the 1997 annual meetings of the World Bank and International Monetary Fund in Hong Kong.

In the last 15 years as deputy director and then director of Stanford University's Center for International Development, Hope has hosted or mentored some70 visiting scholars from China's ministries of Finance and Commerce, think tanks such as the Chinese Academy of Social Sciences (CASS), the Chinese Securities Regulatory Commission (CSRC) the State Administration of Foreign Exchange (SAFE) and numerous universities from across the country. Many of SCID's visitors are Chinese public officials and economic policy makers.

"The purpose of SCID's research program is to inform policies. Through rigorous research focused on large emerging economics, we conduct comparative analysis of economic policies so that we have stories to tell about what went well, what went wrong, and which policies are mostly likely to succeed," said Hope.

The China visitors' program began following a training program that SCID organized for 30-plus officials of China's finance ministry in 2002.

"We had a week's-worth of sessions at Stanford, field trips to Sacramento and another few days with World Bank and IMF officials and others in Washington," Hope said. "What was impressive from the outset, and why the program was so successful, was the targeted and serious nature of the questions raised by Ministry of Finance officials in requesting specific presentations. The Chinese visitors wanted to know why and how the Enron (Corp) scandal happened; they wanted to know about the Orange County bankruptcy, California's electricity problems and PG&E's (Pacific Gas & Electric) role, how venture capital works and how ideas for startups, are converted in to the products and services that enable small firms to become big companies."

Eventually a one-way exchange program was established between the finance ministry and SCID, with four officials – two each for a 6-month visiting program – coming each year. The success of the initial program led to the development of a similar program for officials from the Ministry of Commerce. Chinese officials benefit from their interaction with Stanford's faculty, while Stanford also learns about the policy concerns of the visitors and suggests measures that might improve economic performance in China.

"From my experience at the World Bank with China, I learned that China doesn't particularly value foreigners' opinions of what China should do, since they believe few outsiders have enough knowledge of Chinese culture and history to make reliable prescriptions," Hope said. "Their main interest was in learning other countries, including the US, have done to tackle problems similar to those that China was facing; what difficulties were encountered and how were they overcome. Therefore, sending policy makers to research these issues at SCID and interact with Stanford's outstanding researchers really makes sense."

According to Hope, over the years China's progress has captured the attention of Stanford's scholars across the board, including from the economics department, business school and law school. China as a successfully emerging developing economy is on everyone's radar screen, with interest burgeoning as China has become an ever-more-important part of the world economy

Jianghuai Zheng, professor of economics at Nanjing University, said his opportunity at SCID to learn Western economic theory by attending lectures and seminars has been "precious:"

"I came to realize that the development and innovation of Western economics was largely based on mathematics and statistical analysis, " he said. "Although China's economy has developed rapidly and caught world's attention, little research and economic analysis have been made available at top academic fields internationally, which is quite unbalanced. I hope SCID continues to invite young Chinese economists coming to study at Stanford, which will really help Chinese economists catch up with the world."

Li Li, director of the policy research department of the Ministry of Commerce expressed her appreciation at SCID.

"Through the cooperation program, SCID provides a valuable research and communication platform which enables everyone who comes here not only to have access to the resources to conduct research in their areas of interest, but also share opinions and perspectives with experts from different academic fields. In addition, several months of living experience in California is also a good opportunity for us to understand the US culture, tradition, and society in a full scale as policy makers in China," she said.

Hope is originally from Hobart, Tasmania in Australia. He attended the University of Tasmania and Oxford University as a Rhodes Scholar and later received a doctoral degree in economics from Princeton University. He was awarded "the Order of Australia" medal in 2012, which recognizes Australian citizens for achievement or for meritorious service.

Hope's engagement with China began in 1983 when he traveled to Beijing for the first time to advise financial agencies of the Chinese government on aspects of foreign borrowing policies and external debt management. That dialogue continued through 1986 with a follow-up visit to Beijing and Chinese visits to the World Bank in Washington.

Subsequently, he became an operations division chief, among other things, on lending for industrial and agricultural enterprises in China, primarily through the China Investment Bank and the Agricultural Bank of China.

His move to Stanford was motivated by a desire to continue to work closely on issues related to Chinese economic policy reforms; the subsequent activities of SCID's China program. During many trips to China in the past decade, Hope became an external board member of the China Institute of Public Finance, Shanghai University of Finance and Economics; a member of the International Advisory Committee of Renmin University, School of Business; and a member of the academic council of the International Finance Forum, Beijing.

He said he regards himself as fortunate to have met former Chinese premier Zhu Rongji, China's premier from 1998 to 2003, who he numbers among his three economic policy-making heroes along with the late Professor Widjojo Nitisastro, Indonesia's best-known policy economist; and Paul Volcker, chairman of the US Federal Reserve under Presidents Jimmy Carter and Ronald Reagan(1979-1987).

Among pictures with Zhu, China's former president Jiang Zeming, and China's premier Li Peng on his bookshelf, Hope described Zhu as "tough, visionary and shrewd" as a politician and economist. He said he witnessed his brilliance in presentations during the World Bank annual meeting in Hong Kong in 1997 and became familiar with Zhu's tactics earlier when he was the China program director at World Bank.

"He was so brilliant in advancing China on the international stage. The commitments he made to gain China accession to the WTO (World Trade Organization) were extraordinary. He gave so much that domestic political risks must have been severe, but I thought then and now: what a wise man. Zhu was a fellow who, unlike some negotiators from other countries was willing to make large concessions to expand international trade, knowing that by so-doing China was doing itself a favor. The productivity boost that China has gained from competing vigorously internationally has contributed to the great success of the policy of opening up" said Hope.

According to Hope, Zhu made sure that China would become a major player in international trade, and also saw his legacy as committing the government to reforms that would have to be done after he was gone.

Zhu's lasting legacy in China, according to Hope, will be embellished by his work in two periods: 1993-1995, when he demonstrated the capacity to manage the Chinese economy that had been recognized by Deng Xiaoping, finally ending the boom-bust cycles that emerged in the 1980s, and issuing the blueprint for reform that was approved at the third plenum of the 14th Party Congress; and in what he did from 1997-2001 to guide China through the East Asian financial crisis, initiate major reforms in the financial and enterprise sectors, and secure China's accession to the WTO.

"In 1993 the Chinese economy was going through an incredible peak to the boom-bust cycle, with unsustainably rapid economic growth accompanied by dangerously high inflation. Yet Zhu was able to squeeze the inflation out of the economy and do it without sacrificing too much growth and without excessive job loss. He used the limited macro-economic instruments that were available to him combined with direct controls in a way that was really much more art than science in getting the economy back on track. Zhu was a policy-making genius; I have nothing but admiration for him," Hope said.

Married to his wife Ellen for 46 years and with three children (Charles, Stephen and Katharine) and four grandchildren, Hope said his retirement from SCID is imminent and the legacy he wants to leave at Stanford is his contribution to a better understanding between the US and China of the policy problems with which each country's leaders have to contend.

"The relationship between the US and China is the most important relationship of this century and neither country can afford any serious conflict, either military or economic. What I have tried to do in SCID's China program is to have US scholars understand what policy makers are thinking about in China, and to have our visiting the Chinese scholars and policy makers understand the US economy through their study and interaction with our scholars. "

Hope said that the world can be a better place when people understand and learn from each other, especially now that China plays such an important role in world economy.

"The US needs to accept that it is not the only one who tells everyone how to cut the pie; there are other major players, like China and India, who should have a voice and say in the game," he said. "How policy is made in those emerging economics is something to which the US should pay close attention. I'd be happy to think my contribution at SCID played a role in bringing the US closer to China."