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Perspective Given on Running a Business in China

University of Chicago professor Chang-Tai Hsieh, Ph.D., an expert on economic growth and development, presented “Crony Capitalism with Chinese Characteristics” at The University of Scranton’s spring Henry George Seminar on campus.
April 30, 2018
By: Eric Eiden ’19, student correspondent

 

A professor of economics from the University of Chicago presented “Crony Capitalism with Chinese Characteristics” at The University of Scranton’s Henry George Seminar, held in April on campus. Chang-Tai Hsieh, Ph.D., spoke at the seminar, presented by the University’s Economics and Finance Department and the campus chapter of Omicron Delta Epsilon.

“In terms of the overall ease of starting a business, China ranks 151 in the world,” Dr. Hseih said. “In 2013 there were 185 countries, so that’s very near the bottom in terms of the overall ease of starting a business.”

Dr. Hsieh provided an example of what it takes to expand a small business in a small city in China.

“Think about a small noodle shop. What you need to do is pay 95 taxes and get 192 official chops (referred to as a seal or stamp) of approval. Those are the official signatures,” Dr. Hsieh said. “There is an official list of rules and regulations that on the face of it looks like it is going to kill any business.”

Paying the 95 taxes and getting the 192 chops is required by all business in China unless a business can strike a deal with the local government.

“What you quickly find out is that every single branch of the government, at the local level, is focused on business,” Dr. Hsieh said. “A big part of what that means is basically carving out special deals, or exceptions, to the 95 taxes and 192 official chops.”

The members of the local government can essentially wave past these requirements for businesses if they deem them important enough.

The Henry George Seminar is supported financially by a grant from the Robert Schalkenbach Foundation.

Eric Eiden ’19, Throop, is a journalism/electronic media major at The University of Scranton.
Eric Eiden ’19, Throop, is a journalism/electronic media major at The University of Scranton.
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