20th anniversary of the Unirule Institute of Economics in China

[Barun Mitra]

Economists discuss their ideas at the celebration of the 20th
anniversary of the Unirule Institute of Economics.

(Provided to China Daily Asia Weekly)
Monday, September 23, 2013, 12:29
Asia Weekly: Forming new policy plans for China
By Ben Yue in Hong Kong

Operating a private think tank in China is not an easy task. Without
the government’s blessing, such think tanks can find themselves short
of funding, clients and talent. They even have to pay the same
business tax as enterprises. However, a small number of private think
tanks are not just surviving, but flourishing.
Few of the think tanks that first appeared two decades ago have
remained in operation. According to data from the School of Public
Policy and Management at Tsinghua University in Beijing, out of
approximately 2,000 think tanks in China, only 5 percent are privately
owned.
“It is extremely difficult for private think tanks to survive.
Although there are many already, most of them cannot grow and
develop,” says Feng Xingyuan, vice director of the Unirule Institute
of Economics, one of the original, strongest and best-known private
think tanks in China.
Unirule was ranked 65 for “think tanks with the most significant
impact on public policy” in the 2012 Global Go To Think Tanks Index
report published by Pennsylvania University. It was also ranked as
China’s number two in “impact on public policy” after the official
Chinese Academy of Social Sciences (CASS), and 14th for “best think
tanks with an annual operating budget under $5 million”, China’s only
entry on this list.
Unirule was among the pioneers. In 1993, five economists from CASS
founded the think tank, choosing a name to reflect their wish to
unveil universal rules for a future economy.
“The reasons for Unirule’s success are clear goals, an outstanding
research team, and independence,” says Feng.
Unirule’s 20-year success story is particularly impressive given the
problems that such outfits can encounter. Obstacles are many,
according to Zhu Xufeng, a professor at Tsinghua University who has
studied China’s think tanks for several years.
“It is very hard for private think tanks to attract the best talent in
this country, because they can’t offer the permanent residence (also
known as hukou), public healthcare insurance, and other welfares that
official think tanks could offer — not to mention the social status,”
he says.
Zhu said the one or two successful cases, such as Unirule, are partly
due to the founders’ personal fame.
Unirule’s five founders, Mao Yushi, Zhang Shuguang, Hong Sheng, Fan
Gang and Tang Shouning, were already well known before they founded
the think tank. “Difficulties will be there if they want to recruit
more young talent,” Zhu says.
Feng, one of Unirule’s operators himself, is also a senior research
fellow of the Rural Development Institute at CASS. He works for
Unirule one day a week.
In a speech earlier this year to commemorate the 20th anniversary of
Unirule, Mao Yushi, the celebrated economist who is the spiritual
leader of the think tank, said that Unirule has made significant
contributions to China’s economic and social changes.
These include the shifting from a planned economy to a market economy;
and the evolution from a structure of State-owned companies to a
country containing many private businesses.
“As a private think tank, Unirule is not just an observer of those
changes. We were participating in those processes and had pushed for
them,” Mao said. “We were always going in front of the government.”
Feng believes that China’s private think tanks have huge potential.
“It is a crucial time for China’s reform and opening up. No matter
what direction it goes, the demand for think tanks will rise,” Feng
says.
“If the reform continues, more think tanks will emerge to serve the
economic development. Therefore, there will be competition; good ones
will survive and their quality will improve.
“In the opposite way, if the reform is scaled back, the business
sector will get confused. Their need getting advice from think tanks
will also grow.”
In the 1990s, the demand from the business sector of an “outside
brain” led to China’s first batch of private think tanks, according to
the China Think Tank Development Report 2012. Now the same reason will
support China’s private think tanks to further develop.
“More and more Chinese entrepreneurs want to participate in public
ventures. They are super interested in risk control and legal
consulting businesses, especially from independent organizations,”
Feng says.
Feng explains that many companies have shown interest in donating
money to think tanks for them to conduct research, and he believes
that this will help think tanks to develop.
“China will have more foundations that back think tanks, like in the
US. Policies such as cutting tax for companies that sponsor
foundations might also become a trend in China.”
According to Feng, the most important thing for private think tanks is
to find a clear position and cultivate their own advantage.
“Private think tanks can’t do research for every aspect. They need to
have a specialty,” says Feng. “It’s like running a private business;
too much diversification normally does not work.”
“Specialization is the shortcut for private think tanks to grow,” says
Wang Zhigang, founder of a profitable private think tank, WZG Strategy
Consultants.
“As a country’s economy develops, some think tanks will emerge to
cater to particular industries,” Wang says, pointing out that the
Nomura Research Institute, a major Japanese consulting firm, was
originally designed to support Japan’s finance sector.
Wang explains that his think tank was firstly designed for the real
estate industry that boomed in China during the past two decades. It
was a derivative of the industry, as he puts it.
Transforming from a commercial consultancy, Wang’s think tank shows
another path to success for such private outfits in China.
Back in the 1980s, Wang was working for China’s State-owned Xinhua
News Agency, covering the property industry that was just starting to
boom. The eye-opening experiences that he had in Guangdong province
made him decide to start his own business.
Throughout his career as a journalist, Wang had come to know the
owners of some burgeoning property companies; his business began when
he gave marketing suggestions to these firms.
Soon, Wang’s ideas were making money, and his name became well known.
Big projects sought him out, including the marketing for the Kunming
World Expo in 1999.
In 2003, a friend introduced him to Li Chuncheng, the then party
secretary of Chengdu, who gave him the project of strategic city
planning for the capital city of Sichuan province — and to do it in 30
days.
“It was a big challenge and I nailed it,” Wang says. “It was the first
time China gave an official project to a private think tank.”
Wang explains that such a major project would usually go to government
institutes like the development research center of the State Council.
“What made me happy was the official acknowledgment of the value of
private think tanks.”
Since then, Wang has carried out many strategic city planning projects
based on each city’s cultural character, including Xi’an, Guangzhou,
Shanghai and Zhengzhou.
“Now, more than 70 percent of our business is government projects,” Wang says.
The profitable think tank has also launched its own institute, aiming
to deal with big topics such as urbanization.
Wang is optimistic about the future for private think tanks in China.
However, he also acknowledges that for most private think tanks,
survival is hard. Some of them have had to turn to more detailed
business, such as data collecting and analyzing; while others that
took sponsorship from foreign foundations are often questioned on
their standpoint.
Wang says his dream is to create a private think tank that is entirely
independent, of both the government and the business sector.