The bustling coastal city of Wenzhou left its mark on Hao Zhang. “It’s considered the birthplace of Chinese capitalism, and living there, with many relatives involved in startups, I was exposed to all kinds of businesses,” says Zhang, a fifth-year political science major. He also gained an up-close view of the interactions between government and private enterprise. “My father dealt with these companies all his life as a tax collector,” he says. “I learned from him how important the relationship between business and government is.”
Zhang became fascinated with the expansion of private enterprise into international markets and the emergence of government institutions in response to this explosive economic growth. “I was very interested in the larger narrative of China’s rise, with the rising tensions between China and the US and the Western world in general,” he says.
Today, Zhang is engaged in a unique investigation of the vast global networks that underpin China’s expanding economic and political reach. Their research, based on mountainous data sets, reveals that companies with supply chain connections, including those that cross borders, also share political goals. Identifying these complex and often obscure interdependencies is essential to “advancing our understanding of trade policy,” Zhang says. At a time when the pandemic, war and climate change are affecting trade networks, Zhang believes his supply chain research has “significant implications for the US and the world.”
Production links
Zhang arrived at MIT in 2018. Previously, he had conducted research on the impacts of the Chinese government’s involvement in foreign investment and its use of tax exemption policies on business development, and intended to continue in the same field line
But the Trump Administration’s trade war with China helped shift its focus. When the US government placed punitive tariffs on Chinese industries that shipped goods to the US, including textiles and computer chips, Zhang observed an interesting phenomenon: companies involved in the manufacture and distribution of these products unite to oppose “Chinese companies and those in the United States and elsewhere connected to Chinese companies through supply chains found their interests aligned and felt it was important to act and lobby for themselves and their foreign partners,” he says
Zhang realized that these alliances, formed across great distances, represented a previously unobserved but nevertheless critical aspect of trade policy. “The political strategies involved in achieving trade goals are fundamental issues in political economy,” says Zhang. Traditionally, scholars study the effects on trade of labor and capital interests, or the needs of industries, or the protectionist inclinations of firms with domestic or international markets. “But what has been missing,” he says, “are the political impacts of production linkages between companies and industries across global supply chains.”
Accumulation of evidence
To analyze the degree of political coordination among companies with shared supply chains, Zhang connected two databases: one including all publicly traded US companies and members of their supply chains from 2003 to 2020; and the other showed the lobbying reports of these companies, from 2004 to 2019. Each database contained millions of observations. (The data sets came from the LobbyView and TradeLab projects, led by In Song Kim, an associate professor of political science and one of Zhang’s thesis advisors.)
Quantifying the production and pressure links was a big challenge, Zhang says, requiring cutting-edge data science techniques and two years of work. “I may be the first political scientist to raise questions about the linkages and analyze these datasets together,” he remarks.
The fruits of Zhang’s work, which form the core of his thesis project, include some intriguing ideas: US companies linked to the same foreign partner (for example, Chinese tech giant Huawei, before it was banned from selling in the US) . markets) are more likely to exert pressure together. “Looking at the databases, I could see how their lobbying expenditures correlated,” Zhang says. And when trade barriers hit China’s textile and apparel industries, companies involved with those products pushed American trade associations to lobby on their behalf. “When the U.S. and China started a trade war, lobbying spending increased in a coordinated fashion,” he says.
The lesson Zhang draws is that traditional policy tools such as tariffs cannot be used to protect a nation’s products. “It’s impossible, because whether it’s made by Apple or another company, a product has many different components from many different countries, and imposing a tariff causes collateral damage to businesses, industries and workers at home,” he says. “Now the interests are blurred, because the industries are interconnected by relations of production.”
Towards a better trade policy
It was a fast track for Zhang to scholarship in the field of international political economy. He went to Renmin University in Beijing to study political science. Then, in his second year, he attended the University of California at Berkeley on a scholarship. The experience changed his life.
“I learned how to study the true American way: how to ask interesting questions and collect data,” he says. “That was the moment I decided to pursue a higher degree.” Zhang first earned master’s degrees from Tsinghua University in international politics and Johns Hopkins SAIS in international economics and China studies. He then set his sights on a graduate political science program in the US, specifically at MIT, with its reputation for solving problems using quantitative methods.
Zhang jumped into a new life as a Chinese student in Cambridge, Massachusetts. He joined MIT’s Office of International Students as a graduate fellow, hoping to “help international students settle into the school and thrive in that environment,” he says. In recent years, Chinese students have faced “difficult situations, with Covid and the last president making them feel alone and unwelcome,” he says.
After nearly eight years in the United States, Zhang feels “part Americanized,” but considers himself Chinese and has continued to read classical Chinese poetry and philosophy, as well as practice Chinese calligraphy, an art he learned at age 7.” . As a researcher, I’m constantly under a lot of pressure to produce, and calligraphy is spiritually beneficial for me,” he says.
As he continues to analyze his PhD data, Zhang is convinced that conventional, protectionist trade tools no longer fit an increasingly entrenched and conflicted global economy. It is studying policy alternatives that might better serve to balance companies that favor protectionist measures and those that advocate free trade. He is confident that his current work will be of practical interest to governments and companies seeking information on the supply chain relationships of leading companies. A kink in one part of an expanding network inevitably affects the rest, and identifying all those partners early could help make those chains more resilient. “I believe my work could help alleviate global production problems,” he says.
