Politico-Economic Financial Foundations: US vs. China
Advisor: Ms. Mariam Abodouma
Internship Location: Shanghai, China
Onsite Mentor: Yalin Le
I have always believed that the greatest learning opportunities come from disagreement and discussion. In my senior project, I will be examining the key differences between taxing legislation in the US and in China.
I will begin with researching the fundamentals of tax laws in both countries, their respective histories, as well as their effects on corporations and individuals. I will parallel this research with interviews with corporations large and small, gaining both qualitative and quantitative insight on their experiences and potential struggles in working with various tax regulations.
I will then travel to Shanghai, China, where I will intern under a senior CPA (Certified Public Accountant). This will include learning about the auditing process and interacting with a myriad of corporations, two of which I will interview in order to compare with my findings in the US.
Finally, I will synthesize my results, comparing and contrasting my findings in the two nations. Keeping the economic contexts of the two nations in mind, I will note my key findings down in a report that details the key differences in how the two countries operate.
I hope to walk away from this experience with not only an in-depth understanding of the economic nuances of the US and China but also concrete plans of action on ways we can improve upon our inefficiencies. This includes a short-term guide for businesses to minimize their struggles in dealing with taxes, as well as more long-term policy recommendations for both nations to make lasting reforms.
Project Blog
Post 1: Intro to Project
How can we make the world a better place? Eventually, the root problem usually boils down to some type of long-term universal change — for example, educational reforms, or a way to maximize political efficacy and participation.
However, each of these utopic solutions also entail their own sets of restraints: insurmountable power structures, limited resources, and more. My interests in one day working within the legal system led me wanting to know more about what smaller-scale changes we can make. In an age where consumerism has developed to the point that the furthest we need to go to get our groceries is our front door, what better area to study than economics?
An 8th grade Intro to Economics course and a 9th grade AP Government course have shed light on some of the concrete theory on how our financial decisions relate to the US’s politics on a grander scheme. Since then, I have subscribed to economics updates from the Wall Street Journal sent every other day. These updates include information on economic developments in all aspects of our lives, including the businesses whose services we rely on, more large-scale trends in the country or in the world, and even the ups and downs within the entertainment industry. These briefs have taught me so much in terms of the breadth of economics, and just how intertwined they are in our daily lives.
However, I believe that personal experiences and observations of economics and politics are equally as impactful as rigid rules and theories. Upon thinking of ways to actually act on these experiences in an informed way, I hope to be able to form a comprehensive idea on the differences in economic policy between the US and China, and ways they could improve upon each others’ ideas.
Financial Foundations is split into two portions both in the US and in China: research and practice. For each country, I will first thoroughly research the economic and political backgrounds of their modern-day tax legislation. Then, I will conduct interviews to enlighten how federal legislation can impact corporations of different sectors and sizes. Furthermore, an internship under a senior CPA in Shanghai, the economic heart of China, will shed light on relevant, immediate trends for businesses that I would not have been able to gain exposure to in the US.
Week 0: Introduction to my project
Week 1: Background Information
Much preparatory work was done for the first week of my senior project. For the first several days while I was still in Japan, I took the opportunity to freshen up my understanding of the basics of the US government and the Chinese government. This included reviewing my previous notes from my AP Government course and reading articles online for more specific, relevant, and varied information.
My studies taught me how the US government is far less centralized than the Chinese government, especially regarding the quantitative aspects of presiding over each country. This included not only tax legislation but also a myriad of other rules, such as laws having to do with trading and tariffs.
Nearing the end of the week, I began delving into more profound existing research through articles on JStor to build upon what I had reviewed. This included Raymond Lotta’s 2009 article titled, “China's Rise in the World Economy” and a more recent comparison of the US and China through their military and climate security budgets by Miriam Pemberton in 2016. I printed out the articles I did not finish in time to bring to China.
Week 2: Off to Work!
This week’s continuation of my senior project mainly included getting situated in my internship in Shanghai, specifically regarding the basics of how different computer programs operate differently in China and certain specific applications used exclusively within the company. This included simpler things, like learning how to use a machine to bore tiny holes in one particular way, and more complex things, like updating company-specific records that will be federally processed.
This was also a week of learning how China operates through personal experience! One week in, and I am already a convicted criminal :( Just kidding! But I learned that since COVID-19 ended, rules and regulations regarding foreigners entering the country have gotten infinitely stricter. Failure to report my mother and I’s entrance has resulted in a small note on our Chinese criminal records.
Regarding the mechanics of what I have done so far, the central values of the work are order and thoroughness. This, in turn, necessitates certain logistical manoeuvres, such as encouraging unity for the sake of organization and transparency within the workplace to ensure that each small step is completed in a way that does not at all hinder the completion of the project as a whole.
Post 5: New discoveries!
This week consisted of writing and compiling notes from previous independent research, while also completing work in China.
This began with a research report written in 2009 by Raymond Lotta, a political economist and author, titled China’s Rise in the World Economy. This article provides the political and economic context for China’s present-day relevance on the global stage. Here are some key quotes from the article that I will later synthesize and analyze with information from other sources:
Characterized by both dependency and growing economic strength
At the time, the US uncontestedly had the primary position in the imperialist world economy, the financial glue fo the whole world system, and the political-military “guarantor” of a global order that benefits, at least for now, all the big powers
Long-term, strategic and competitive orientation to diversify and fortify a domestically rooted industrial base
Extend the country’s international economic and financial reach, and strengthen military capabilities, but to do so without provoking the United States
Potential future as an imperialist power?
My own work also continues parallel to my research; this includes analyzing 2023 income and spending records from a domestically well-known travel company.
I look forward to learning and discovering more in the coming weeks!
Week 4: Continued Clarification~
This week was one of clarity and continuation. Meaning, I continued working at my internship, while clarifying the cause and context of my work to a deeper degree. This week’s work came mainly from a construction and engineering company sourced from California! Right away there were some important differences I noticed from my last project, where the work had been sourced from a large Chinese corporation.
Firstly, there were English copies of all of the financial documents! This offered a much more comprehensive look into the company’s economic context. As I drafted up charts for their 2023 savings and spending, it made a lot more sense why these numbers had to be precisely and accurately recorded.
Even though both of these companies were large companies, I also found differences in how they organized their data. The Chinese company, a traveling business, organized different numbers by a location-based subsection of data. On the other hand, the American company split their data on more functional categorization, their charts resembling that of an order of operations, rather than a list of some of the most economically advanced regions of China.
As I continue my work with different companies, I hope to gain more insight on how different companies, hopefully smaller businesses, choose to organize their financial information!
Week 5: Filing Fun!
Instead of entering data for the past year, this week was mainly concerned with the storage of old data. In China, corporate finance laws require CPA agencies to print and keep all of the records that they work with, for future reference. This entails a thorough and systematic filing system that at once sorts, explains, and protects a company’s data.
The first step is to gather all of the data. This includes all of a company’s revenue and spending for the past year (in this case, 2023), as well as an update on any changes or continuities for their savings. In many cases, these figures will also be accompanied by an explanation by the company for why some numbers are the way they are. For example, an engineering company could explain why one number on spending is just an estimate, because the acquisition of materials was particularly difficult for a period of time.
After gathering all of the data, the next step is to combine and order it. This is where the different ways in which a company categorizes their data come into play. In the previous blog, I described how a travel company might divide their data by splitting their company based on location, whereas an engineering company could do the same based on different steps in a more general engineering process. These differences all change the way that different types of charts and forms are ordered in that company’s file.
After having all of these records laid out, there comes the tedious process of replicating the digital files on paper. Some of the files will have already been printed out; others will have to be printed out in the office. After getting hard copies of every single document, they are ordered and separated (staples and clips are taken out), and then bound by a giant booklet-binding machine.
Lastly, the booklet for the whole company is labeled with its different subsections, as well as a number assigned to it.
This process was a little difficult to get the hang of at first, but ultimately fulfilling and fun!
Week 6: Candescent Contact
This week’s work was still related to data collection and organization, but involved lots of proactive, live communication with the partnering corporations than usual.
As said before, data collection and storage processes are pretty standard and well-established in China; this automatically also means that partner companies will mostly know what to do in order for the long, detailed process to run smoothly. However, there are always exceptions and extremities that require further focus. This week’s main client is an extremely large company that mainly operates within many different locations in China. With that many moving pieces, some subsections of the company have difficulty matching numbers across records; in other cases, some subsections are even completely closing down, while others are expanding.
These new updates require extra care on our part, mainly meaning that we must directly connect with representatives from within the company, more specifically to the ones that are in charge of sending data out of the company. After contacting them, they can either provide further clarifications on poorly explained discrepancies, or forward our questions to other people within the company, and later get a more specific answer that way.
Overall, this has been a slightly frustrating but also refreshing process, as I get to speak with people who operate all over China!
Week 7: Change and Continuity
This week’s work was back to data organization, except with more long-term data instead of just within this past year.
This process ensures not only that data is clearly and thoroughly stored for the past year, but also that data over the last three years gets checked at the same time. At a glance, this allows a broad vision of the company's development over a longer period of time. It also allows for the numbers between companies to be checked countless times over, to ensure rigor and accuracy in the storage process.
In this process, many types of change can be observed. Most obviously comes the growth and narrowing of different sectors within a company. However, more large-scale, broad changes also imply a change in a company’s trajectory. For example, an increased amount of spending on upkeep for international sectors of the company imply the want for a more global outreach, whereas a focus on domestic sectors implies that providing the best service within China is the main objective.
Seeing these trends was extremely interesting, and I can’t wait to learn more!
Week 8: Finishing up?
This week, I mainly focused on beginning my senior project product, an essay. This first consisted of reviewing all of the blogs I had written so far, and choosing the most important material to include. It also meant revisiting the research that I had conducted in the earlier stages of the senior project. Over these few blogs, I noticed continuities in the system's structure and organisation.
While working on this, I partook in the last week of my internship. As I looked back upon all the work I had done up until this point, I finished up some data organization, as the accounting firm finished up the data for one of the large companies they had done work for for the last two months, and began to dedicate more time to other, smaller businesses.
See you next week, with updates back in America!