It wasn’t that long ago that the U.S. and China sought closer economic relations. David Dollar was at the heart of that engagement, first as a World Bank economist and then as Treasury official, advising both Washington and Beijing on ways to move forward together.
During the 2009 global financial crisis, Wang Yang, a senior Communist party official who was then running Guangdong province in southern China, turned for advice to the World Bank’s Beijing office headed by Dollar. After Dollar and his staff wrote up recommendations, he told a Wall Street Journal reporter, Wang invited him to give a lecture to the provincial government, which was attended by hundreds of officials, with Mr. Wang in the middle of the front row.
Not long afterwards, the U.S. Treasury hired Dollar as its China representative, counting on his broad contacts for a better idea of Beijing’s thinking. “No one else came close to his depth of understanding and on-the-ground access,” says Lael Brainard, director of the White House’s National Economic Council who was then a senior Obama Treasury official.
David’s work provided empirical proof about where assistance can have the greatest impact.
Ryan Hass, director of Brooking’s John L. Thornton China Center
Dollar died on Oct. 6 from complications arising from RSV, his family says, several weeks after a bone marrow transplant. He was 68 years old and a senior fellow at the Brookings Institution at the time of his death.
David Dollar was born in St. Louis, Mo., the son of two college professors. He attended Dartmouth College, where he began studying Chinese. Soon after, he traveled to Taiwan on a fellowship and then enrolled at New York University, where he earned a Ph.D. in economics. He was an assistant professor at U.C.L.A., and a visiting professor at the Chinese Academy of Social Science in Beijing, before joining the World Bank in 1989.
Early on, as a World Bank economist, Dollar made his reputation by co-authoring several widely cited studies. He argued that foreign aid accelerated growth in countries with good governance, and global trade and investment led to more rapid growth in poor countries. Both conclusions remain controversial but have had widespread influence.
David Dollar speaking on whether global economic integration has been disruptive to developing countries, September 18, 2001. Credit: C-SPAN
“David’s work provided empirical proof about where assistance can have the greatest impact,” says Ryan Hass, director of Brooking’s John L. Thornton China Center, “The consequences of that were a windfall of funding” from donors demanding poor countries improve political rights and attack problems like corruption. The U.S.’s Millennial Challenge Corp. formed several years later in 2004, provides grants to poor countries based on those principles.
Dollar combined his academic insights with policy recommendations. As the World Bank’s Washington-based country economist for Vietnam in the early 1990s, he helped shape what Vietnam calls its economic “renovation.” The communist country began to welcome foreign investment and encourage entrepreneurship. The joke among Vietnamese economic officials, say former World Bank economists, was that “David was the first dollar the World Bank provided Vietnam.”
When Dollar asked Vietnam’s famed Defense minister, Gen. Vo Nguyen Giap, why the country decided to open up, Giap replied, “desperation,” says Dartmouth economist Douglas Irwin. Until his death, when Vietnamese economic officials visited Washington they asked to speak with Dollar.
But Dollar was best known for his work in China, where he lived for nearly a decade, initially as the World Bank’s country director from 2004 to 2009, and then as the U.S. Treasury’s representative from 2009 to 2013.
The World Bank played an important role in China’s economic development, offering a steady stream of advice to Chinese economic officials who cautiously experimented with market reforms starting in the 1980s. Dollar benefitted from those ties and helped deepen them. Modest and easy-going, he developed a wide range of contacts in Chinese economic circles.
Under his direction, the bank’s staff put together one of the first estimates of the costs of China’s pollution, calculating that it caused 750,000 premature deaths annually. After objections from Beijing, the study was never formally released but the estimate became public. “It helped convince the authorities to take the problem more seriously,” says Bert Hofman, a former World Bank China country director.
Dollar’s insights and connections made him valuable to the Obama administration, Dollar was “driven by evidence” says former Treasury Secretary Timothy Geithner, “and not vulnerable to waves of China pessimism or paranoia.”
At a meeting of provincial ministries of finance in Kunming around 2012, for instance, Dollar was slated as the first foreign speaker and talked to the group in Mandarin, says Annika Eriksgard, who was the European Union’s representative. “I took this as a sign of China gradually finding itself more interconnected (with the rest of the world) and with a wish to engage and understand the other major countries,” she says.
One of Dollar’s main assignments for Treasury was to track and try to influence China’s currency policy. The Obama administration, like administrations before it, complained that China kept the yuan undervalued, making its exports cheaper. While that benefited American consumers who could buy cheaper furniture, clothing and other goods, the competition bankrupted American manufacturers who couldn’t match China’s prices.
David and people like him have much less influence but their views should still be considered. A world where world powers don’t have economic ties is very dangerous.
Minxin Pei, a China scholar at Claremont McKenna College
His role also opened him to constant ribbing about being an economist with the last name of Dollar. For a time, he worked on the issue with a Washington Treasury official with the last name Yuan. So as the U.S. pressed China to lift the value of the yuan against the dollar, two of its main emissaries were named Dollar and Yuan.
After leaving China, Dollar continued his China studies at Brookings. There he informally advised the Chinese authorities about how to set up a development bank, called the Asia Infrastructure Investment Bank, so it followed international standards. With two Chinese economists, he also co-authored a book, “China 2049”, which proposed economic reform measures.
But by then U.S. relations with China were worsening and confrontation was replacing cooperation. The U.S opposed the creation of the AIIB, which Dollar helped create, fearing it would be used to increase China’s global influence and lobbied allies unsuccessfully against joining it.
Dollar, the engagement advocate, found himself out of step. “His views didn’t match the zeitgeist in Washington,” says Hass, though he says officials still sought Dollar’s advice.
Dollar never made the transition from a development economist who saw China’s rise from poverty as a great success to a political actor looking to contain China’s growing power, says Pei, the Claremont McKenna China scholar.
“Engagement, integration, and globalization are yesterday’s concepts in most capitals.” Pei says. “David and people like him have much less influence but their views should still be considered. A world where world powers don’t have economic ties is very dangerous.”
Dollar is survived by his wife L. Paige Whitley and his two children, Evan and Isabel Dollar.
Bob Davis, a former correspondent at The Wall Street Journal, covered U.S.-China relations beginning in the 1990s. He co-authored “Superpower Showdown,” with Lingling Wei, which chronicles the two nations’ economic and trade rivalry. He can be reached via bobdavisreports.com.
