In the wake of President Hu Jintao's visit with Yale University's President Richard Levin last Friday, it's noteworthy that China had recently authorized the distinguished university's ability to trade domestic stocks and bonds, making it the first foreign university to be granted access to the country's tightly controlled securities market. This action might very well be related to "historical quanxi."

The decision allows Yale's endowment investors to tap one of the world's fastest growing economies. The university's endowment stands at nearly $15 billion and is one of the world's largest. China allows foreign investors to buy only a limited number of stocks and bonds, referred to as B shares, that are quoted in U.S. and Hong Kong dollars. The much larger domestic stock exchange, which trades stocks known as A shares, is restricted to Chinese investors and a select group of approved foreign institutions.

It doesn't hurt that Levin, a distinguished economist, is an avowed free trader and does not support those prevalent views in Washington that the US impose punitive tariffs on Chinese products. After all, there is an impressive China story about opportunity not protectionism, that warrants daily reaffirmation.

Yale and China have a strong historical link since the first Chinese student, Yung Wing, came to study in the U. S. at Yale in 1854. In 2006, more faculty are engaged in China than in any other country and the university hosts more students and scholars from China than from any foreign nation. According to the Yale Bulletin, there are over 80 Yale-China academic collaborations currently underway and more than 26 study sites across the Chinese Republic. More Yale faculty conduct academic projects in China than in any other country, and Yale hosts more students and scholars from China than from any other foreign nation.

Check out Nayan Chanda's Yale Global Online, where economist, Daniel Rosen deftly examines the economies of the US and China and their respective financial habits. For example in 2005, savings accounted for at least 30 percent of Chinese household income while the US registered no savings at all.

You might ask what all this has to do with China's VC landscape? Academics are largely leading the policy reforms in China's venture industry and the dialogue with institutions of higher learning like Yale, succeeds in solidifying Mr. Hu's world view of more 'harmonious cooperation. Photo courtesy of Michael Marsland.