'The reform of China must not waver.'
By Huangfu Ping (Caijing Magazine)
Updated: 2006-02-15 09:08

[note: Huangfu Ping was a commentator with Liberation Daily and a deputy editor-in-chief with People's Daily. From the end of 1991 through the beginning of 1992, Huangfu Ping was known for a series of commentaries about economic reform in China.]

China has reached another historical turning point. During the process of building the well-off society, we are now looking at a period in which intra-national contradictions are showing and international frictions are many.

There is a new wave of thought in society that wants to negate and oppose the reforms. These people regard the new problems and contradictions that occurred during the reform process as the bad effects of western liberalization and they are issuing criticisms and condemnations. It would seem that we are once again facing another round of debate about socialism versus capitalism.

We ought to look at this properly with a combination of history and reality, together with theory and practice, in order to analyze the current problems.

In the late 1980's and early 1990's, the negation of reform and opening had caused a temporary clamor of ideas. But at that critical moment in history, Deng Xiaoping made the definitive statements: "Planned economy is not equivalent to socialism, and market economy is not equivalent to capitalism"; "the key is the question of whether we want 'capitalism' or 'socialism' but the standard for judgment is to see whether something is good for advancing the productivity in a socialist society, whether it is good for increasing the combined national resources of the socialist country and whether it is good for raising the living standards of the people"; "China must be wary of the Right, but the main thing is to hold off the Left."

At the time, the party central government led by Jiang Zemin at the Fourteenth Congress implemented the major ideas of Deng Xiaoping during his southern tour and pushed the reform and modernization projects into a new historical phase of development. The reason why China is in such good shape today and the masses of people have well-off lives is intimately connected to our firm determination to resolute promotely the reforms in the socialist market economic system.

The results from the market economic reforms inevitably caused some new problems and contradictions to appear. Presently, among the masses, the strongest sentiments are about the wealth gap between rich and poor, regional disparities, deterioration of the environment, serious corruption of power, public safety, the high prices for medical care, schooling and housing that came as the result of reforming health care, education and housing. The party central with Hu Jintao as the General Secretary holds the attitude of using pragmatic methods to solve genuine problems in modern ways based upon scientifically developed ideas in order to construct the well-off society. Basically, the idea it to adopt and develop the theory of Deng Xiaoping and the "Three Represents" theory and to insist on using reforms as the principal means of solving the new problems. With more reforms, greater opening and a healthy, complete market economic system under socialism, this will eventually lead to an overall plan to solve the problems of the disparities between urban and rural areas, between geographical regions and between rich and poor; an overall plan to harmonize economic developments with social developments; an overall plan to harmonize socio-economic developments and environmental protection; an overall plan to harmonize opening to the outside and internal development.

Certain people have put the blame for all the new problems and contradictions during the reforms on the market reforms themselves. They want to shake up and negate the reforms. This is obviously incomplete and erroneous. In the historical background of changing the economic system, many of the contradictions arise because the market economy is immature and the market functions were inadequate. That is not the fault of the market economy and system themselves. The disparity between rich and poor was not because the market reforms allowed one segment of the people to become rich first. It was because during the transition to the market, the hand of power intervened and let certain people become rich quickly at the expense of others. Using administrative power to become rich while hurting the weaker groups was precisely caused by the flaws in the old system. How can market reform be blamed now?

The appearance and expansion of the unfair distribution of social wealth was not the fault of the reforms either. On the contrary, it was the obvious outcome when the reforms were blocked and unable to reach into everywhere. The most significant obstacle is that the interest class caused the overall efficiency of the reforms to become distorted into "departmental interests" and "local interests" and let "trading power for money" operate freely and extensively. History has shown that "letting some people get rich first" was a brilliant decision. "Efficiency first" broke up the old system and liberated the productive power. Not only did some of the people get rich, but the entire wealth level of society rose to an average of US$1,500 per capita. The number of people below the poverty line went from the 300 million before to just over 20 million now. This showed that the banner of "efficiency first" for the reform also had the words "fairness." Decreasing the gap between rich and poor should not be regarded as equivalent to clamping down on the rich. Rather, it should be about protecting equal rights to increase the speed by which the poor can make money. The purpose of reform is not to make rich people poor, but to let poor people become rich. Emotions such as "hating the rich" will not help to shrink the gap between rich and poor, and they are not conducive for becoming well-off altogether. This is an obvious logic in contemporary business culture.

At the moment, the public has increasing needs for public goods which are presently inefficient and in short supply. This is the major contradiction in Chinese society. Public goods refer to the social services that the government provides for the masses, such as education, culture, residences, medical care, employment, security, ecological protection, environment safety, etc. That is to say, once the problem of basic necessities is solved ("Pick up the bowl and eat meat," the next step is to "Put down the chopsticks and start cursing out your mom." What are you cursing her out for? You "curse" because there are too many corrupt officials and judges. You "curse" that it is not safe in the streets and there is no protection. You "curse" that information is neither transparent nor balanced, and things are not done democratically, and so on. All of these problems arise because there are not enough public goods. The masses have increasing need for a public space with efficiency, no corruption, equal participation and transparency.

It can be seen that the true focal points of many of the problems and contradictions during the reforms were the injustices that occurred because the administrative powers intervened in the distribution of production during the marketization. The marketization of administrative resources (especially public goods) was the most outstanding reason for the unfairness in the ownership and distribution of social wealth. The marketization of power also distorted the reforms themselves severely. Certain domains in which the markets should not be functioning became the targets of "false reforms" in order to make profits, whereas other domains in which market reforms should be promoted remained stagnant.

Using the land market as an example, the local governments have virtually completely ignored the rights of the land owners to participate in the transactions and became the main body in the market transactions themselves. This made the local governments and land developers the biggest profit-reapers, and the rights and interests of the peasants and residents who own the land are often damaged. In recent years, there have been a large number of civil disputes over urban land clearances and rural land requisitions, and this reflects the contradictions when the local government monopolize the key market in land requisitioning and selling.

The problems that emerged during the reform process are manifestations of the underlying factors of the system, and these are intimately related to the political administrative system. After more than 20 years of reform in China, it is the technological fields that have taken on the form of modern market economy but not necessarily the substance of market economy. The stagnation of the reforms of the important markets involved not just the issue of reforming the economic system, but it also involved the reform problems for the political, social, cultural and other systems. Thus, in the recommendations of the Eleventh Fifth Year plan of the central government passed by the Fifth Plenum of the 16th CPC Central Committee, the top item in the reform projects is for the government's administrative system. The important thing is to first solve the monopolization and domination of the government in the key markets in order to clear the path for the reform of those key markets and push through the market reforms fully. In terms of job function, the government should turn from an interest group in the market to a body that serves the public, distributes the public resources and goods fairly, justly and openly to the public and creates a fair competitive market environment that is useful to all the main bodies in the market.

China is at a critical period of the transformation of the system, and this is a period of huge changes in the social structure. There are many interest groups and there are many ideas out there. To adjust the interest relationships during a deep structural reform will create a great deal of resistance. The depth, breadth, difficulty and complexity of the reforms are increasing. In our thinking, we have been influenced deeply by traditional socialist theories and planned economies, so we are often lagging behind the situational developments. When we encounter problems, we often use extreme judgments based upon ideology and we blame the problems on the reforms. If anyone wants to use an individual case study to negate all the reforms, then it is irresponsible.

We need to liberate our thoughts further, we need to have independent thinking and we need to use scientific thoughts everywhere. We will go full-steam ahead with the reforms. We cannot waver, we cannot stop and we cannot retreat. To use a criticism of neo-liberalism to negate the practice of reform is basically negating the entire history of Chinese reform, and it also negated the theory of Deng Xiaoping and the important ideas of the "Three Represents." The reforms needs to be perfected and the market economy has to mature. The last 30 years of practical reforms has proven an unequivocal truth: only socialism can save China and only reform can save China! It is everybody's wish to stay firm with the reforms and openings. It is the overall trend to develop the market economy. Speeding up the development of the economy and society is what everybody hopes for. Liberating your thought to move with the times is a necessary step.