Market economy needs more time to mature

By Qin Xiaoying (China Daily)
Updated: 2006-04-27 06:15

A debate erupted at the end of last year on the accomplishments and errors of nearly 30 years of reform in China. The debate involved renowned economists, government officials and the general public. Widespread debate on the Internet reached many.

The spontaneous debate covered a wide range of subjects such as people's livelihoods and tackling corruption, but did not probe deep into the theoretical roots of the matters being discussed.

However, it was an exchange of different ideas that addressed almost all aspects of the reform as well as a thermometer gauging the mood of the public. It might provide central authorities with a frame of reference for working out new policies.

True, some finger-pointing bordered on the extreme. For instance, some labelled those who urged pondering over the reform's defects "old guard," yearning to backtrack to the planned economy. Others alleged that certain "mainstream" economists had been bought by interest groups. Still others dismissed those who suggested borrowing ideas and principles from Western economic theories as "foreign-worshiping dogmatists" who had discarded fine Chinese traditions. All of this, however, does not hide the fact that the vast majority of people involved in the debate agreed in all sincerity that the reform has brought fabulous achievements.

Although a handful of backtrackers still exist, few people subscribe to the idea that the market economy should be totally dismissed as unworkable.

It is based on this judgement that this author firmly believes that the debate is all about looking squarely at the new problems cropping up in the course of the reform, about how to fully evaluate the difficulties ahead and about making the reform more workable in order to achieve sustainable development.

Sorting out the questions raised in the debate and making a sound analysis of them is of great significance.

The debate roughly concentrated on three major questions. First, the loss of State-owned assets in the course of economic infrastructure rearrangement and who should be held responsible for it. Second, whether or not vested monopoly interests exist and how these groups, if they do exist, impact on society. Third, the policies and infrastructure concerning healthcare, education and housing, which are of vital importance to millions upon millions of mortal beings in this country.

These questions no doubt cover all the important aspects of the Chinese economy and social life and also involve in part the issue of political reform.

Each question, in my opinion, contains three strata. First, what should be stuck to and what should be discarded in terms of the experience of the reform? This means actually taking stock of the nearly 30 years of reform.

Second, what should be added to future reform or what should be improved?

Based on this, we are led to the third stratum: Facing squarely the fundamental transition of Chinese society, which is unavoidable, and on this basis studying new problems and accepting new changes.

What are the new problems? What are the problems that were overlooked by decision-makers because conditions were not ripe enough to make them stand out and be felt?

First and foremost, in my opinion, is the question of vested interest groups. Now that the question has surfaced, it can never be steered clear of.

Generally speaking, the existence of interest groups is a universal phenomenon in all societies. The interest groups referred to in this debate are the groups that monopolize important resources.

Recognizing their existence and preventing them from exercising negative influence on the formulation of reform policies and the implementation of the policies constitutes the crux of the matter in safeguarding the interests of the State and the public.

This is also a hard nut that must be cracked in the next phase of the reform. Otherwise, universal sharing of the benefits brought by the reform, the fair distribution of social wealth and the punishment of corruption would just be empty talk.

Second, a sound and full understanding of the fledgling nature of the market economy taking shape in the country is called for.

The reality today is way beyond our expectations about the market economy in the initial stages of the reform and opening up.

It is our romantic perspective that led us to believe that the market was omnipotent and made us forget that the market economy itself is an economic form that contains clashing and contradictory elements.

Through this debate, many people have come to realize that only when we understand the fledgling nature of the Chinese market economy can we break free from economic triteness and find a balance between fairness and efficiency, equality and disparity, ecology and production, stimulus and aiding the poor, rights as a member of the public and private property.

At the same time, the debate makes people see clearly that the market economy in China needs time to become sound and perfect and requires legal and cultural support from society. The long-standing accumulative effect offered by necessary social institutions is especially important in this regard.

The author is a researcher with the China Foundation for International and Strategic Studies.

(China Daily 04/27/2006 page4)

(For more biz stories, please visit Industries)