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Economists decode China's reforms
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The year 2008 marks the 30th anniversary of China's reform and opening-up drive. China's Central TV Station, on January 13, invited Li Yining and Wu Jinglian, two famous economists and promoters of China's reforms, for an interview to discuss economic successes and failures and to speculate about future reforms.

CCTV: Could you comment on the most successful reforms in the past 30 years?

Wu Jinglian: One was the decision of the central authorities to develop a commodity economy in 1984. This proved to be the prologue for more reforms.

Second, the Communist Party of China (CPC) adopted a resolution concerning the establishment of a socialist market economy at the Third Plenary Session of the Fourteenth CPC Central Committee in 1994. A big stride forward in comprehensive reforms during the 1990s can be attributed to the 1994 market economy reform.

Third, the reform of the basic economic system proposed at the 15th CPC National Congress in 1997. The economy of coastal areas has grown rapidly since the launch of this reform.

Li Yining: In 1978,18 farmers from Xiaogang Village in Anhui initiated the rural contract responsibility system, based on households with remuneration or incomes linked to output. The reform was designed to break with egalitarianism. The villagers took a great risk to promote the new contract system in the initial states of the reform, but the outcome was an enormous increase in agricultural productivity.

Second, a reform aiming at introducing the joint-stock system took place in the middle and latter half of the 1980s. This hastened the birth of China's stock market. Although the stock market was not yet perfected, the reform paved the way for other reforms of state-owned enterprises and market growth.

The third is the rise of private economy. Private enterprise creates the most job opportunities, estimated at 70 percent. The private economy has also made great contributions toward taxation and exports in many cities.

Wu Jinglian: I agree with Professor Li's first comment. The contract responsibility system has developed quickly and it has played a significant role. But I consider it the restoration of a system popular among farmers rather than a reform.

CCTV: Can you comment on anything that has disappointed you most in the past 30 years?

Li Yining: First, the dual structure of the urban and rural economy has not yet been changed, so farmers' incomes have increased slowly.

Second, industrial monopolies have not been eliminated during reforms involving state-owned enterprises. These monopolies must be broken in order to establish a real market economy.

Third, reforms of the social security system have made little progress because of financial difficulties or other reasons. The government must pay close attention to the people's livelihoods in the future.

Wu Jinglian: I agree with Professor Li; the work on the social security system is too slow. The central government decided to reform the country's social security system in 1993. As far as I know, some official departments took an active part in the reform but they have met with obstacles, which were not related to finance. In fact, many departments have maintained their old system, allotting too much consideration toward bettering their own interests.

The reform of property rights regime has not been fully implemented. For example, the problem of land ownership has not been solved and this involves almost half of the population. I believe that the permanent right of land use should belong to the farmers. If we cannot resolve this problem, many other issues will also remain unsettled.

Another problem is legal construction. The central issue of the market economy is independent and free business transaction. If administrative organs or other powers control transactions, then it is not a market economy. The central government decided to establish a country governed according to laws in 1997, but the reform of legal system has been too slow.

CCTV: We have achieved a new starting point and we are looking forward to better prospects. In terms of the country, enterprises and the people, could you list some priority issues which call for urgent action?

Li Yining: The establishment of a social security system needs to be accelerated in China. Efficient measures should be taken in dealing with problems in education, medical insurance and employment.

Chinese enterprises should take on more social responsibilities. On the one hand, they should step up self-innovation, because it is only through innovation that they can improve their competitiveness and win international success. On the other hand, they should also provide more help to communities and poor areas.

I think education should be strengthened to build up credibility and directed at individuals. A society cannot develop without credibility.

Wu Jinglian: I think reforming governments is the most important issue. Chinese government organs should perform their functions according to the will of the people. They should make great efforts to establish an adequate social security system and improve law enforcement.

Chinese enterprises should change their market environment, which means promoting reforms. Also they should make their profits honestly. As an individual, we should try our best to do our work well and also show concern for society at large.

CCTV: What kinds of measures should we take to solve these problems?

Li Yining: Stagnation and retrogression lead only to a dead end. We understand that there are always difficulties in the process of moving forward, but we need to do it anyway as long as we are heading in the right direction.

Wu Jinglian: The Guangdong Provincial Party Committee called for continuous emancipation of the mind recently to stimulate systematic reforms and further development. We should respect others and think theoretically. We need the right to discuss these issues freely, then we can promote our reforms.

(China.org.cn by Yang Xi, February 8, 2008)

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