01.11.2013 13:14
How the die was finally cast for economic change? and subsequent decades of explosive growth ? by tenacious reformists
Reform Series: Part I
Economic reform entered a period of uncertainty beginning in the late 1980s and stretching into the early '90s. The period was marked by ongoing debates over the respective roles of central planning and the market system.
With Deng Xiaoping's support and guidance, Jiang Zemin announced at a summer 1991 event that the party has settled on an official stance. His words helped quell mainstream, state-media critics of the pro-reform "Huangfu Ping" articles, which had appeared earlier that year in the Liberation Daily and clearly documented the reformist position.
"Central planning and the market are economic tools," Jiang Zemin said at the July 1 event marking the 70th anniversary of party's founding. "Both are needed to build a commercial economy on the basis of large-scale, socialist production.
"Which tool is used does not ultimately distinguish socialism or capitalism."
Deng Xiaoping had expressed exactly that viewpoint earlier in the year while meeting with visiting foreign dignitaries, and during at talks with party leaders.
Meanwhile, Jiang Zemin poured himself into reading books about economics, whose authors ranged from Adam Smith to Paul A. Samuelson to Joseph Stiglitz. He sought to understand how the market works.
A few weeks after the party anniversary, Jiang Zemin started preparing for a special forum on economics and which system would be best suited for China's reform path. The goal was to set a clear, ideological stance on reform's direction, the role of central planning, and the market's influence ahead of the 14th National Party Congress scheduled for the following year. An attempted coup d'etat that rocked China on August 19, 1991, prompted Deng Xiaoping to call an urgent meeting with Jiang Zemin and other Politburo members, where reform was brought to the fore.
"Pressing on with reform and opening up will decide the fate of China", he told them. "We must clarify what it means to establish and develop a socialist nation."
Afterward, Jiang Zemin accelerated preparations for the scheduled economics forum. Those invited, predominantly economists, had to meet his requirements. For example, participants had to advocate realistic, practical solutions. They had to be willing to share their thoughts thoroughly and honestly. Second, Jiang Zemin was keen to invite researchers who specialized in the reform and opening up movement. And he wanted to hear from experts on western capitalism.
More than 20 people attended the talks, including many who specialized in international affairs. A number were later elevated to key government posts linked to the economy, including Zhou Xiaochuan, the current central bank governor, Guo Shuqing, who today serves as China's chief securities regulator, and Justin Lin Yifu, who later rose to chief economist at the World Bank.
The participants were asked to discuss three questions: Why had capitalism proved so resilient? What could be learned from other economic systems? And what was behind the breakup of the Soviet bloc in Eastern Europe?
The talks ran three full days and five half-days from mid-October to mid-December. The setting was informal, with participants sitting around a single table and speaking openly. There were neither assigned seats nor scripts. Anyone could speak at any time.
The first topic was western capitalism's progress since the Second World War. Many noted the existence of market regulations in capitalist economies, and that the state in many countries plays a role in economic affairs. Clearly, they concluded, aspects of central planning are not unique to socialism.
?
The economists also gave detailed explanations of the shareholding system and competition's role. Lin Yifu, then a deputy director at the State Council's rural development office, drew attention to the Four Asian Tiger economies of Singapore, Taiwan, South Korea and Hong Kong, highlighting their highly successful development strategies.
Forum attendees acknowledged that, far from dying out, capitalism had in fact gone from strength to strength; the market system had shown its dynamism, and progress had been made to address its failures via, among other means, macro-economic management.
After the discussion turned to the break-up of the Soviet bloc, all agreed that economic factors were the major reason for the system's collapse. The traditional, centrally planned economy had failed to compete with the primarily market-based economies of Western countries.
The young and avant-garde Guo Shuqing, then a researcher at the State Planning Commission's research center, openly criticized the Soviet states. He faulted them for excessive meddling in economic affairs and their dogmatic views of public ownership. Guo Shuqing went on to write three research papers that were published after the meeting and spelled out his position.
Zhou Xiaochuan argued that a market's basic functions are to efficiently allocate limited resources and provide an incentive mechanism.
How the die was finally cast for economic change? and subsequent decades of explosive growth ? by tenacious reformists
Reform Series: Part I
Economic reform entered a period of uncertainty beginning in the late 1980s and stretching into the early '90s. The period was marked by ongoing debates over the respective roles of central planning and the market system.
With Deng Xiaoping's support and guidance, Jiang Zemin announced at a summer 1991 event that the party has settled on an official stance. His words helped quell mainstream, state-media critics of the pro-reform "Huangfu Ping" articles, which had appeared earlier that year in the Liberation Daily and clearly documented the reformist position.
"Central planning and the market are economic tools," Jiang Zemin said at the July 1 event marking the 70th anniversary of party's founding. "Both are needed to build a commercial economy on the basis of large-scale, socialist production.
"Which tool is used does not ultimately distinguish socialism or capitalism."
Deng Xiaoping had expressed exactly that viewpoint earlier in the year while meeting with visiting foreign dignitaries, and during at talks with party leaders.
Meanwhile, Jiang Zemin poured himself into reading books about economics, whose authors ranged from Adam Smith to Paul A. Samuelson to Joseph Stiglitz. He sought to understand how the market works.
A few weeks after the party anniversary, Jiang Zemin started preparing for a special forum on economics and which system would be best suited for China's reform path. The goal was to set a clear, ideological stance on reform's direction, the role of central planning, and the market's influence ahead of the 14th National Party Congress scheduled for the following year. An attempted coup d'etat that rocked China on August 19, 1991, prompted Deng Xiaoping to call an urgent meeting with Jiang Zemin and other Politburo members, where reform was brought to the fore.
"Pressing on with reform and opening up will decide the fate of China", he told them. "We must clarify what it means to establish and develop a socialist nation."
Afterward, Jiang Zemin accelerated preparations for the scheduled economics forum. Those invited, predominantly economists, had to meet his requirements. For example, participants had to advocate realistic, practical solutions. They had to be willing to share their thoughts thoroughly and honestly. Second, Jiang Zemin was keen to invite researchers who specialized in the reform and opening up movement. And he wanted to hear from experts on western capitalism.
More than 20 people attended the talks, including many who specialized in international affairs. A number were later elevated to key government posts linked to the economy, including Zhou Xiaochuan, the current central bank governor, Guo Shuqing, who today serves as China's chief securities regulator, and Justin Lin Yifu, who later rose to chief economist at the World Bank.
The participants were asked to discuss three questions: Why had capitalism proved so resilient? What could be learned from other economic systems? And what was behind the breakup of the Soviet bloc in Eastern Europe?
The talks ran three full days and five half-days from mid-October to mid-December. The setting was informal, with participants sitting around a single table and speaking openly. There were neither assigned seats nor scripts. Anyone could speak at any time.
The first topic was western capitalism's progress since the Second World War. Many noted the existence of market regulations in capitalist economies, and that the state in many countries plays a role in economic affairs. Clearly, they concluded, aspects of central planning are not unique to socialism.
?
The economists also gave detailed explanations of the shareholding system and competition's role. Lin Yifu, then a deputy director at the State Council's rural development office, drew attention to the Four Asian Tiger economies of Singapore, Taiwan, South Korea and Hong Kong, highlighting their highly successful development strategies.
Forum attendees acknowledged that, far from dying out, capitalism had in fact gone from strength to strength; the market system had shown its dynamism, and progress had been made to address its failures via, among other means, macro-economic management.
After the discussion turned to the break-up of the Soviet bloc, all agreed that economic factors were the major reason for the system's collapse. The traditional, centrally planned economy had failed to compete with the primarily market-based economies of Western countries.
The young and avant-garde Guo Shuqing, then a researcher at the State Planning Commission's research center, openly criticized the Soviet states. He faulted them for excessive meddling in economic affairs and their dogmatic views of public ownership. Guo Shuqing went on to write three research papers that were published after the meeting and spelled out his position.
Zhou Xiaochuan argued that a market's basic functions are to efficiently allocate limited resources and provide an incentive mechanism.
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