What Does China Need? Market Economy or State Capitalism?


          Subido por el 30/11/2011

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Known as “the conscience of China’s economic sector*”,
Wu Jinglian, a renowned economist, in his recent speech,
urged the Chinese Communist Party (CCP) authorities’
“next administration to highly promote reformation.”
Wu warned that China’s market-oriented economy
encountered setbacks, and the authorities should adopt
proper money policy to gain breathing time, avoiding an
outbreak of severe inflation and a hard landing.
Wu believes that the transformation of economic
growth should just not be a slogan.

On 28th November, at the summit forum during the award
presentation ceremony for the Sun Yefang Prize in
Economic Science & Transformation of Economic
Development and Economic System Reform, Wu Jinglian
pointed out that in a rather long period of time, China’s
economic growth was resource driven.

Wu said that China’s macro economy was caught in a dilemma.
If it continued to adopt easy monetary policy, the asset bubble
would reach tipping point, triggering a collapse in real estate.
Inflation would likely increase in a vicious trend.
So, the authorities should tighten monetary policy.
However, the economic growth in the past was propped up
by money, a tight policy would mean that
the growth momentum would be lost.

Wu Jinglian, is currently deputy director, research fellow of the
academic committee at the CCP State Council Development
Research Center, deputy director of the economic committee of
CCP’s Chinese People’s Political Consultative Conference and chief editor of Reform magazine.

In his speech, Wu Jinglian proposed five areas related to
the transformation of economic growth.

However, economics professor, Chen Zhifei, at the City
University of New York, questions whether the CCP can really achieve its proposed economic transformation.

Chen Zhifei: ” Mr. Wu has always had insights on issues of
China’s market economy and has gained people’s respect.
Since the late 1980s, he followed the then CCP Premier,
Zhao Ziyang, to carry out pricing reform, drawing the industry insiders’ attention and respect.
But since the 4th June incident in 1989, for over 20 years,
though he has given lots of views on China’s markets,
I believe that’d be just his own wishful thinking.”

Currently, China’s coastal areas, named as the world’s
factories, confront difficulties in exporting due to increasing business costs, and global economic recession.
More and more enterprises in this plight have to make
salary cuts, layoffs and the like, while triggering another wave of worker protests.

Wu Jinglian stated that China’s successful coping with
the Asian financial crisis mainly depended on
the rising of small and medium enterprises, which presently
were caught up in the tidal wave of business failure.
Wu pointed out that the fact of state-owned sector’s expanding
and private sector’s shrinking , was a major reform setback.
Without implementing reform on the state-owned economy,
the overall efficiency of China’s economy would be hard to improve upon,
and would accelerate corruption and wealth polarization.

That state-owned enterprises not only monopolized
in oil, telecommunications, railways, finance and other key areas,
but also rapidly expanded with backups from
state-owned banks’ massive loans.
Secondly, CCP authorities at all levels owned enormous power
to allocate land, capital and other important resources;
Thirdly, CCP authorities at all levels directly intervened in
enterprises’ micro business operations by means of approval for invested projects,
application of market access permits and
pricing control systems, etc.

NTD reporters Yi Ru, Li Yuanhan and Sun Ning.

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