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Wu Jinglian

Wu Jinglian: Voice of Reform in China

edited with introductions by Barry Naughton
Copyright Date: 2013
Published by: MIT Press
Pages: 384
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  • Book Info
    Wu Jinglian
    Book Description:

    For more than thirty years, Wu Jinglian has been widely regarded as China's most celebrated and influential economist. In the late 1970s, Wu (b. 1930) was one of a small group of economic thinkers who broke with Marxist concepts and learned the principles of a market economy. Since then he has been at the center of economic reform in China, moving seamlessly as an "insider outsider" between academic and policy roles. In recent years, Wu has emerged as a prominent public intellectual fighting not just for market reform but also for a democratic society backed by the rule of law. This book presents many of Wu's most important writings, a number of them appearing in English for the first time. Each section offers an informative introductory essay by Barry Naughton, the volume's editor and an expert on China's economy. The book begins with Wu's most recent articles, which make clear his belief that gradual marketization combined with institutional development will make Chinese society fairer and less corrupt. Biographical writings follow, accompanied by a richly insightful text by Naughton on Wu's life and career. Writings from the 1980s and 1990s, written originally for a small audience of policy makers, demonstrate how Wu shaped China's early reform path; essays and articles from the late 1990s and early 2000s reflect Wu's new role as an advocate for broader reforms. Taken together, these texts map not only China's path to economic reform but also Wu's own intellectual evolution.

    eISBN: 978-0-262-31698-9
    Subjects: Economics, History

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
  3. Introduction
    (pp. ix-xxiv)
    Barry Naughton

    Wu Jinglian is widely acknowledged to be China’s most influential and celebrated economist. As an active participant in economic debates and discussions in China for more than thirty years, Wu has already gained a formidable reputation for intellectual independence, personal honesty, and commitment to the reform process. In several crucial episodes, Wu Jinglian’s input directly shaped China’s economic policy, altering China’s trajectory and contributing to its rapid rise. Wu is generally recognized as one of China’s most influential “public intellectuals,” appearing, for example, as one of six economists on a widely circulated list of China’s fifty most influential public intellectuals...

  4. I Current Issues:: What Kind of 21st-Century Economy Will Emerge from China’s Reforms?

    • Editor’s Introduction: Addressing Current Issues
      (pp. 3-10)
      Barry Naughton

      This part contains recent pieces by Wu Jinglian that address the most pressing issues facing China today, in the second decade of the twenty-first century. The section and volume open with a 2012 piece calling for a revival of economic reform. Economic reform and the creation of a market economy governed by the rule of law are at the center of Wu’s concerns. Wu discusses the past, present, and future of China’s market reforms, and while he describes past successes, he doesn’t waste much time celebrating China’s economic achievements, which are by now wellknown and widely acknowledged. Instead, he is...

    • 1 Toward a Renewal of Reform
      (pp. 11-32)
      Wu Jinglian, Barry Naughton and Lauren Reed

      Naughton: China made enormous strides in reform during the 1990s, but since the entry into the World Trade Organization in 2001, the pace of reform has slowed dramatically. What are the reasons for the slowdown in reform after 2001?

      Wu Jinglian: The slowdown in reform after 2001 had both economic and political causes.

      First, the economic causes. Economic reforms in the 1990s really accomplished a great deal. Among the 1990s economic reforms we should first name the creation of workable fiscal and financial systems; and the privatization of the small township and village enterprises. In addition there was globalization. In...

    • 2 Thinking through China’s Thirty-Year Economic Reform Process from an Institutional Perspective
      (pp. 33-60)
      Wu Jinglian

      A country’s economic development has two drivers: technology and institutions. As a developing country, China’s technological level still lags behind the developed countries, but it is relatively easy for China to access existing technologies that are new to China but can still improve efficiency. However, whether or not we can utilize new technologies to their full potential depends on whether our institutions are compatible with these technologies. Therefore the institutional driver plays the most critical role in historical progress. This article therefore looks at China’s thirty-year economic reform from an institutional perspective.

      In the wake of the failure of the...

    • 3 The Financial Tsunami and China’s Economy
      (pp. 61-68)
      Wu Jinglian

      The 2008 financial tsunami was a shock, and it is important to understand its nature, both from a theoretical standpoint and for practical policy purposes, in order to manage the impact decisively. It is not appropriate to see this as a crisis of the United States, or call it a “Wall Street Financial tsunami.” In my view, although the crisis has its roots in the global monetary system that is centered on the US dollar, and the origin of the crisis is in the US subprime loan crisis, the crisis is not about any single country or group of countries....

    • 4 An Analysis of the Attitude toward Reform of Three Social Forces
      (pp. 69-74)
      Wu Jinglian

      As economic interests change during the transition period, social forces emerge that hold differing attitudes toward economic reform. At first, during the early reform period, there were basically just two attitudes toward reform, for or against. Even then, there were many different reasons to be for or against reform: some people took positions because of their understanding of the problems, while some people made calculations based on their own political position or economic interests. Under the conditions prevailing at that time, the majority of people supported reform. Most government cadres and ordinary workers and farmers had become dissatisfied with the...

    • 5 Properly Handle the Excessive Increase of Income Inequality
      (pp. 75-78)
      Wu Jinglian

      It is necessary to call the problem of excessive income inequality to the attention of our compatriots and urge everybody to think about this problem. The income gap has reached an extent that shows that our society is indeed sick. Since it’s a sickness, we should not conceal it but should rather seek to bring it into the daylight. But just talking about it doesn’t solve the problem, either. We need to think about it rationally and find feasible solutions. I agree with Professor Yi Gang that if we respond with a populist approach that sensationalizes the problem, it will...

    • 6 Several Methods to Effectively Check the Spread of Corruption
      (pp. 79-84)
      Wu Jinglian

      In our previous economic analysis, we pointed out that the interference of political power in business creates that environment for rent-seeking, and is the most important source of corruption. Thus it follows that in order to combat corruption at its root, we must strive to eliminate the environment in which rent-seeking activities grow, and that means to reduce the intervention of administrative power into economic activity. In 2000, when Wei Jianxing [then head of Communist Party Discipline Inspection Commission] visited Guangdong, he pointed out that to combat corruption at its root, it was necessary to reduce administrative examination and approval...

    • 7 How Nations Become Rich and Strong: Thoughts Inspired by the TV Show “The Rise of the Great Nations”
      (pp. 85-94)
      Wu Jinglian

      Central China Television broadcast in 2007 the documentary “The Rise of the Great Nations,” which got a lot of attention. I think the title of the show is not completely accurate, since the problem is not so much whether a nation can “rise” and become a “great nation” that dominates a certain era but rather whether the people of that nation achieve prosperity. However, since this show used vivid images to spread historical knowledge, and urged Chinese people to open their eyes to the world and think about how to do a better job on our road of national rejuvenation,...

  5. II Biography:: Living History in a Multi-generational Community of Socially Engaged Intellectuals

    • Editor’s Introduction: Biographical Preface
      (pp. 97-118)
      Barry Naughton

      Born in 1930 Nanjing, Wu Jinglian grew up in turbulent times and entered adulthood during the early years of the People’s Republic of China. Wu’s personal history is thus intertwined with the history of the People’s Republic. Wu Jinglian has had a vantage point near the center of many of the crucial events of the turbulent history of the People’s Republic of China. Since the reform era began, he has been an important actor, shaping the trajectory of economic reform in many ways, major and minor. Wu Jinglian has written about his personal history, and in this introduction I have...

    • 8 My Mother: Using an Entrepreneurial Spirit to Achieve Life’s Goals
      (pp. 119-124)
      Wu Jinglian

      Most children believe that their mother has a great and memorable spirit, but the greatness of every mother is different. Since my mother passed away a month ago, I have been thinking what the unique spirit was that my mother had that is worth remembering. My mother had a very strong personality: She was persistent about her goals, had very strong principles that she never compromised, and her work style was capable and effective…. I want to call her spirit the entrepreneurial spirit. In economics terms, this means engaging in forward-looking behavior that allows you to obtain your ultimate objectives...

    • 9 The Background to My Economic Thought
      (pp. 125-132)
      Wu Jinglian

      Many accomplished economists experience a professional life characterized by steady accumulation of knowledge and experience; in contrast, my own professional life has been marked by sharp turns that only in the end brought me to my present understanding of economics. So I deem it necessary to explain the development of my views of economics before expounding on what these views are.

      I was born in a family which produced in the preceding generations quite a few Chinese entrepreneurs. My great grandfather on my mother’s side, Deng Mincheng, managed a match factory jointly with one of his fellow Sichuanese in Japan....

    • 10 My Friendship with Gu Zhun
      (pp. 133-144)
      Wu Jinglian and Xing Xiaoqun

      Xing Xiaoqun: You and Gu Zhun were good friends. I would like you to tell me some stories about your association with him.

      Wu: Gu Zhun joined the Institute of Economics (CASS) twice, in 1956 [for one year] and again in 1962. Actually it was only during his second stint at the Institute, and especially in 1968 at the [May 7] Cadre School in Minggang in Henan, that we became acquainted with each other and became friends.

      The first time Gu Zhun came to the Institute was after several years of government work in the Ministry of Construction, first at...

    • 11 A Further Stage of Intellectual Biography
      (pp. 145-154)
      Wu Jinglian

      In 1978, while the academic world was exploring the theoretical side of reform, rural reform were steadily advancing with the experiment of contracting output quotas to individual households. Subsequently Sichuan Province initiated in 1978 the experiment of expanding enterprise autonomy in several state-owned enterprises (SOEs). The idea was to delegate more power to the experimental enterprises regarding the production and sales of above-plan products, and allowing them to retention and use profit and appoint the enterprise managers. Later this experiment was expanded nationwide to 6,600 large and medium-sized SOEs, which accounted for 60 percent of the national budgeted industrial output...

  6. III Shaping China’s Economic Reform

    • Editor’s Introduction: The Economist as Reform Policy Adviser
      (pp. 157-178)
      Barry Naughton

      This part includes essays from 1980 through 1998, a period during which Wu Jinglian moved close to the center of the decision-making process and served as a practical policy adviser. In this part, then, timing and context are particularly important. Each selection was written for a specific purpose, and to fully understand that essay, we need to understand its policy context. Wu’s arguments, in context, provide a perspective on the overall policy process, including the channels through which intellectuals can participate in policy determination, and the way such channels are manipulated by top leaders. These essays are a valuable information...

    • 12 Economic System Reform and Adjustment of the Economic Structure
      (pp. 179-186)
      Wu Jinglian

      We can think of the national economy as an organic whole, composed of numerous sectors and production resources. Alternatively, we can approach if from the standpoint of cybernetics, and research it as a large complex system. In either case we first must analyze how the multiple sectors and production resources are integrated, and how they fulfill their respective functions. Our current research on economic structure addresses the question of how various aspects of the social organization of production integrate the material factors of production. The management of the economic system is a type of structural problem as well, since the...

    • 13 The Opportunity to Embrace Across-the-Board Reform
      (pp. 187-190)
      Wu Jinglian

      Since the [1978] Third Plenum comprehensive economic reform has not developed with the same immediacy as readjustment of the national economic structure. Outside of agriculture, economic reform has basically consisted of partial experiments. However, the brilliant success achieved by the reform of the agricultural system, the experimental reforms in industry and commerce, and the extremely valuable experience created by those reforms will exercise an enormous influence on the comprehensive reform of the economic system.

      Since the Third Plenum various forms of production responsibility have been implemented in agriculture, leading to a fundamental change in the management system of our socialist...

    • 14 Should We Push Ahead with Piecemeal Reform or Adopt Coordinated Reform?
      (pp. 191-194)
      Wu Jinglian

      In paragraph 54 in the Central Committee’s suggestions for the 7th FYP, the draft mentions that economic reform has now come into the city from the countryside, and so has two essential requirements: “The first is to enhance the vitality of enterprises, especially the large and medium state-owned enterprises. The second is to strengthen and improve macroeconomic control, regulation, and management.” The next paragraph cites “invigorating enterprises as both the starting point and the ultimate goal of urban economic reform.” The main mechanism by which we can invigorate enterprises is to “further streamline administration and decentralize authority.” Specifically, this includes...

    • 15 An Outline Plan for the Medium-Term (1988–1995) Reform of the Economic System [Excerpts]
      (pp. 195-198)
      Wu Jinglian and Zhou Xiaochuan

      Since the beginning of all-around reforms, we have faced three possible choices of macroeconomic policy: first, under a loose monetary policy, curbing inflation by strengthening administrative control over prices; second, actively undertaking price reform without changing the expansionary monetary policy; third, controlling money supply and then gradually undertaking the price reform.

      It has become increasingly clear that the first method, “loose money plus price controls” is very unfavorable to development and reform, and is also incapable of curbing inflation. With a rising general price level, controlling the prices of certain key products only further distorts comparative prices and lowers the...

    • 16 The Divergence in Views and the Choice of Reform Strategy
      (pp. 199-212)
      Wu Jinglian

      This paper presents my own personal views on our great reform cause. My descriptions of my colleagues may not accurately reflect their views, due to my own limitations. My purpose is to generate discussion and come closer to a common understanding of how to best implement reform. No one can be right all the time, but as long as we take a practical and realistic attitude, we will be able to gradually reach the truth.

      Of the lessons learned from economic reform, both at home and abroad, the following points are especially worthy of note:

      1. The economic system reform aims...

    • 17 A Discussion of Plan and Market as Resource Allocation Mechanisms
      (pp. 213-230)
      Wu Jinglian

      Ever since the issue was first raised, a century ago, of what the operational mechanism of the publicly owned economy should be, the relationship between plan and market has been a constantly debated topic. In the last year there have been complex and heated discussions about the relationship between plan and market, between planned adjustment and market adjustment, and between a planned economy and a market (or commodity) economy.² Once definitional differences are set aside, it is clear that the primary concern of these debates has been how plan and market differ from each other in allocating scarce resources, and...

    • 18 Three Talks in Front of Comrade Jiang Zemin
      (pp. 231-242)
      Wu Jinglian

      Chairman Mao pointed out a long time ago that in economic construction, we should learn lessons from everyone, without exception. We should use this attitude to study the measures capitalist countries took to moderate social conflict and avoid a serious crisis after World War II. Social and economic conflicts did not disappear, and there continued to be periodic economic recessions. However, economic fluctuations were far less severe than before the war, and production grew much faster on average. During the entire 19th century and the first half of the 20th century, GDP had regularly decreased by 10 to 20 percent...

    • 19 A Suggestion That We Adopt the Authorized Expression (Tifa) “Socialist Market Economy”
      (pp. 243-250)
      Wu Jinglian

      In the international Communist movement, socialist economic debates have long focused on the relationship between plan and market. This is an important theoretical and practical issue that directly affects the results of reform and the future of Socialism. In the last ten years, the Party‘s understanding of the issue has experienced great changes, and so has the academic discussion. However, recently some self-styled theorists have objected to the consensus decision made by the Party [in the past], and this has unsettled people’s thinking and is obstructing the reform process. It is essential to bring the discussion to a new level,...

    • 20 A Comprehensive Design for the Near and Medium-Term Reform of the Economic System
      (pp. 251-260)
      Wu Jinglian and Zhou Xiaochuan

      First, it is necessary to boldly push forward the reform under the guidance of a carefully designed midterm reform plan; to make sure the immediate priorities are consistent with the overall medium-term reform design; and prevent a stop-and-go pattern of reform implementation.

      Second, building the institutional structure of the market economy implies many adjustments of power and interests. We must centralize power over macroeconomic adjustment and aggregate demand but decentralize control of microeconomic operations. We must streamline the existing agencies while also developing new undertakings and types of activity. If we delay too long, we will lose this opportunity to...

    • 21 An Evaluation of the Economic Situation and Suggestions to Policy Makers
      (pp. 261-270)
      Wu Jinglian

      I have completed my survey and research in Shaoxing, Taizhou, Wenzhou, and Yiwu, and have returned to Beijing. I traveled almost 1,000 kilometers in this investigation, personally visited factories and markets, and had discussions with both entrepreneurs and leadership cadres at all levels. In this area, small and medium-sized enterprises have already become the main force of the economy. Their exceptional performance in technological upgrading, product replacement, and international sales ability is extremely encouraging. Their huge and underdeveloped potential is clearly a growing force for us to overcome the current difficulties and create a new round of high-speed growth. This...

  7. IV Broadening the Reform Agenda

    • Editor’s Introduction: Becoming a Public Intellectual
      (pp. 273-278)
      Barry Naughton

      The selections in this part were written between 1995 and 2003. They differ significantly from the pieces in the previous part in three respects. First, they were written after Wu moved away from his direct involvement as a policy adviser, and returned to a primarily academic orientation. Wu continued to provide advice to government leaders, of course, and as the Chinese policy process was restructured to institutionalize expert input, Wu often served on advisory commissions and committees. In addition, though, Wu now had the flexibility and perspective to write about national affairs from a longer run and multidimensional perspective. Second,...

    • 22 The Fundamental Importance of Developing China’s Stock Market
      (pp. 279-296)
      Wu Jinglian

      Some of the papers I have written on the problems in China’s securities markets have been strongly criticized. My views have been seen as a conservative current that would obstruct the prosperity of our stock market and the formation of our capital markets. In this article I seek to lay out my viewpoint comprehensively, in order to refute criticisms that seem to be based either on a misunderstanding, or else are driven by economic interests.

      I want to emphasize the importance of what contemporary economics calls the “corporate system” as the most important market infrastructure needed for securities markets. The...

    • 23 What’s Wrong with the Chinese Stock Market?
      (pp. 297-310)
      Wu Jinglian

      In October 2000Caijingmagazine published an article that elicited interest and indignation, entitled “Behind the Scenes at Investment Funds.” It remains to be seen, however, whether this glimpse behind the scenes will be followed by further revelations or by a new cover-up. As a result the public demanded that economists speak out on the issues, and I was interviewed on Central television (CCTV) programs a number of times in late 2000 and early 2001, and expressed my long-held views.

      It was also around this time that the securities regulatory agencies began to pick up the pace of regulatory oversight...

    • 24 Developing Independent Chambers of Commerce
      (pp. 311-322)
      Wu Jinglian

      I’m glad that we can get together once a year to summarize the progress of our research on chambers of commerce, discuss the results, and raise questions for further research and discussion. Today I will discuss four points.

      Since last year’s meeting, all our friends, especially those from Wuxi, have done a lot of work. The materials from the meeting have been edited into a book, and some of the studies are being published. We are progressing in our research and localities are making headway in establishing chambers of commerce. From the beginning, our research topics have been closely related...

    • 25 Improve the Work Style of Party Organizations in Enterprises
      (pp. 323-328)
      Wu Jinglian and Wang Yuan

      There has been a long history of discussion about the status and role of Party organizations in firms. Even now, this question has not been adequately addressed either theoretically or practically. Under the planned economy in the past, SOEs adopted the manager responsibility system led by Party committees. The work style of Party organizations was that Party secretaries, as they were in the designated leadership position of any Party organization, served as the “big boss” in the management and command system of the enterprises.

      It was felt that Party committees were trapped into everyday economic affairs and as a result...

    • 26 Build an Open, Transparent, and Accountable Service-Oriented Government
      (pp. 329-336)
      Wu Jinglian

      The SARS epidemic first appeared in Guangzhou in November 2002 and led to an unprecedented public health crisis because of the negligence and mistakes of certain government departments. Facing a serious problem, China’s highest decision makers acted decisively and made a fresh start by abandoning traditional protocol for such incidents. They significantly improved the openness and transparency of government policies, removed incompetent officials who made mistakes, and organized leading government employees to protect people’s lives and safety. This series of actions, in addition to the previous improvements in government leaders’ accountability and news reports, heralded a new era of China’s...

    • 27 Key Points of the Speech Given at the Symposium on Constitutional Revision
      (pp. 337-344)
      Wu Jinglian

      Constitutional revision is a huge topic that requires sophisticated knowledge. I have been studying the related literature ever since I was notified about this symposium. There are many questions that I have not thought over clearly. Today I will present several points and ask for your opinions.

      First, revising the constitution and making it compatible with a constitutional government is imperative to the sustained order and peace of our country, and should be actively pursued. Our country’s economic reform has made huge accomplishments over the past twenty years. But the progress of political reform has been very slow. This makes...

  8. Chronology
    (pp. 345-348)
  9. Glossary
    (pp. 349-354)
  10. Index
    (pp. 355-368)