New York: Oxford University Press, 2016. xvii, 331 pp. US$39.95, cloth. ISBN 978-0-19-022315-1.
This nicely translated Chinese publication presents a series of interviews with Wu Jinglian, one of the most influential Chinese economists, by Ma Guochuan, the chief commentator of Caijing Magazine published in China. The book is full of insightful analyses of China’s economic reform and should help readers outside China gain a better understanding of the economic reform that has transformed China since the 1980s.
Ma’s main argument developed in this book, however, is that China needs to restart its economic reform and transform China’s semi-command and semi-market economy into a full-fledged market economy based on the rule of law (vii). Against the more popular notion of “Beijing Consensus” or “China Model,” which emphasizes the strong role of the state and strengthening of the state sector, Ma believes this approach is not the right prescription for China since it can only lead to state capitalism or so-called “crony capitalism” (viii). This opposing view presented by Wu and Ma is significant not only because of Wu’s personal influence in the national economic decision-making process, but also due to the fact that China is once again at a “new crossroads” (1). China’s economy is currently slowing down quite a bit. “Whether China can write another brilliant chapter in history,” according to Wu, “will depend on which path it takes” (15). In his mind, the danger of returning to a new-leftist path is of great concern.
The book is divided into twenty dialogues. In dialogue 1, an introduction, Wu offers an interesting summary of the various “stones” China touched in tapping into the uncharted waters of reforming the Stalinist economy. These “stones” include: “market socialism” (1982) based on former communist countries’ reform experiments; “socialist planned commodity economy” (1984) inspired by the success of a state-centred development of the “four little dragons”; and “socialist market economy” (1993). Although these experiments have led to sustained economic growth, they also resulted in widening income gaps and increasing popular resentment against corruption and the privileged group. This situation has in turn created some appeals to the neo-leftist ideology. Wu argues that China needs to fight against state capitalism by restraining the administrative power of the government and gradually phasing out administrative interventions in macroeconomic activities, and by transforming the government to a service-oriented model.
Topics 2 to 15 present a historical review of serious steps taken during the prolonged economic reforms in the last three decades. It ranges from the reform of state sectors, the establishment of a rural household responsibility system, the reform of financial institutions, to the reform of the social security system. This section reads more like a series of mini lectures on various topics on the history of China’s reform. It feels like some of the content may be taken from Wu’s lecture notes. Some dialogues even contain tables. Dialogue 2, for instance, is a summary of socialist history and Soviet Russia’s experiments with socialist ideas. Dialogue 3 talks about the establishment of a command economy in China in the 1950s. It discusses the emergence and implementation of the market socialist system in China. This long narrative and review of the history of economic reform serves as a basis for understanding the current debate and for making arguments for further reforms as advocated by the authors. The narrative does have some merits. It provides extensive details on decision-making processes, such as those dealing with the “Huangpu Ping incident” in 1990 (138) and the internal criticism of Xue Muqiao in 1979 (212), both of which were previously less known to readers or researchers outside China.
Topics 16 to 19 deal with issues and problems with China’s reform. In dialogue 16, Wu characterizes the current economic system as a “preliminary market economy.” Some of its “serious defects” include: the state sector still controls vital “economic lifelines,” government agencies still have a lot of power in resource allocations, and the market is not yet governed fully by the rule of law (235–236). Dialogue 17 is devoted to the discussion of a sensitive topic, that is, the need for political reform. Here, Wu echoes Milton Freeman’s viewpoints that economic freedom should go hand-in-hand with political freedom. “If there is no reform of the superstructure so that it is compatible with the economic base,” according to Wu, “tensions and conflicts will arise between the two” (244). However, the resistance to changes comes primarily from those people who hold the orthodox Marxist views and those who are part of the privileged groups. The combination of state capital and political power, in Wu’s view, has helped produce a semi-command and semi-market economy which in turn may lead China to state capitalism, a warning Wu is consistently making throughout the book.
The final dialogue contains many of the highlights of the book. Wu denounces the so-called “China model” and associates the model with the semi-command and semi-market system. He believes that “a market economy based on the rule of law” will bring China into democracy. This liberal view bears many resemblances to the so-called “Washington Consensus.” However, if this is viewed as a silver bullet to solving all of China’s problems, it then can become equally problematic since a pure free market economy never truly existed. Kenneth S. Freedman points out in his book Myths of the Free Market (Algora Publishing, 2003) that despite the important role of the market, “pure free market economics have consistently underperformed well-focused mixed economies.”
Overall, this book is a very useful reference to our understanding of neo-liberal economics in China. The irony is that China’s path towards modernity is full of contradictions, including many conflicting economic theories. The views presented in this book are nevertheless part of the intellectual forces that drive China forward. Only time will tell which approach serves as a better guide for China’s new round of reforms.
Baogang Guo
Dalton State College, Dalton, USA
pp. 329-331