If China Continues to Move Toward Greater Free Market Reforms They
Opinion | CHINA'S MARKET REFORMS
https://www.nytimes.com/1984/11/28/opinion/china-s-market-reforms.html
CHINA'S MARKET REFORMS
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November 28, 1984
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A leap into the unknown is the only accurate way to describe the economic reforms announced in China last month. But based upon a trip to four large Chinese cities earlier this month, I am convinced that the Chinese leaders intend to make a permanent change in their system of state socialism.
''We learned our lessons the hard way,'' Premier Zhao Ziyang told a group of Americans, reflecting the painful emergency of China from the Cultural Revolution. ''Now we know what works best for China.''
The call for socialism ''with Chinese characteristics'' in the text of the Oct. 20 reforms announced a large-scale restructuring of the urban economy, which will use many capitalist mechanisms to create incentives for economic development. Wages and bonuses will be linked to job performance under reforms that explicitly abandon any notion of equality. Prices will not be held to ''irrational'' levels. Each enterprise will be a ''more truly independent economic unit'' with power to plan production and marketing. The Government will regulate enterprises,
but not directly manage or operate them. This is an experiment of historic proportions. No major Communist country has tried to move so far toward a market economy. And certainly none has done so as explicitly. In deciding to go ahead with the urban reforms, the Chinese are relying heavily on five years of experience with an incentive system in the agricultural areas. Farmers contract to produce an agreed amount from a parcel of land and can retain the income from surplus production. This has resulted in sharp increases in output and improved living standards. The Chinese explained they had begun their reforms in the rural areas to avoid drawing farmers to the already overcrowded cities. Whether accidental or intentional, these reforms may have helped the Chinese avoid the ''Mexico City phenomenon.'' Indeed, there are complaints that some of the best workers have been drawn to rural areas by the prospect of higher incomes.
Mr. Zhao recognizes that urban reform is far more complex. Asked about the dangers of inflation as prices moved up to realistic levels, he said the pricing system is the most delicate issue in the urban reform. A tough job, he says, but manageable if China moves cautiously.
China will rely on a new generation to carry out the reforms. The text mandates that ''under no circumstances should we use lack of experience as an excuse for holding back young cadres.'' This concept has special significance for the generation of able Chinese in their 30's and 40's consigned by the Cultural Revolution to the most menial tasks. For example, the Mayor of Shenyang, who will lead the reforms in a city of more than five million people, is only 40. Alert Chinese are already responding to the announcement. At recent conferences organized by the former Secretary of State Cyrus R. Vance in Balian and Shanghai, a host of nascent Chinese capitalists turned out to meet with 27 participating American companies. They were seeking investment in a wide array of business ventures large and small. The American businessmen, who signed up for the conference before the Oct. 20 reforms were announced, were amazed to find the Chinese queued up to reap the benefit of the edict that ''socialism does not mean pauperism.'' Quotations from Marx, Lenin and Mao are invoked to rationalize the new policies, but the goals of the reforms might startle earlier theoreticians. One official predicted the reforms would create ''200 million rich Chinese'' who could be customers of the West. When I raised my eyebrows, the number was confirmed and my attention was called to the large savings being piled up by the Chinese farmers. The confidence of Chinese leaders could not be better illustrated than by questions Mr. Zhao asked himself in our meeting: ''Will the policy change after Deng (Xiaoping) leaves the scene?'' he wondered out loud. ''Will it change after Hu Yaobang and I are gone, too?'' No, he said, because the reforms are ''not a pipe dream of an individual'' but rather are based on experience and supported by the vast majority of Chinese people. Americans who know something about the difficulties and rewards of a market system will watch with a mixture of admiration and concern. One can only imagine the consternation in Moscow as the Russians seek ways to revive their lagging economy.B
Source: https://www.nytimes.com/1984/11/28/opinion/china-s-market-reforms.html
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