Deepen
economic reform
By Chi Fulin ( 11/04/2002 )
In the past decade, China has persistently carried out market-oriented
economic reforms and scored many achievements. Now that the nation
has joined the World Trade Organization in a globalized world economy,
we will encounter new challenges in continuing these reforms.
In this condition, the "three represents" theory of Party
General Secretary Jiang Zemin will guide China's economic reform.
The Three Represents theory stipulates the Party must always represent
the development trend of China's advanced productive forces, the
orientation of China's advanced culture, and the fundamental interests
of the overwhelming majority of the people in China.
The core meaning of promoting the productive forces is to conduct
reforms to make the economic and political systems and the various
policies better cater to the requirements of the modern market-driven
economy.
A major content of the reforms is a shake-up of the ownership system
that made the economy transform from a single-ownership to a mixed-ownership
economy. It has bolstered national economic prosperity in the past
two decades.
During that period, every step of the reform has been followed
by a new round of robust economic growth.
We first recognized the role of the non-State economy in economic
development. Later we endorsed the mixed economy composed of multiple
economic elements and the mixed-ownership economy.
Past experiences show that it is of vital importance to accelerate
the development of the mixed-ownership economy and increase its
proportion in the national economy to achieve sustainable economic
growth.
Mixed-ownership economy breaks the limitations of single ownership
and makes the economy more dynamic.
It is conducive to absorbing social capital to enrich the property
rights structure of State-owned enterprises, which will improve
their operational efficiency.
In a mixed-ownership economy, the proportion of State-owned enterprises
will decrease, helping to shake off some administrative interferences
in the management of enterprises.
We should thus further reform our economic system and develop the
mixed-ownership economy, which meets the requirement of a modern
market-oriented economy and helps maintain sustainable economic
growth.
The reform is in the interests of the people. It will improve people's
income levels by maintaining fast economic growth.
The ultimate goal of the reform is to achieve common prosperity
of all people.
In the process of achieving this goal, a small portion of the population
who have better professional capacity and are honest in operating
their businesses have become rich after the country adopted the
reform and opening up policy of the late 1970s. This helps break
the "share-alike" income distribution system of the old
planned economy.
At the current stage, we should expand those comprising the "medium
income level" group. The "medium income level" group
includes those with fixed family assets and a stable income above
the average income level of the population as a whole.
It is a severe challenge for the country to expand the medium income
level group. China has long been an agricultural nation, the rural
population comprises more than two thirds of the whole population
and there is a wide gap between the living standards of rural and
urban residents.
Policies should be devised to increase the income of this low-income
group so that a majority of them can be better off.
This should be our middle- and long-term policy target in perfecting
our income distribution system.
A market-oriented mechanism should be adopted in reforming the
system.
It should be reformed to recognize the claim of labourers to their
labour property right, so they can use this right to share in the
income distribution.
In this process, we should re-assess the labour and labour value
theories. Production factors such as capital, technology and managerial
know-how should be considered as factors of income distribution.
What the government should do to expand the medium income level
group is to employ taxation, fiscal and financial means to balance
income distributions between different social groups.
It must perfect the taxation system and ensure the taxation of
high income groups. It must also accelerate the establishment of
a comprehensive social security system and improve employment to
guarantee the stable income of the labourers.
In pushing forward the reforms, we will encounter many social and
ideological problems.
Most of them, such as the conceptual conflict between "rule
of man" and "rule of law" and between "government-oriented"
and "market-oriented," are closely related with the old,
feudal culture. We must promote advanced culture to guide the solutions
to the problems.
New concepts of reforming the current administrative system should
be introduced.
The traditional top-bottom mandatory managerial system played an
important role in the old planned economy period. But now that China
has adopted the reform and opening up policy for two decades, economic
and conceptual changes have made it unable to meet the requirement
of social development. Changes must be made to cater to new social
conditions.
The power of government in resource distribution should be weakened
to fully bring out the role of the market mechanism. Mechanisms
should be created to make labourers able to obtain the resources
by their abilities within the framework of the law.
The one-way managerial mechanism of the government should be changed
into a co-operative mode of management. And the traditional "State-centred"
societal concept should be replaced by the concept of a "citizen-centred"
society.
It is also important to actively and steadily carry out reform
in the political system. The most urgent task is to define the government's
role within the framework of democracy and law and prevent power
abuse and interference in business activities.
Some public powers have been used by some people to grab personal
and departmental interests. The vested interests have become an
obstacle to further reforms and distorted market rules. More dangerously,
their infamous activities have been taken for granted by some as
part of normal market rules.
If such systematic and conceptual problems are not solved, our
socialist market economic construction will meet severe difficulties.
( The author is executive director of the Hainan-based China Institute
for Reform and Development. )
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