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Economic Reforms and Contradictions
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16729 |
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Section : |
SPECIAL SECTION
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| Issue
Date : |
10 / 1989 |
2,991 Words |
| Author
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Bertrand Renaud
Bertrand Renaud is a housing finance adviser in the urban
development division of the World Bank and a frequent visitor
to China. The views expressed are his own and do not reflect
those of the World Bank or any of its affiliated
organizations. |
The prodemocracy demonstrations last spring brought to us via television the expectations of the Chinese population with an intensity and immediacy they had never had before. The bloody suppression of those protests shattered the confidence that the international community had in the stability of China, the goals of the present Chinese government, and that government's capacity to liberalize its economy successfully.
China's economy was already in trouble in 1988; the reformers had run out of easy things to do. Like other reforming socialist economies, China had introduced market mechanisms into its state-controlled system. However, the leadership was divided over the results, and there never was a consensus to go all the way with market socialism. Moreover, even if such an agreement existed, the right sequence of reforms is still unknown because no socialist country has yet completed this transition successfully. Bigger, deeper, and more complex changes in price, enterprise, and property rights reforms would be needed to continue to modernize the system and make it more dynamic. Major budgetary and financial reforms would also be required to regain control over price levels as inflation in China is accelerating sharply.
Unfortunately, further reforms would create more winners and losers, with many of the losers among the 48 million members of the Chinese Communist Party. The crackdown ordered last June by senior party leader Deng Xiaoping and his aging comrades has fractured what remained of a consensus. The Chinese economy is now stuck halfway. Can it stay in a holding pattern for very long? Will it decline? A historical perspective may throw some light on the future of the Chinese
... (1951 of 18988 Characters)
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