Although there has been considerable progress over the past two decades, the economic mechanisms for reform are far from finished, with further developments still needed at a broader level, said a leading economist recently.
Gao Shangquan, president of the China Economic Restructuring Institute, made the remarks in a report delivered at the institute’s annual meeting, which convened on Nov. 23, 2002.
Gao summarized four aspects of the economy that are hindering further reform. Domestic reforms lag behind reforms related to the opening-up policy, macro-economic reforms occur more slowly than micro-economic reforms, government reforms take longer than enterprise reforms, and political reforms are behind economic reforms.
In Gao’s opinion, reform for the next period should focus on four key aspects: property rights diversification; capital socialization; equitable wage distribution and the administration of law.
Property rights diversification, as the cornerstone of economic reform, is an effective way to explore diversified public ownership. Capital socialization makes use of social capital, governed by property right diversification principles, and reduces the need for individuals to hold property. Currently, more and more countries are choosing to adopt this method and make up for the inefficiencies caused by individual capital accumulation.
The government’s macro-control policies, its method of public governance and democratic politics are crucial to the solving problems of economic disorder, the polarization of wealth, and enterprise ownership.
Social justice, addressing the balance between rights and obligations, first emphasizes equality of economic rights, status and competitive opportunities and the equality of social rights. In addition, government and social organizations should ensure that essential factors of production like labor, capital, technology and management will be rewarded for their contributions.
Disparity in wages caused by competition brings not only the benefits of efficiency and accumulated social capital, but also a further polarization of wealth. Thus, it is necessary for government to rectify these inequalities through a secondary form of redistribution of wealth.
Advances in the legal system and governmental administration are crucial in effectively implementing the law. First, the government should take responsibility for creating a healthy environment and maintaining equal rights in all markets, instead of emphasizing an overall controlling function as it did before. Second, the government should stipulate only what can’t be done. Finally, governance should abide by the administration of the law, instead of taking executive rule. This is the best way for a market economy to avoid official interference and corruption, thus keeping the market in order.
(China.org.cn by Tang Fuchun, December 6, 2002)
