Back at the end of the 1970s, not a single Western economist foresaw that China would have the world’s fastest growing economy over the next 25 years.

Their perspective of China was informed by the western economic textbooks of the day. Here was a nation that lacked the criteria thought to be the prerequisites for significant economic growth. These were mature markets, private ownership of property and an effective regulatory framework. But the miracle of China’s economic development still rolled out.

In an effort to understand the Chinese miracle, some 60 Chinese economists, politicians and legal experts gathered in Shanghai-based Fudan University from October 18 to 19. They had come to participate in a top-level conference entitled “Political Economy: Walking Towards a New Era”. The delegates were unanimous in their agreement that Western economic theories on their own cannot provide a satisfactory explanation of the current economic phenomena in China and that the time has now come for China to have its own economic theories.

Over the period of sustained growth, which has seen such dramatic changes in China’s economic structure since 1979, several outside influences have been pre-eminent in economic thought within Chinese academic circles. First came the political economics of the former Soviet Union, then 1980’s Western neoclassical economics followed by a more recent emphasis on dealing costs and property ownership.

Yet, Chinese economists were to be deeply puzzled when they turned to these various economic theories to seek an explanation for China’s economic phenomena.

Professor Chen Ping of the China Economic Research Center at Peking University commented, “According to Western economic theories, a country like China with its huge population should be one of those least likely to take-off economically, but China did just that.”

It is Professor Chen’s view that a theoretical basis for the driving force of China’s economic growth cannot be found in classical Western economics. For example where is the explanation of the incentive mechanism prior to ownership reform or of the effects of regional differences on growth models?

“China seems to be following an economic development model which depends on market forces and development. This is quite different from the so-called Western economic model which relies on such determinants as consumer demand and productivity gains,” added Professor Chen.

“Unlike Western economists whose current focus is on fine-tuning their economies, Chinese economists are faced with the consequences of widespread systemic change. This may well provide a clear pointer to the need to develop uniquely Chinese economic theory,” noted renowned economist Wang Dingding.

“China’s economic growth depends largely on the energy that is released when systems are reformed,” said Professor Yao Yang of the China Economic Research Center at Peking University.

Chinese scholars question the categorization of a “socialist economy in a transitional state” as applied by Western economists.

For Prof. Shi Zhengfu of the New Political Economics Center at Fudan University, what can be witnessed in China is not the changing social economic system that is seen through Western eyes. Rather it represents a new era of evolution into the unknown ready to herald the birth of China-specific economics.

Professor Shi is of the opinion that China’s own economic theory can be developed in relation to at least three characteristics of the national economy. Enterprise structure frequently including an element of public ownership; initial middle class economic success followed up with social wealth redistribution mechanisms; proactive intervention by local governments prepared to manage rather than merely observe development.

“Economics in China should not merely replicate the old Western economic studies. Our aim is to move away from Western economic development models. Like American economists, we study what is new and up-to-date,” said Prof. Chui Zhiyuan.

Though all the scholars present at the conference agreed on the need to build China’s own economics, they also recognized that up to now, the focus of Chinese economic study has been on criticism of Western economics rather than on developing viable alternatives. “The content of China’s economic study is new while the methods and models are old,” commented Prof. Shi Jinchuan, vice-dean of the Economics College at Zhejiang University.

Many scholars see the application of a case-study approach to actual problems as the best way to identify the necessary Chinese characteristics. Any breakthroughs in the specifics would in turn point the way to generalities and theoretical advances. Prof. Zhang Shuguang said, “The most meaningful path will be first to find positive results and then apply these to help inform the regulatory process.”

“No matter how things turn out in the end, the very fact that Chinese economists are being called on to develop a new economics with Chinese characteristics speaks for itself. After a long period of rapid economic growth, Chinese economists have the confidence to develop their own economic models,” concluded Stephen Green who heads the Asian program of the Royal Institute of International Affairs.

(China.org.cn by Zheng Guihong, November 3, 2003)