China: From Revolution to Reform PDF
Preview China: From Revolution to Reform
CHINA: FROM REVOLUTION TO REFORM STUDIES ON THE CHINESE ECONOMY General Editors: Peter Nolan, Lecturer in Economics and Politics, University of Cambridge, and Fellow and Director of Studies in Economics, Jesus College, Cambridge, England; and Dong Fureng, Professor, Chinese Academy of Social Sciences, Beijing, China. This series analyses issues in China's current economic development, and sheds light upon that process by examining China's economic history. It contains a wide range of books on the Chinese economy past and present, and includes not only studies written by leading Western authorities, but also translations of the most important works on the Chinese economy produced within China. It intends to make a major contribution towards understanding this immensely important part of the world economy. Published Dong Fureng INDUSTRIALIZATION AND CHINA'S RURAL MODERNIZATION Hong Wang CHINA'S EXPORTS SINCE 1979 Jiann-Jong Guo PRICE REFORM IN CHINA, 1979-86 Michael Korzec LABOUR AND THE FAILURE OF REFORM IN CHINA Peter Nolan STATE AND MARKET IN THE CHINESE ECONOMY Sheng Hua, Xuejun Zhang and Xiaopeng Luo CHINA: FROM REVOLUTION TO REFORM Wang Xiaoqiang and Bai Nanfeng (translated by Angela Knox) THE POVERTY OF PLENTY Malcolm Warner HOW CHINESE MANAGERS LEARN Gordon White (editor) THE CHINESE STATE IN THE ERA OF ECONOMIC REFORM Tim Wright (editor) THE CHINESE ECONOMY IN THE EARLY TWENTIETH CENTURY Xun-Hai Zhang ENTERPRISE REFORMS IN A CENTRALLY PLANNED ECONOMY Yuming Sheng INTERSECTORAL RESOURCE FLOWS AND CHINA'S ECONOMIC DEVELOPMENT Zhu Ling RURAL REFORM AND PEASANT INCOME IN CHINA Series Standing Order If you would like to receive future titles in this series as they are published, you can make use of our standing order facility. To place a standing order please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address and the name of the series. Please state with which title you wish to begin your standing order. (If you live outside the UK we may not have the rights for your area, in which case we will forward your order to the publisher concerned.) Standing Order Service, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire, RG21 2XS, England China: From Revolution to Reform Sheng Hua Research Fellow of Corpus Christi College, Cambridge Xuejun Zhang Associate Professor and Department Director Institute of Economics, Chinese Academy of Social Sciences, Beijing and Xiaopeng Luo Associate Professor and Department Director Research Centre for Rural Development, China M © Sheng Hua, Xuejun Zhang and Xiaopeng Luo 1993 Softcover reprint of the hardcover 1s t edition 1993 All rights reserved. No reproduction, copy or transmission of this publication may be made without written pennission. No paragraph of this publication may be reproduced, copied or transmitted save with written pennission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the tenns of any licence pennitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WIP 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published 1993 by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world ISBN 978-1-349-11438-2 ISBN 978-1-349-11436-8 (eBook) DOI 10.1007/978-1-349-11436-8 A catalogue record for this book is available from the British Library. Copy-edited and typeset by Povey-Edmondson Okehampton and Rochdale, England Contents List of Tables and Figures vii Preface and Acknowledgements V111 1 Introduction 1 2 The Political Pattern in the Early Stage and the Upsurge of Rural Reform 25 2.1 The evolution of the political pattern 28 2.2 The upsurge of rural reform 37 3 Early Urban Reform Attempts and their Implications 63 3.1 The incentive problem 64 3.2 The coordination problem 75 3.3 Some remarks on early reforms 88 4 The High Tide of the Reform 99 4.1 A year of climax 99 4.2 The 'First Battle of Reform in Urban Areas': price and wage reform, 1985 111 4.3 The origin and legalisation of the Dual Track System 119 Appendix: Making use of the Dual Track System to transform the price mechanism (12 September 1984) 126 4.4 'Consolidation, digestion, supplement and improvement' (1986) 131 5 Rural Reform, 1984-8: Progress and Stalemate 141 5.1 The setback of reforming the mandatory system for purchasing agricultural products 145 v vi Contents 5.2 The rapid development of non-farming industries in rural areas 151 5.3 The perplexity of post-people's commune reform 167 5.4 Dispute over rural reform after 1984 179 Notes 192 Index 233 List of Tables and Figures Tables 2.1 Index of national income and gross output value of agriculture and industry 26 2.2 Average annual wage of staff and workers 39 4.1 Average annual consumption of residents 100 5.1 Statistics of non-farming industry in rural areas 155 Figure 3.1 The administration of China's economic system 76 vii Preface and Acknowledgements The ideas in this book originated in 'The Ten-Year Reform in China: Retrospect, Reflection and Prospect', a serial essay published in 1988 in nos 9, II and 12 of Economic Research, which is one of China's leading economic journals. The essay met with a wide unexpected response and caused heated dispute in both academic and government circles. Many international newspapers and periodicals gave significant coverage to the essay's conclusion that reform in socialist countries had reached a dead-end unless the system of state ownership was dismantled and property and civil rights re-established. As a result of the media's involvement, many questions and sometimes misunderstandings were addressed. Many readers and friends in academic circles encouraged us to record the reform process in detail and to elaborate our thinking further on the topic of state socialism in general. Latterly, the events in Beijing in June 1989 have not only ended a page of the Chinese reform but also cast great uncertainty over China's prospects. We realised that further working on the subject was not only a requirement but also our duty. The first-result is the present book. The structure and purpose of the book is straightforward. The introduction examines Chinese reforms in the context of China's unique and historical development, and especially its transformation under external challenge and its seemingly unstoppable revolution. Keeping this background in mind, we portray Chinese reform from both economic and political angles, and focus on shifts in policy· making as well as the debates in academic circles so as to offer a key to understanding the complicated and often confusing economic and socio-political phenomena in contemporary China. In this way the book tries, as a first step, to highlight the historical clues behind alternating revolution and reform in modern Chinese history: why China chose communist revolution in order to realise its dream of modernisation; why Mao Zedong's socialism failed to bring about modernisation; why the initial gentle reform logically led to the wholesale dismantling of the social and economic structure; why Deng Xiaoping's reform culminated in such crisis, tragedy and unrest in 1989 and thereafter, and why the Chinese will be facing the Vlll Preface and Acknowledgements IX challenge of stagnation or upheaval, reform or revolution again at the next t11m of the century. Needless to say, we bring certain advantages to writing this book. Not only have we experienced and personally suffered under the special form of Chinese state socialism, but we later directly participated in designing and implementing the transformation of this system. Some of our suggestions, such as the dual-track system (legalising the market and letting it gradually outgrow state planning) and the assets responsibility system (invite public bidding for top manager posts), were adopted in policy-making, and are regarded as having largely influenced the basic pattern and trends of the Chinese reform. Because we have been deeply involved in this process, we, of course, have our own bias in examining the reform, especially when there still exist so many controversial arguments with regard to reform strategy, not to mention its alternative, revolution. As patriotic Chinese, it is difficult for us to suppress our passion when we observe events which have such crucial consequences for China's prospects. Therefore, we do not harbour the extravagant hope that we can offer a definitive explanation to the subject. What we do hope is that what we present here could contribute to further discussion and progress. We are very grateful to Professor Dwight H. Perkins for his suggestions and encouragement, to Professor Thomas G. Rawski for his sharp but constructive critiques, and to Dr Keith Griffin for enlightening discussions. We are particularly indebted to Dr Peter Nolan, Dr Tage Vosbein and Dr Chris Bramall for their detailed comments and suggestions on the early draft of some chapters. We would like to pay special tribute to our English translators, Ms Angela Knox and Mr G. Wang. Without their excellent work the book would hardly have reached its present form. Of course, we remain solely responsible for all remaining mistakes (Sheng Hua revised and proofread the final version). Most valuable, albeit limited, financial supports from the Center for Modern China (Princeton), one British company, the Edward Boyle Memorial Trust and the Centre for Modern Chinese Studies, Oxford, are gratefully acknowl edged. We would also like to express our thanks to our publishers and to the editors for their constant help and co-operation. SHENG HUA XUEJUN ZHANG XIAOPENG Luo
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