China’s economy must ‘return to basics’ amid tech reform push, outspoken economist Wu Jinglian says

One of China’s most outspoken and liberal economists has called for the Chinese economy to “return to the basics” by building an “open, competitive and orderly” market.

Wu Jinglian, 94, believes the key lies in the “reform of the economic system, transformation of the growth model” and is dependent on the form of the market and the rule of law.

“Right now, it is important to coordinate all short and long-term policies and make building a unified, open, competitive, orderly market system a core mission,” Wu said in the March issue of the Exploration and Free Views academic journal.

“[China] should seize the new wave of tech reform, and push further on reform and opening up.”

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Wu was quoted among his peers for his views on how China should proceed in transforming its economy.

Wu was a key adviser to the Chinese government from the 1980s during China’s famous reform and opening-up movement, which was one of the most important governance legacies of China’s late paramount leader Deng Xiaoping, that helped transform China into the world’s second-largest economy.

The open discussions over the economic reforms have gradually died down in recent years, despite China’s economy encountering a variety of problems, including a slowdown of headline growth, a property slump and a demographic crisis.


‘Two sessions’: China’s economic and diplomatic challenges | Talking Post with Yonden Lhatoo

‘Two sessions’: China’s economic and diplomatic challenges | Talking Post with Yonden Lhatoo

Xi has vowed to deepen reforms and open the market wider several times during speeches and also in government documents, with the latest made during his field inspection in the central province of Hunan last month.

However, overseas questions remain over China increasingly swaying away from the direction of an open market.

There has also been an increase in state ownership in the overall economy and in the fickle regulatory environment, including introducing new laws, including the anti-espionage law seen by foreign businesses as deterring investment.

Reforms suggested by pro-reformists over the years include raising the retirement age, reforming state-owned enterprises and the hukou household registration document, and also the removal of market entry barriers for private firms.

And despite appearing less in public events in recent years, Wu continued to speak about implementing Beijing’s 2013 reform document, which for the first time mentioned letting the market play a “decisive” role in the economy and set out 336 detailed reform tasks.

A report published by the US-based Rhodium Group in February suggested that results of China’s efforts to turn into a “market-based” economy were mixed, as the government had made “meaningful” progress in attracting foreign investment, but had not addressed structural problems that resulted in mounting local government debt.

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But the property slump, ballooning local government debts following years of large-scale credit and investment expansions continue to weaken confidence in the private sector, and are weighed further down by problems such as the ageing population.

International Monetary Fund managing director Kristalina Georgieva called for “deep structural reforms” to “enhance conditions for entrepreneurship, innovation and economic performance” during the China Development Forum in Beijing last month.

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