Alongside the implementation of reform and opening-up, China's economy took flight. After 30 years of fast development, China's GDP has surpassed that of Japan. Meanwhile, China replaced German as the largest export country in the world.
From the Beijing Consensus in the beginning of this century to China Model – a concept derived from China's booming economic growth since opening-up – analysts and scholars have long sought to explain the secrets behind the country's incredible rise.
China Model supporters attribute the achievements to the country's unique economic and political system. It has a strong central government that backs its state-owned economy, enabling it to successfully complete projects essential to the nation's interests. This can be seen in hosting the Beijing Olympic, constructing of the high-speed trains and maintaining 9 percent annual GDP increase even during the global financial crisis.
However, while this explanation raises a sense of national pride, it also leaves many questions.
For example, if strong central government and state-owned economy are the secrets of China's success, then why did the even more powerful government rule and national economy in the 30 years before the economic reform bring such trauma and suffering for Chinese people, not to mention a famine in 1959-1961 that took millions of lives?
The truth is, behind the economic achievements, we also paid huge prices. In recent years, the negative long-term effects from the government's enormous bailout programs that achieved short-term benefits are gradually starting to show.
Since setting up the goal of building socialist market economy in the 14th Central Committee of the Communist Party of China (CPC), the country has made a series of adjustments for its state-owned economy that aimed at providing opportunity for private businesses.
Although the progress of socialist market economy in each field is different and some key industries haven't changed, the round of reforms established a basic framework for a socialist market economy system that opens to the world market.
The system liberated workforces and realized the continued fast economic growth. The reforms provided platforms for people to start their own businesses, fully utilized the human and material resources, compensated for the consumer demand insufficient and bridged the technology gap between China and developed countries.
These are all evidences that show the reform and opening-up that initiated in 1978 as the real secret behind 30 years of fast economic growth.
China Model doubters argue that although China has made great strides in the 30 years since opening-up, its market reforms still face many big obstacles, demonstrated by the fact that the state sector maintains sole leadership in the allocation of resources, directing policies regarding land, energy, communications, transportation and currency.
In addition, the legal system regulating the market has yet to be perfected, which allows regional governments to micro-manage local businesses, often to the detriment of their positive growth.
In fact, China's current economy is developed from the so-called "state syndicate" system, which combines market economy and state-owned economy. This system has two possible outcomes: modern market economy (system-regulated market economy) or state-capitalist economy.
Some East Asia countries' experiences have told us that countries that adopted the market economy guided by the local government need to break through the obstruction of power groups and transform into democratic developmentalism.
As China has a long feudalism history, such transformation would be difficult. Besides, if the transformation cannot guarantee free exchange, the whole process would become a mess. The government will intervene and resort to the "law of the jungle" to once again dominate the market. Then the market will deteriorate into an economic body where authorities manipulate social and political environment to obtain profit, rather than adding value to the resources.
Therefore, meaningful progress can occur only through simultaneous reforms of both the economic and the political systems. For the former, a market dominated by directions and planning from governmental authorities must become one guided by free exchange. For the latter, government rules and regulations must transition from serving political interests of the officials to abiding a strict set of fair and transparent laws.
Facts have told us that depending on strengthening of the government and investing massive resources will incur serious consequences for the economy and society. An economy serving only the government cannot persist. Worse, significant government intervention in the marketplace will spread corruption and widen the gap between the rich and the poor, causing social instability.
The public has made many complaints for what the government address these potentials for future economic crises. But it is very important to first establish a direction to go from here. And China Model is a vital topic for discussion that may impact future of this country.
Source:China.org.cn