economic thought

Political reforms after the Cultural Revolution and the economic necessities of ‘opening up’ (kaifang) China’s economy have radically transformed both the theories of Chinese economic thought and its study, practice and influence as a profession.

Chinese economists have gradually abandoned Marxist historical-materialist and class-based economic theoretical analysis and the methods and models of Soviet-style central-planned economics. As reformist leaders Deng Xiaoping, Hu Yaobang and Zhao Ziyang in the 1980s, and Jiang Zemin and Zhu Rongji in the 1990s, liberalized the Chinese economy, arguing it was still in the ‘initial stages of socialism’ (shehui zhuyi chuji jieduan) and that they were developing ‘socialism with Chinese characteristics’ (you zhongguo tese de shehui zhuyi), senior economists Du Runsheng, Xue Muqiao and Ma Hong gained the freedom to explore Western neo-classical and neo-institutional economic theory. Popularly, many classic Western economic texts have been translated into Chinese, and biographies of such influential entrepreneurs as George Soros, Bill Gates and Jack Welch are common in bookstores.

Marketization has required the dismantling of independent planned-economy ‘sectoral economics’ (bumen jingjixue), each with their own unique quantitative analysis methods and standards, and the growth of broad-based ‘market economics’ (shichang jingjixue) with internationally accepted standards of data collection and analysis. Government ministries for specific industries and their large state enterprises have broken up into regulatory agencies, think tanks and cross-sectoral enterprise groups. At the same time, the colleges of the planned economy era that trained economists for these institutions have been forced to merge together as general curriculum universities. The evolution of the sectoral-specific state banks (e.g. the Bank of Agriculture, the Bank of Industry and Commerce) into general-lending institutions, and the rise of multi-purpose investment banks, development funds and stock market institutions, have also increased the demand for broadly trained economists.

Privatization has given economic thought more freedom in the reform era, providing the resources for the rise of fiscally autonomous think tanks and individual economists capable of sustaining themselves through income from public commentary. CCP leader Jiang Zemin’s criticism of liberal economists Mao Yushi (director of the independent Unirule Institute) and Fan Gang (Economic Reform Foundation) in 1999 cut into their income from state media sources but did not silence them. Legal reforms and the down-sizing of the bureaucracy have created competition among organs for government economic policy research and made individual economists drafters of economic legislation in the people’s congresses. Peking University’s Li Yining was particularly influential in drafting the National People’s Congress laws on bankruptcy, mergers and contracts. The rise of technocrats in the CCP has also increased the demand for sophisticated market economy analysis by think tanks under central organs, notably the State Council Development Research Institute and the Institute of Economics of the Chinese Academy of Social Sciences.

Decentralization has also seen the re-emergence of local economic think tanks as influential policy actors. The Shanghai Academy of Social Sciences’ (SASS) World Economy Institute, under deputy-director Qin Benli, and its newspaper, the World Economic Herald (Shijie jingji daobao), became China’s premier forum for economic theory and policy debates among scholars and government officials until they were shuttered in 1989. The director of the SASS Economic Research Institute, Yuan Enzhen, served as a key macro-economics policy advisor in the 1990s to both the Shanghai Municipal Government and former Shanghai leaders in Beijing, including Premier Zhu Rongji.

Finally, the internationalization of China’s economy has also transformed economic thought in China. Chinese economists with advanced training in liberal economics work with foreign governments (especially United Nations organizations), international investors (foreign banks and investment funds), and multi-lateral trade (WTO), monetary (International Monetary Fund) and lending (World Bank and Asian Development Bank) institutions. Internationalization has also meant the hiring of thousands of young economists trained overseas (especially the United States), with resulting pressure on Chinese universities and government agencies to offer salaries competitive with foreign academic institutions and the growing private consulting industry.

See also: Qin Hui

Further reading

Hamrin, C. and Zhou, S. (eds) (1995). Decision-Making in Deng’s China: Perspectives from Insiders. Armonk and London: East Gate.

Hsu, R. (1991). Economic Theories in China. 1979–1988. Cambridge: Cambridge University Press.

Naughton, B. (2002). ‘China’s Economic Think Tanks: Their Changing Role in the State’. China Quarterly 171:625–35.

STEVEN W.LEWIS