China not transitional to capitalism: experts

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Last updated at: (Beijing Time) Thursday, October 23, 2003

China not transitional to capitalism: experts

Nearly three decades ago, no single Western economist could have predicted that China's economy would grow at the fastest rate in the world over the following 25 years.

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Nearly three decades ago, no single Western economist could have predicted that China's economy would grow at the fastest rate in the world over the following 25 years.

At that time the preconditions set as necessary in standard Western economic textbooks - a well-established market, private property rights and effective rule of law - were not present.

But overall progress has been made along the years, even in the first half of 2003 when the country was hit by the outbreak of severe acute respiratory syndrome (SARS).

A group of economists, politics experts and law experts gathered late October in China's flagship business municipality of Shanghai to seek an answer to what Westerners have hailed the "China miracle".

Mainstream economics in the West categorizes the Chinese economy as a "changing socialist economy." This definition was called into question by Chinese scholars. Shi Zhengfu, an economic professor with the Shanghai-based prestigious Fudan University, said what has been produced in China is probably not a change from one social and economic system to another, nor "transitional" to capitalism in Westerners' view, but an "evolution to an unknown world."

"This situation provides an epoch-making opportunity for the creation of China's own economics," said Shi, who is director of the New Political and Economic Center of the Fudan University.

His view was echoed by a string of senior Chinese economic experts attending the seminar on "Marching to New Politics and Economics" held in Fudan.

China's economic system undertaken profound changes after 1979, and choices for its unformed economic structure were many: from that of the former Soviet Union to the Neo-classic economics of the West, and to the "New Institutional Economics" based on transaction cost and property rights.

But they fell into malfunction when applied to analyze unique economic phenomena in this country. "According to Western economic theories, a populous nation like China is less likely to have an economic blast-off, but we made it," said Chen Ping, a professor with the China Economic Research Center in elite Beijing University.

According to Chen, forces driving China's economic growth have many aspects at odds with what Western classic economics think necessary. For example, in China a competitive system has emerged before the reform of property rights, and some regions have had earlier and faster economic development because of favorable location.

"China's experience validates a growth pattern of moderate competition and economic evolution in co-existence (of different ownership), which is distinctive from the Western economic growth model of consuming natural resources and saving on manpower," Chen said.

Wang Dingding, a renowned economist, said Western economists focus on processing small issues in economics, but Chinese economists face systematic changes, which may lay a foundation for the building of China's social sciences, including economics theories.

"China's economic growth, to a very large degree, relies on energies released by a series of system reforms," Yao Yang, Chen Ping's colleague, commented.

Prof. Shi said China's economics could play a role in the following three aspects: the enterprise system of multiple ownership including public ownership; the pattern of social wealth distribution with the creation of middle class going before privatization; local governments acting as "administrator", not "night watchman" as they are in Western countries.

"The research based on China's economics is not a copy research of matters Western economics had done, nor is the goal of the research to let China copy the Western style of economic development. We have been confronting the same issues as US economists: all being untouched ones," Cui Zhiyuan, a professor working in a German-based institute, said.

Although to create an economic system fit for China's own economic development has become a consensus of Chinese economists, few innovations or inventions have been worked out, while they work on criticizing and analyzing Western economics.

"The content of China's economic research is new, but the means of research is old," said Shi Jinchuan, vice director of the Economic School of Zhejiang University.

Stephen Green, head of the Asia Program of the Royal Institute of International Affairs in Great Britain, said that "No matter what the result will be... the Chinese are full of confidence in their own mode of economic development."

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