Chapter 19 The fourth part: Economics of the World and the People (1993-1998)

After Deng Xiaoping's inspection tour to the south, China's economy once again entered a period of high-speed growth. Thousands of horses are galloping, dust is everywhere, and the busy and chaotic scene makes people feel mixed. The good news is that the economy is showing a strong recovery trend. According to the data of the National Bureau of Statistics, in 1991, the national construction in progress was about 900 billion yuan, and by 1992 it had expanded to 2.2 trillion yuan. Fixed asset investment increased by 69% on the basis of the previous year, which is an unprecedented figure.The central bank has issued 50 billion yuan more banknotes, but all places are still clamoring for a lack of money.By the end of the year, the national GDP exceeded 3 trillion yuan for the first time.The growth of private enterprises in various provinces is very gratifying. Guangdong, Guizhou and Hunan are the three provinces with the fastest growth in the output value of township enterprises, reaching 55%, 57% and 89% respectively.

The worry is that the hyper-growth of investment is inducing a series of related effects.The British "Economist" warned in its year-end draft at the end of 1992, "At some point in 1993, the booming Chinese economy will appear dangerously overheated. fire".In the first half of the year, the national production means price index rose by 44.7%.Under the situation of imbalance between supply and demand, the financial order has also become a bit chaotic. Underground banks are extremely active. Private lending rates are getting higher and higher, and official interest rates are useless. Money can be resold at 20% or even 30% interest rate.

Wu Jinglian recalled, "During the one-year period from the middle of 1992 to the middle of 1993, various parties had very inconsistent views on this macroeconomic situation."In the world of economics and economics, a debate has reignited. Most newspapers described this debate as a debate between "hot" and "not hot". It seemed that there were only two factions at the time: the reformists who advocated "not hot" and the conservatives who advocated "already overheated".But according to Wu Jinglian's observation, the actual situation is much more complicated than what the newspapers said.In the process of China's economic development, there has always been a concept accepted by many people, that is, reformers must advocate high-speed GDP growth; in contrast, those who advocate maintaining economic stability and even "sacrificing" a little speed must be conservatives.Behind this point of view is a popular way of thinking, which is to "mix" specific economic judgments and policy designs with certain political views, and use an ideological standpoint to prove that one's economic views are "politically correct."As a result, the distinction between "reform" and "conservative" has become quite arbitrary.In fact, in China in 1992, some seemingly radical and supportive views on economic growth came from conservatives before the southern inspection, and some reformers appeared to be very "conservative" on the issue of GDP growth.The former tried to argue that the "high speed" in 1992 was the result of the rectification in the past three years.On the contrary, those who insist on market-oriented reform believe that the speed should be slowed down at this time, seize the opportunity, and promote reform.

It is against this complex background that there were mainly four different viewpoints at the time. The first point of view is that the reason for overheating is that market-oriented reforms are advancing too fast, and the subtext is that reforms should be slowed down and planning controls should be strengthened. The second one agrees with the first opinion on the analysis that overheating has occurred, but is the opposite of the first opinion, and believes that the root cause of the overheating is that reforms in key sectors are still not proceeding fast enough.They advocated decisive measures to stabilize the economy and advance reforms.

The third type thinks that the economic development is in good condition, maintaining a high speed without overheating, and there is no danger of inflation. They hold a fully positive attitude towards the previous period of economic work and believe that the practice at that time should be continued. The fourth type is dissatisfied with the advancement of reform, but believes that the situation of economic growth is gratifying.They believe that inflation is an inevitable accompaniment to the high-speed growth of various countries, and austerity measures should not be taken to hinder the continuation of the high-speed growth momentum.

The representative of the fourth opinion is Li Yining.In fact, as early as 1985, he had already formed his basic views on inflation in the debate with Liu Guoguang and others.According to his "non-equilibrium theory", during the period of economic transition, supply exceeds demand is normal. In a developing country like China, the opening and revitalization of the economy objectively requires an increase in money supply.Money supply faster than economic growth is a requirement of the economy itself, and keeping money supply limited ahead of time is an impetus to economic growth.If the government suppresses demand and restricts money supply, it will not only be detrimental to rapid economic growth, but will also damage the interests of all parties, leading to weakening of people's support for reform.Therefore, tight macro policies are not advisable.Accordingly, he proposed two sets of programs, "homeopathy" and "contrarian therapy".The former is to tolerate the existence of moderate inflation for a certain period of time, increase economic vitality, and must not adopt a policy of simply compressing demand.The latter is to take all measures to eliminate inflation first, and then take measures to restore the economy.Of course he supported the implementation of the first set of plans.

In order to support his point of view, Li Yining also considered curbing inflation and reducing unemployment together at the meeting for soliciting opinions held by Zhu Rongji at the end of 1993.He said: Inflation has almost caused the vast majority of people to suffer. Although everyone complains and complains, generally no one will take the lead in making troubles. They think, "Everyone suffers, why should I take the lead?" Unemployment is different. Only some people were victimized, their psychology was unbalanced, and their conflicts tended to intensify.If both inflation and unemployment can cause social unrest, it is more likely that unemployment will cause social unrest.Therefore, he believes that "the lesser of two evils" should be adopted, and a policy of "giving priority to employment and taking into account price stability" should be adopted. ②

Wu Jinglian did not agree with Li Yining's analysis on inflation and unemployment.He pointed out at the same symposium that the argument of "the lesser of two evils" is based on the old Keynesian "Phillips curve" in which unemployment and inflation are negatively correlated.This simplistic statement, after the great debate about "stagflation" in the late 1970s and early 1980s, was considered outdated even by New Keynesians.In addition, the claim that inflation does not cause social instability because it harms everyone equally is groundless. In fact, inflation is a "bad tax" with a redistributive function that benefits The rich are not good for the "hand to mouth" working class.Therefore, his policy orientation is that decisive measures must be taken quickly to stop the spread of inflation.

From the point of view of policy choices, in this debate, the differences among experts are actually whether to "govern while governing" or "govern before governing."This depends on the different judgments of the two sides on the nature of inflation.If it is believed that a balance in economic aggregate is an important precondition for promoting reform, then the government should give priority to controlling inflation and then carry out reforms.And if inflation is understood as the "unbalanced" normal state of the transition economy, then a certain amount of inflation is not harmful, but conducive to economic growth and the advancement of reforms.According to this logic, the government should not adopt austerity policy to deal with the current inflation.

In short, this is another big debate in the history of reform. Four kinds of opinions and several factions are intertwined, making people dizzy. At the government level, the leader who believes that the economy has overheated and must carry out macro-control, especially the financial system should be radically rectified, was the one who worked at the Institute of Industrial Economics of the Chinese Academy of Social Sciences chaired by Ma Hong. Zhu Rongji, member of the Standing Committee and vice premier of the State Council. Zhu Rongji was transferred to Beijing in 1991 from his post as secretary of the Shanghai Municipal Party Committee, where he served as Vice Premier of the State Council in charge of the economy.During his time in Shanghai, he was known for his closeness to the people and his strict management of officials.In the oral history, Wu Jinglian commented on his old acquaintance in this way: "He has two good points. One is that he can discuss issues with others. Maybe others don't see it that way, because I am familiar with him and can debate. Many officials I was afraid of him. When I saw him, I suddenly forgot what I said clearly. In fact, even if he discussed with you, even if he argued fiercely, he didn’t hold any grudges. He and I had very serious disagreements and Intense debates, but this does not prevent us from maintaining a relatively good relationship. He once said that disputes belong to disputes, and people should not be handled casually. He has a lot of opinions on some leading cadres who punish people when they disagree. Another point is that he is sometimes subjective, but he must do what he has identified, and he is very courageous." Wu Jinglian also gave a brief evaluation of Zhu Rongji's "report card" for 12 years in power: "I think The two things he did the most beautifully, one was in 1993, he used reforms to control inflation, and the other was in 1998, he also used reforms to deal with the East Asian financial crisis.”

As soon as Zhu Rongji arrived in Beijing, he criticized that reforms that should be popular in some places have not been popularized, and reforms that should not be popular-one is infrastructure investment, and the other is the stock market, which is too hot.But at that time, the whole country was suffocating, and the enthusiasm for development that had been extinguished had just been stimulated by the southern inspection. At this moment of excitement among the whole people, demanding that the economy be "slammed on the brakes" would undoubtedly be burdened with the burden of "opposing development is the last word." "'s raging infamy. In April and May of 1993, the situation became more and more out of control, the retail price index continued to rise, and the exchange rate of RMB against the US dollar depreciated by 45% within six months. The decision-makers had to make a clear decision on this.At this time, it was Deng Xiaoping who came on the scene again. He talked to the top leadership and urged measures to achieve macroeconomic stability. In June, the governor of the People's Bank of China was replaced, and Zhu Rongji, the executive vice premier of the State Council, was appointed concurrently as the governor. Document No. 6: "Opinions on the Current Economic Situation and Strengthening Macro-control" (commonly known as the "Sixteen Articles"), to rectify the financial sector and urgently "cool down"; the second is to formulate a comprehensive reform plan and implement "overall promotion, key breakthroughs" "The new reform strategy. The "Sixteen Articles" have a strong sense of emergency, including raising deposit and loan interest rates, strictly ordering specialized banks to recover loans exceeding the limit and illegal lending funds before August 15, comprehensively reducing investment in capital construction, and re-examining Locally approved economic development zones, 20% reduction in administrative expenses, etc.The State Council sent research teams to 20 provinces and cities to inspect the legitimacy of financial activities. In June, CCTV's "Economic Experts Forum" was chaired by Li Qingyuan, deputy director of the Macro Department of the State Economic Reform Commission, and invited Wu Jinglian and Ma Jiantang of the Development Research Center of the State Council to record a special program and conduct a televised discussion on the summer economic situation.Ma Jiantang explained the ongoing "sudden brake" policy.Wu Jinglian’s remarks appeared to be more independent. On the one hand, he expressed his concerns about inflation and supported macro-control. He believed that “if the people’s psychological state is stable and the government’s measures are correct, and the two cooperate, I estimate that by the end of this year, , The economy can be stabilized at the beginning of next year."On the other hand, he also explicitly criticized the "administrative measures" of the "Sixteen Articles" as "too strong."This was considered "too bold" by many people at the time.When reviewing this matter in his later years, he said: "As far as I understand, the correct role of an economist should not be to 'explain and demonstrate policy', but to make independent judgments on economic conditions and policies, and inform the government and the public. "The program was aired in two episodes in July and attracted a lot of attention. Under Zhu Rongji's strict measures, the "Sixteen Points" really stopped the momentum of overheating. By October, the growth rate of fixed asset investment had dropped from 34% in June to 15.6%, and the price index of production materials also followed. Rapid decline, the exchange rate of the US dollar to RMB in the foreign exchange market dropped from 1:11.5 to 1:8.7. It is true that administrative thunderbolts can slow down the excessively fast speed, but if this stops the "reform train" that has just started, it will be another disaster.At this time, the other side of the "two-pronged approach" shows its importance. At the TV seminar on CCTV, Ma Jiantang interpreted the "Sixteen Articles", and then the host asked Wu Jinglian: "Professor Wu, you often provide consultations to the government. If the Prime Minister asks you to take any other measures, what is your opinion?" Wu replied: "I think three levels of measures will be adopted for this rectification. The first level is administrative measures; the second level is policy adjustment; the third and deepest level is system reform... the current currency The most profound reason for the expansion is that the system reforms of the three key departments are lagging behind, so if we want to get rid of the bottom line and solve the problem fundamentally, we still need to work hard on reform.” Wu Jinglian's so-called three key departments refer to the fiscal and taxation system, the financial system, and state-owned enterprises. His basic idea is still - we must insist on using reforms to promote sustained and stable economic growth, and in terms of methods, we should promote overall supporting reforms.It was also during that period that the strategy that he and his colleagues submitted to the decision-makers was conceived in 1986 and re-studied in 1990, the "overall design plan for China's economic system reform" that had been honed for a long time. In fact, when the Central Committee of the Communist Party of China and the State Council deployed the emergency action launched by the "Sixteen Points" in May 1993, they had already deployed a more far-reaching action: drafting a programmatic document to start a comprehensive reform of the economic system.First, 20 economists organized by the State Restructuring Commission put forward a "Planning Outline for Establishing a Socialist Market Economic System" in May.Then, the Central Finance and Economics Group Office set up a number of research groups on the establishment of a socialist market economy system and a drafting group for official documents (this document was later passed by the Third Plenary Session of the Fourteenth Central Committee of the Communist Party of China in November, entitled "The Communist Party of China Decision of the Central Committee on Several Issues Concerning the Establishment of a Socialist Market Economic System").Wu Jinglian participated in the drafting of the "Outline".Several members of Wu Jinglian's research group were also called to participate in the drafting group of the official document. It is true that "heaven pays off with those who wait and see". Under such circumstances, the years of hard work of Wu Jinglian's research group finally came into play. Since the spring and summer of 1992, with the recovery of the reform situation, the members of Wu Jinglian's research group have accelerated the research process, and various achievements have been formed one after another.Wu Jinglian recalled: "After the 'Southern Speech', the results came out one by one, and each one was sent to the central government, usually to Zeng Peiyan, the office director of the Central Finance and Economics Leading Group, and the Third Plenary Session of the 14th Central Committee to decide to draft The person in charge of the ten groups will distribute them to the decision-making leaders, and then publish them in journals one after another, many of them in the "Reform" magazine edited by me." It can be seen from the book "Overall Conception and Scheme Design of Building a Market Economy" published later that they completed a total of 21 project reports, involving the new fiscal system, the new state-owned assets management system and the ownership framework of state-owned enterprises, China's monetary policy, financial Institutional reform, national professional bank reform, RMB policy, corporatization, rebuilding of relationship between enterprises and banks, social security system, positioning and transformation of government functions, theoretical discussion of modern state functions, etc.This is the first time that Chinese economists have thought about the future of China's economic reform as a whole, and put forward highly operable implementation strategies. It shows that after more than ten years of reform exploration, Chinese scholars have gradually sorted out the reform It is from this point that the debate on China's reforms has temporarily bid farewell to ideological differences, and entered into a period of methodological controversy under the premise of implementing a market economy. Among these plans, the most important document is "An Integrative Design for Near and Mid-term Economic System Reform" written by Wu Jinglian and Zhou Xiaochuan.In this research report, they propose that the market economy of the Anglo-American style (individualistic market economy), the Japanese (Asia-Pacific style) market economy (corporatist market economy), and the German-style market economy (social market economy) , to establish the fourth type, that is, "market economic model with Chinese characteristics".Taking this as a starting point, they set specific reform steps in key areas and reform goals in the near and mid-term. Just as these proposals were presented one after another, preparations for the Third Plenary Session of the 14th Central Committee began. Zhou Xiaochuan, Lou Jiwei, Guo Shuqing and Li Jiange in the research group were recruited into the document drafting group. Lou Jiwei at this time As Director of the Macro Department of the Economic and Trade Commission, Li Jiange is the Director of the Research Office of the Economic and Trade Commission. Many reports completed by Wu Jinglian and others were printed and distributed to the drafting group for policy reference. During the drafting process, scholars had another interesting discussion.At that time, China's reform had been carried out for 15 full years, so the plenum was going to describe the characteristics of China's reform strategy. At this time, differences emerged. At that time, quite a few scholars believed that the feature of China's reform strategy was the victory of the "gradualism" line. It was precisely because of the gradual nature of reform that China did not fall into trouble like the former Soviet Union and Eastern European countries. rapid growth.This view is shared by many people, who use Deng Xiaoping's famous sayings - "cross the river by feeling the stones" and "take each step to see" as basis.Therefore, the policy of "overall gradual progress and one or two breakthroughs at each stage" was put forward for the reform in the latter stage. Wu Jinglian didn't think so.His point of view is that it is inappropriate to compare the "shock therapy" of the Soviet Union and Eastern Europe with "gradualism" and take the latter as the main successful experience of China's reform, because this kind of generalization based on speed has not touched China. The nature of transformation.So, what was the essence of China's economic transformation in the first 15 years?Wu's answer is: incremental reform. The so-called incremental reform refers to the fact that the main achievement of China's reform is not the stock within the system, but the increment outside the system. He discussed that, judging from the actual situation of China's reform, within the scope of the state-owned economy, basically only some small repairs have been made in the past 15 years, but no fundamental changes have been made.As far as the reform of state-owned enterprises is concerned, from decentralization and profit transfer to the implementation of the contract system, all improvements were carried out under the condition of the planned economy as the main framework. In fact, its reform had stagnated by 1981.However, the achievements of China's economic growth are universally recognized. What are the reasons?The secret lies outside the system.When the reform of the state-owned economy stalled, we did not hang ourselves on a single tree. Instead, we shifted the main battlefield of reform to the non-state-owned economy, that is, the rural and foreign-related economy: one for rural reform and one for opening to the outside world. After 1980 to around 1993, the characteristics of China's reform. In terms of economic theory, Wu Jinglian believes that Janos Korner, the author of "Shortage Economics" and an economist at Harvard University and the Budapest Institute for Advanced Study, proposed a "theoretical framework that can better touch the essence of things."Korney argues that, in terms of pure form, there are two basic strategies for the transformation of "post-socialism", of which "Strategy A", or the organic development strategy, identifies the most important task as creating favorable conditions, To enable the private sector to grow from the bottom up; "Strategy B", or the accelerated privatization strategy, determines that the most important task is to eliminate state ownership through the privatization of state-owned enterprises as quickly as possible.The transitional economies of Central and Eastern European countries show that "Strategy A" is a more effective transitional strategy because it can promote capital accumulation, cultivate the entrepreneurial class and accelerate the formation of market institutions; while "Strategy B" cannot do this If everything fails to improve efficiency, if it is not done well, it will form an irregular market controlled by a small group of oligarchs, which will cause endless harm. Wu Jinglian believes that the essence of China's reforms in the first 15 years is similar to "Strategy A" proposed by Korney. Based on this analysis, he said: "If Korney's distinction criteria are slightly modified, the focus should be on the growth of non-state-owned enterprises or the focus on state-owned enterprises. This theoretical framework can be used to analyze the evolution of China's reform strategy. For example, the rural contract system in the early 1980s gave birth to tens of millions of farmers' family farms, liberating the natural entrepreneurial spirit of Chinese farmers ; followed by township and village enterprises and private enterprises that sprung up like mushrooms after rain, opened up the market, cultivated a large number of entrepreneurs, and created a strong demand for the establishment of an orderly market, thus supporting the deepening of the reform of state-owned enterprises.” On the basis of this analysis, he further compared the differences in reform paths between China and the former Soviet Union and Eastern European countries.Take Hungary, the country with the most radical economic reform, as an example. It started reform in 1968, and the situation was not bad in the first two years, but it encountered difficulties around 1972. The economic order was chaotic, the fiscal deficit increased, and inflation appeared. The state-owned sector has advanced and retreated, and has not been able to find a way out.The situation in other countries in Eastern Europe, such as Yugoslavia and Poland, is completely similar. The main target of reform is the state-owned economy as the main body of the national economy, and during the reform process, the entire national economy depends on it. This is like an old car. It is necessary to dismantle it, update and improve it, and at the same time use it instead of transportation, which is of course impossible.The biggest difference between China and it is that although the state-owned economy is old and broken, it is not in a hurry to dismantle it, but to make small improvements to keep it going. Build new cars outside. The reason why Wu Jinglian insisted on using "incremental reform" instead of "gradual reform" to describe the characteristics of China's early reform strategy has two main points. First, to highlight the institutional characteristics of China’s reform, and to set the object and boundary of reform—we will see in the future that the term “reform” has become a problem because of its generalization, ambiguity of object, and use by special interest groups. A major symptom of China's modernization progress. Second, it clearly pointed out the main battlefield for future reforms.He believes that although the incremental reform has achieved remarkable results, it also has obvious shortcomings, because the economic system is a machine for allocating resources, and a long-term "peripheral war" outside the system will bring a series of problems, mainly in four aspects First, the financial situation of the state-owned sector is deteriorating day by day, and the living standards of employees of state-owned enterprises cannot be improved; second, the economic overheating and inflationary pressure often exist and erupt from time to time; third, the coexistence of dual systems makes corruption have a very large institutional basis Fourth, the policies adopted by the old and new systems are different, which widens the income gap between different regions, different departments, and different social groups.Wu Jinglian realized more and more later that the long-term continuation of incremental reforms will inevitably lead to a derivative trajectory of "dual-track system-expansion of rent-seeking base-crony capitalism". He described in his book "Contemporary China's Economic Reform": "The crux of the problem The reason is that under the strategy of 'reform first outside the system', the economy has been monetized to a considerable extent, but the dominant administrative power still intervenes in market transactions under the conditions of the planned economy; reforms have allowed independent enterprises to be established, but A considerable portion of resources, such as means of production, land, investment, and credit resources, remain in the hands of the government, which is allocated administratively. In this way, it turns the entire economy into a huge breeding ground for rent-seeking activities.” From the above, Wu Jinglian returned to his famous conclusion: China's reform must follow the path of overall reform.The transition from "incremental reform" to "overall reform" actually contains such a declaration: the object and focus of reform should be placed within the system, so that it can form a system with the vigorously developing and market-oriented forces outside the system. sexual match. Wu Jinglian's proposition was not accepted by everyone.He recalled: "Until the second half of 1993, when preparing for the Third Plenary Session of the 14th CPC Central Committee, a report by the special investigation team of the resolution drafting group also believed that the reforms in the past were done well because of the adoption of 'overall gradual progress and stage breakthroughs'. In the future, this policy should still be adhered to. It was not until the resolution of the plenary session that it was changed to a later formulation: 'overall advancement, key breakthroughs'." On November 14, 1993, the Third Plenary Session of the 14th Central Committee of the Communist Party of China was held. The meeting passed the "Decision of the Central Committee of the Communist Party of China on Several Issues Concerning the Establishment of a Socialist Market Economic System", clearly proposing a new reform strategy of "overall advancement and key breakthroughs". , not only to attack in the marginal areas, but also to fight a fortified battle in the state-owned sector to ensure the initial establishment of a socialist market economic system before the end of the 20th century. Later historians believed that this "Decision" was related to the "Decision on Economic Reform" formed at the Third Plenary Session of the Eleventh Central Committee in 1978 and the "Decision on Economic System Reform" passed at the Third Plenary Session of the Twelfth Central Committee in 1984. It has considerable continuity and is an important milestone in the history of reform. The three "Third Plenary Sessions" have become a legend of China's reform in the first 15 years. Since 1994, reforms have been promoted in various fields as a whole—— Establish a new fiscal and taxation system: transform the fiscal contract system that has been in use for many years into a new tax-sharing system, thereby transforming the fiscal and taxation relationship between the central government and local governments, and re-establishing centralization in the sense of macroeconomics. Start the reform of the financial-banking system: establish a central bank system that independently implements monetary policy under the leadership of the central government, start to promote the commercialization of existing state-owned specialized banks and the diversification of commercial banks, successively establish the National Development Bank, Policy banks such as Export Credit Bank and Agricultural Development Bank. Carry out reform of the foreign exchange management system: announced the cancellation of the dual exchange rate system. Since January 1, 1994, the two exchange rates have been merged, and a "single, managed floating exchange rate based on market supply and demand" has been implemented. The exchange rate of RMB against the US dollar It is set at 8.72 yuan to 1 US dollar, a depreciation of 33% from the previous official exchange rate of 5.7 yuan. Promoting the reform of state-owned enterprises: put forward the requirement of establishing a modern enterprise system. On July 1, 1994, the "Company Law of the People's Republic of China" (hereinafter referred to as the "Company Law") was officially promulgated, and Chinese enterprises entered into standardized management in line with international practices period. Establish a new social security system: implement a pension and medical insurance system for urban employees that combines social pooling and personal accounts. The successive introduction of these new policies and new systems has created an unprecedented pattern in China's reform and economic outlook.In the future, Wu Jinglian also used this boundary in his college textbook "Contemporary China's Economic Reform", identifying the period of Chinese reform from 1979 to 1993 as a period of "incremental reform", and then entering a new stage of "overall reform". . It was also from 1994 that China’s macro-economy embarked on a road of high-speed and healthy growth, thus creating an economic miracle of no outbreak of inflation for 13 consecutive years and an average annual GDP growth rate of up to 9%. This period can be called The "golden time" of the fastest economic development in the history of New China was also the "rise of great powers" era in which national wealth accumulated the most since the Opium War in 1840.During this period, China's economic aggregate surpassed that of France, the United Kingdom, and Germany successively, ranking third in the world. Comparing the resolution of the Third Plenary Session of the 14th CPC Central Committee with the report of the overall design task force for China's economic system reform, it can be clearly seen that the former has adopted many policy suggestions and verbal formulations of the latter, and Wu Jinglian and others have worked hard for many years to form an overall The supporting reform plan undoubtedly played the role of a "sketch". As an economist, Wu Jinglian at this time may have really approached the realm of managing the world and helping the people.