Chapter 70 The Role of the Central Government: Decentralization and Disequilibrium Strategies

This passage of Deng Xiaoping was quoted repeatedly in the future, and many observers deduced a conclusion based on it: the reform in the 1980s was a non-governmental economic movement in which the government let itself go its own way and ruled by doing nothing.Many people even believe that the government has done nothing in economic growth, and the reforms it promoted have all ended in failure.This, in my opinion, is not entirely accurate.The real situation is that the recovery of the national economy is a process of “full decentralization by the central government, bold local leadership, and active participation by the people.” The central government and local governments played the roles of facilitator and leader respectively.

As far as the central government is concerned, its strategy can be divided into three aspects: one is decentralization and transfer of profits; the other is unbalanced development; The objects of decentralization and profit transfer are state-owned enterprises and local governments, and its goal is to stimulate the recovery of economic factors and reduce central fiscal expenditures. At the Third Plenary Session of the Eleventh Central Committee at the end of 1978, the Central Committee believed that: "A serious flaw in my country's economic management system is that the power is too concentrated, and there should be leadership to decentralize boldly, so that localities and industrial and agricultural enterprises can be guided by the unified plan of the state. There will be more autonomy in business management.” Based on this consensus, the State Council announced in the following year that eight large state-owned enterprises, including the Capital Iron and Steel Company, Tianjin Bicycle Factory, and Shanghai Diesel Engine Factory, would take the lead in experimenting with expanding corporate autonomy, including Expand the autonomy of business management, implement profit retention, levy fixed assets tax, increase depreciation rate and improve the use of depreciation fees, implement full credit for working capital, etc.In 1984, the contract system, which was effective in rural areas, was introduced into the enterprise reform, and the government's allocation of state-owned enterprises was changed to loans, and then to shares.

The central government’s decentralization of power to local governments began with the fiscal contract system in 1981. The State Council announced the implementation of a fiscal contract system of “dividing revenue and expenditure and grading contracting”. Except for the three major municipalities directly under the Central Government, Beijing, Tianjin and Shanghai, the rest of the provinces carried out various forms of fiscal contracting. Guaranteed dry, this system is vividly called "dividing kitchens to eat", that is, the one big kitchen of "unified income and unified expenses" can no longer support so many sons, so each eats small kitchens separately, food and clothing, suffering and happiness, and asking for more blessing. Around 1987, the State Council successively proposed "enterprise contracting", "departmental contracting", "financial contracting", "foreign trade contracting", and "credit contracting in pieces", which were called "five major contracts".

If we say that the decentralization of power to enterprises and local governments not only unburdens the central government, but also provides the possibility for economic recovery, which has the effect of killing two birds with one stone. Then, the unbalanced development strategy is an active policy arrangement. , and is also the most creative move in this round of reform.China's planned economy is like a pool of stagnant water deposited with silt. I am afraid that even God is powerless to stir it up. Therefore, we can only start from the weakest corner, muddy the water vigorously, and then call the wind and rain to wrinkle the pool of spring water.In the early days, this was a stopgap measure, but in the long run it completely changed the macroeconomic landscape of the country.

As early as the spring of 1979, when the introduction of European and American capital was not effective, State Affairs Anhui approved a request from Yuan Geng, chairman of the China Merchants Group, to draw a circle in the south of the border and the nearest city of Bao’an County to Hong Kong, where free Chinese capital gathers. 2.14 square kilometers, the establishment of the Shekou Industrial Zone, "can not only use domestic relatively cheap land and labor, but also facilitate the use of international funds, advanced technology and raw materials, and make full use of and combine the existing favorable conditions of the two." This The industrial zone was neither included in the national plan nor allocated by the government. Yuan Geng used the land as a resource and leased it to Hong Kong businessmen, and offered tax breaks as incentives to attract factories to settle in. This move achieved miraculous results.By July 1980, the central government approved the opening of Shenzhen, Zhuhai, and Shantou as special economic zones (later Xiamen was added as the "Four Special Zones"). Foreign manufacturers invest and set up factories, or set up joint ventures and tourism businesses with them."Then in 1984, 14 coastal cities were further opened to speed up the pace of introducing foreign capital.

The establishment of special zones and the opening of coastal cities are collectively referred to as the "Southeast Coastal Priority Development Strategy".During the planned economy period, China’s industrial economy was basically deployed in the Northeast and North China. The second-line strategy in the mid-1960s focused on the central and western regions. In the three provinces of Zhejiang, there is very little investment in major projects. The "Southeast Coast Priority Development Strategy" has completely broken the original investment pattern. Foreign capital and private capital grow like weeds in these areas where state-owned capital is weak, forming a new pole of China's economy .

Throughout the 1980s, imbalance became a basic reform idea. The model of special economic zone and development zone was an imbalance in the allocation of resources. "Southeast priority" was an imbalance in regional economic development. "Let some people get rich first "Getting up" is an imbalance in wealth distribution. Giving foreign capital "super-national treatment" in terms of land expropriation and taxation is an imbalance in business operations. Enterprise pilot projects are an imbalance in policy allocation. The dual-track price system is implemented for state-owned enterprises. Disequilibrium of price protection.Li Yining once pointed out that the planned economy has a major "equilibrium defect", so the breakthrough of the old system is essentially a chaotic process of breaking the balance.

The orderly decentralization of economic power and the implementation of the unbalanced strategy mean the return of the spirit of free trade. While it has an impact on the planned economic system, it will definitely challenge the unified ideological system. In this regard, the decision-making Show your tough side. The famous saying "stability overwhelms everything" came from Chen Yun's mouth, but it was quoted by Deng Xiaoping many times. Although the two leaders had many differences in economic thought, they had no problem in maintaining the ruling status of the Communist Party and controlling their thoughts. The positions and attitudes of the two are basically the same.