China's 40 Years of Economic Reform and Development (eBook)

Zheng Xinli is a well-known economist, professor and doctoral tutor, currently serves as Vice Chairman of the China Center for International Economic Exchanges. Prof. Zheng has been engaged in the study of macroeconomic theory and economic policies for a long time. From August 1978 to August 1981, he studied in the Industrial Economics Department of Graduate School, Chinese Academy of Social Science and obtained a master degree in economics. From August 1981 to December 1987, he worked in the economic group of Research Section of the Secretariat of the Central Committee of the Communist Party of China (CCCPC), as a division-level investigator and Deputy Group Leader of the economic group. From December 1987 to July 1990, he worked as Deputy Chief Economist in the State Information Center. From July 1990 to June 2000, he worked as Deputy Director, Director, Deputy Secretary General and Press Spokesman successively in the Policy Research Office of the State Planning Commission. From June 2000 to April 2009, he worked as Deputy Director of Policy Research Office of the CCCPC. He was also Vice Director of 11th CPPCC Economic Committee. From October 2014 till now, he is Executive Vice President of the China Urban-townization Promotion Council, which he initiated. 

Resume 6
Theoretical Breakthroughs in China’s Economic Reform 10
A Book Explaining the Secrets Behind the 40-Year Success of the Chinese Economy 10
Works Must Be Relevant to Everyday Life 10
Xinli Zheng’s and My Shared Experience of the Reform Years 10
Comments on Xinli Zheng’s Academic Thoughts 20
Academic Contributions of Xinli Zheng 20
Using the Final-Goods Ratio as a Major Indicator for Evaluating Macroeconomic Benefits 20
Limits to Rational Investment 21
Establishing New Planning Functions to Improve Macro-control 22
Establishing an Investment System Compatible with the Market 23
Establishing a Sound Macro-control System that Coordinates Planning, Finance and Taxation, and Banking 24
Revitalizing the Four Pillar Industries 25
Development Planning and Xinli Zheng’s Collected Economic Works 25
A Mixed-Ownership Shareholding System as the Main Way of Achieving Public Ownership 26
Guiding Non-government Capital Toward Building a New Countryside and Agricultural Modernization 26
Changing the Economic Growth Model and then Changing the Economic Development Model 27
Expanding Domestic Demand 29
Proposing Consumption “Engines” Coordinated Development of the Real Estate, Automobile and Stock Markets, and the “Two Increases” Plan 29
Proposing Ways to Achieve Independent Innovation 30
Proposing to Include the Increased Value of Intangible Assets in Assessments of the Maintenance and Appreciation of the Value of Assets of State-Owned Enterprises 31
Proposing Increasing Chinese Exports and a Focus for Overseas Investment 31
Three Major Opportunities Presented to China by the Global Financial Crisis 32
Proposing Policy Recommendations for Transforming Inflationary Pressures into Motivation for Industrial Upgrading 32
Establishing the Two Disciplines of Modern Policy Science and Development Planning 33
Research on the Innovative Huai River Economic Zone Strategy 34
Two Recommendations Adopted by the Central Government That Had Significant Economic Benefits and International Impact 34
Proposing a Zhoushan Archipelago Free-Trade Port 35
Xinli Zheng’s Philosophy and Work Style 36
Realistic, Pragmatic, Rigorous, and Innovative 36
Sec25 37
Sec26 38
Learning from the Economic Systems and Development Models of Other Countries 39
Sec28 39
Sec29 39
Sec30 40
Focusing on Countermeasure Research and Providing Results for Use in Formulating Central Government Economic Policy 40
Scientific Analysis that Combines Qualitative and Quantitative Elements 41
Contents 43
Preface 55
Preface to the English Edition 59
Reform and Opening Up 61
1 The Mixed-Ownership Joint Stock System Is a Major Way to Realize Public Ownership 62
1.1 The Proposal that Mixed Ownership Is the Most Vital Form of Public Ownership Continues and Further Develops the Related Theories of the Communist Party 62
1.2 Taking a Mixed Ownership Model as the Primary Means for Realizing Public Ownership Represents a Scientific Summary of Our Experience in Reform 64
1.3 Taking Mixed Ownership as the Primary Means for Realizing Public Ownership Is an Important Outcome of Explorations on Combining Public Ownership with the Market Economy 66
1.4 Studying and Implementing the Decision’s Conclusions on How to Realize Public Ownership Can Have a Significant and Far-Reaching Impact on SOE’s Reform and Development 67
2 The Mainstay that Successfully Dealt with the International Financial Crisis 69
2.1 The Root Cause Was that the United States Used State Credit to Create Financial Bubble 69
2.2 The Chinese Economy Has Become the Stabilizer and Engine Driving the World Economy 72
2.3 Taking Multiple Effective Measures to Fend off International Financial Risks 73
2.4 Upholding China’s Legitimate Rights and Interests in the Reform of the International Financial System 75
3 Adhering to the Strong Engine of the Expedited Innovation Reforms 77
4 Balancing the Government-Market Relationship Is Instrumental for Economic Structural Reform 85
4.1 Streamlining Administration and Delegating Powers to Boost the Vitality of Enterprises: The Key to Success in China’s Reform 85
4.2 Expanding the Fundamental Role of the Market in Allocating Resources 87
4.3 Deepening the Reform of the Administrative System and Building a Service-Oriented Government with Carefully Defined Functions 90
4.4 Principles for Balancing the Government-Market Relationship 92
5 Building Consensus on Reform by Changing the Growth Model 94
5.1 Promote Income Distribution Reform that Centers on Changing the Driver of Economic Growth from Investments and Exports to Consumption 97
5.2 Promoting Reform of the Tax System to Replace Business Taxes with VAT While Accelerating the Development of the Tertiary Industry 100
5.3 Reform the Technology and Education System While Centering on Industrial Upgrades 103
5.4 Accelerate the System for Rural-Urban Integration While Narrowing the Rural-Urban Gap 105
5.5 Further Reform the Financial System While Leveraging the Basic Role of the Market in Allocating Resources 108
5.6 Reform the Land Management System While Unleashing the Potential of Land 109
6 Suggestions on Building an Asian Infrastructure Investment and Financing Institution Led by China 110
6.1 Establishing a Chinese-Led Asian Infrastructure Investment and Financing Institution Serves China’s Strategic Interests 111
6.2 It Is Possible and Feasible to Build a Chinese-Led Asian Infrastructure Investment and Financing Institution 113
6.3 Considerations for the Establishment of a Chinese-Led Asian Infrastructure Investment and Financing Institution 115
6.4 Suggestions for Establishing a Chinese-Led Asian Infrastructure Investment and Financing Institution 116
7 The Roadmap for the Reform of the Financial System 118
7.1 Make Expanding Access to Finance the Priority of Financial System Reform 119
7.2 Establish Local Financial Regulators to Improve Accountability of Local Governments 120
7.3 Establish Deposit Insurance and Loan Guarantee Systems and Resolve Risk Through Market Mechanisms 121
7.4 Promoting Interest Rate Liberalization Is the Centerpiece of Deepening Reforms in the Financial System 122
7.5 Develop a Multi-tiered Capital Market System 123
7.6 Push for Progress in Renminbi Internationalization in an Orderly Manner 125
8 Keeping Reform Oriented Toward a Socialist Market Economy 127
8.1 Leveraging the Decisive Role of the Market in Allocating Resources Represents a New Leap in the Party’s Understanding of the Laws of the Market Economy 127
8.2 Deepening Reform to Promote Public Ownership and More Efficiently Integrate It with the Market Economy 130
8.3 Distribution System Reforms Will Allow for a Stronger Incentive Mechanism for Promoting Economic Development 132
8.4 Improving the Macro Regulatory System Is Intrinsically Important for Harnessing the Strengths of the Socialist Market Economy 133
9 Establishing an International Reserve Currency System with Checks and Balances 135
9.1 Replacing the Single Reserve Currency with Multiple Reserve Currencies Is a Historical Inevitability 135
9.2 Establishing an International Reserve Currency System with Checks and Balances Could Help Solve the Triffin Dilemma 137
9.3 China’s Financial System Reform Will Set the Stage for the Renminbi to Become an International Reserve Currency 139
9.4 The Position, Role, and Strategic Choice of the Euro in Maintaining the Stability of the International Monetary System 141
10 Giving Play to New Development Engines Through Reform and New Breakthroughs 142
10.1 Reform the Household Registration System and Unleash the Potential of Urbanization 143
10.2 Reform the Rural Land System and Unleash the Potential of Agricultural Modernization 144
10.3 Implement Reform of the Financial System and Unleash the Potential of Capital 146
10.4 Reform Investment and Financing Mechanisms and Unleash the Potential of Private Investment 147
11 Getting Rid of Misconceptions on the Deepening of SOE Reform 150
11.1 Rectifying False Perceptions of SOE Reform 150
11.2 Highlighting the Importance and Urgency of Deepening SOE Reform 153
11.3 Resolve to Innovate, Target Policies and Finish the New Round of the SOE Reform 155
12 Exploring Building of New-Type Think Tanks with Chinese Characteristics 158
12.1 The Significance of the Decision Made at the 18th Central Committee’s Third Plenary Session to Build New Types of Think Tanks with Chinese Characteristics 159
12.2 Building New Types of Think Tanks with Chinese Characteristics Requires the Experiences of Developed Countries 160
12.3 Main Problems in the Development of Chinese Think Tanks 163
12.4 Building New Types of Think Tanks with Chinese Characteristics Must Include a Firm Grasp of the Right Direction 165
13 Enhancing the Systematicness, Integrality, and Cooperativity of Reforms 167
13.1 One General Objective for These Six Major Reforms 167
13.2 Six Major Reforms as One Enormous and Structured Social Project 169
13.3 Challenges Facing the Six Major Reforms 171
13.4 Six Major Reforms to Tap Huge Development Potential 173
The Development Pattern 174
14 Transforming the Development Pattern Is the Fundamental Approach for Dealing with the Crisis 175
14.1 Adjust the Demand Structure by Enhancing the Role of Consumption in Boosting Economic Growth 176
14.2 Adjust the Industrial Structure by Developing the Tertiary Industry 177
14.3 Optimize Structures for Key Factors by Promoting Industrial Enhancements Based on Self-innovation 178
14.4 Create Export Demand and Strive to Curb Export Decline 179
15 Taking Measures to Increase the Share of Resident Income in GDP 181
16 Enhancing the Role of Consumption in Boosting Economic Growth 184
16.1 The Excessively Low Resident Consumption Rate Is Very Unfavorable in the Current Economy 185
16.2 Increasing the Resident Consumption Rate Is a Major Task of Macro Regulation 187
16.3 Facilitate Linked Development of the Housing, Auto, and Stock Markets, and Advance Sustained and Healthy Consumption Growth 189
17 Promoting Economic Growth by Improving People’s Livelihood 194
17.1 Maintain Continuity and Stability of Macro-economic Policies 194
17.2 Highlight Resident Consumption to Expand Domestic Demand 195
17.3 Expand Public Services as a Strategic Priority of Livelihood Improvement 196
17.4 Expedite Reform of the Social Management System 198
18 Transforming the Economic Development Pattern Is an Urgent Strategic Task 199
18.1 The Shift from Transforming the Economic Growth Model to that of Transforming the Economic Development Pattern Manifests the He Party’s Deeper Understanding of Economic Development Rules 199
18.2 Transform from Mainly Relying on Investments and Exports to the Coordinated Development of Consumption, Investments, and Exports 201
18.3 Transition from Major Reliance on Secondary Industry to Reliance on the Linked Development of Primary, Secondary, and Tertiary Industries 208
18.4 Transform the Economic Growth Mode from Relying Mainly on Resource Consumption to Relying on SampT Progress, Workforce Quality Improvement, and Management Innovation 209
18.5 Accelerate the Transformation of the Agricultural Development Pattern 210
18.6 Open Wider to Facilitate the Transformation of the Development Pattern 212
18.7 Set up Systems and Mechanisms for Transforming the Development Pattern 213
19 Promoting the Concept of Innovative, Coordinated, Green, Open and Shared Development 215
19.1 Stick to Innovative Development by Giving Play to the Leading Role of STI 215
19.2 Pursue Coordinated Development with a Focus on Rural Areas and the Central and Western Regions and on Social Development 217
19.3 Uphold Green Development by Developing the Environmental Protection Industry into a Pillar Industry 219
19.4 Adhere to Open Development by Undertaking a Higher Level of Economic Opening up 220
19.5 Stick to Shared Development by Building a Moderately Prosperous Society for the People 221
20 China Has Great Potential to Join the Ranks of High-Income Countries 223
20.1 Facilitate Urban-Rural Integration and Eliminate Misunderstandings 223
20.2 Improve the Investment System and Increase the Public Goods 226
20.3 Draw upon the US Experience and Focus on Science, Technology, and Innovation 227
Macro Regulation 231
21 The Macro Regulatory System of China’s Market Economy 232
21.1 Macro Regulation of Decentralized and Coordinated Market Economies 232
21.2 The Main Tasks for Macro Regulation 234
21.3 Coordination and Cooperation of Planning, Fiscal Policy, and Financial Regulations in Macroeconomic Regulation 236
21.4 Establishing A Macroeconomic Regulatory System Requires Transformation of the Government Functions 238
22 Ensuring 8 Percent Economic Growth This Year 239
23 New Situations and Missions After a Soft Landing 243
23.1 Whether or not China Can Maintain Economic Growth Over 8 Percent Has Become the Focus of Domestic and International Attention 243
23.2 Expanding Domestic Demand and Cultivating New Growth Areas Is the Key to Maintaining Rapid Economic Growth 245
23.3 Achieve Rapid Economic Growth Based on Structural Optimization and the Transformation of the Growth Model 248
23.4 Improve Investment and Financing Mechanisms and Direct Personal Savings Deposits to Investment Priorities 250
24 Macroeconomic Management Reform in China 252
24.1 The Basic Direction of the Macroeconomic Management System Reform 252
24.2 The Planning System Reform 269
24.3 Reform of the Fiscal and Tax Systems 276
24.4 The Reform of the Financial System 282
25 Expanding Domestic Demand: A Vital Strategic Guideline 291
25.1 Expanding Domestic Demand Plays a Critical Role in Maintaining a Rapid Economic Growth 291
25.2 Expanding Domestic Demand as the Basis Standpoint for China’s Economic Development 293
25.3 Priorities and Major Tasks for Expanding Domestic Demand in 1999 294
26 Translating Inflation Pressure into Impetus for Industrial Upgrading 298
26.1 An Analysis of Current Inflation Pressure 298
26.2 Directing Surplus Funds Toward Structural Adjustment and Industrial Upgrading 300
27 Improving Coordination of Economic Growth, Structural Adjustment and Commodity Prices 303
27.1 Achieving Steady and Robust Economic Development While Keeping Commodity Prices Stable and Making Structural Adjustments 303
27.2 Channeling Investment in Accordance with the Requirements for Accelerating the Transformation of the Economic Development Pattern 306
27.3 Start by Increasing the Supply of Products in Short Supply to Relieve Inflationary Pressure 309
28 Properly Handling Dialectical Relationships in Economic Work 311
28.1 Gain a Strong Understanding of the Dialectical Relationship Between Supply and Demand 311
28.2 Gain a Strong Understanding of the Dialectical Relationship Between Short-Term and Long-Term Economic Development 313
28.3 Gain a Strong Understanding of the Dialectical Relationship Between Urban and Rural Development 314
28.4 Gain a Strong Understanding of the Dialectical Relationship Between the Real Economy and the Virtual Economy 316
28.5 Gain a Strong Understanding of the Dialectical Relationship Between the Government and the Market 317
Balanced Urban-Rural Development 320
29 Facilitating Coordinated Agricultural Modernization, Industrialization and Urbanization 321
29.1 Agricultural Modernization Is Clearly Lagging Behind Industrialization and Urbanization 321
29.2 Seizing Rare Historic Opportunities to Modernize Agricultural 324
29.3 Cultivating New Agricultural Investment and Operation Entities 325
29.4 Summarizing and Promoting Successful Experiences of Various Localities in Agricultural Modernization 325
30 Sticking to New Urbanization with Chinese Characteristics 327
30.1 Urbanization Will Be the Most Fundamental Driver of China’s Economic Development Over the Next Two Decades 327
30.2 Three City Clusters as the Engines Driving Economic Growth 329
30.3 Sub-regional City Clusters with Provincial Capitals as Centers 330
30.4 Urbanization at Local Level with Counties at the Center 332
30.5 Major Reasons Behind the Rapid Development of City Clusters 333
30.6 Rural Land Reform Is the Key to Unleashing the Potential of Urbanization 334
31 Exploring Methods for Realizing Public Rural Land Ownership 336
31.1 Allow Mortgages, Guarantees and Circulation of Contracted Land Management Rights for Farmers 336
31.2 Facilitate Mortgages, Guarantees and Transfers of Rural Housing Properties in a Steady and Prudent Manner 338
31.3 Rural Collectively-Owned Construction Land Should Be Subject to the Same Rights and Prices as State-Owned Land 340
32 Focusing on Rural Reform, Breaking Demand Bottlenecks 342
32.1 Inadequate Demand Is the Major Problem Currently Affecting the Economy 342
32.2 Releasing Rural Demand Potential Is the Key to Resolving Inadequate Demand 343
32.3 Encouraging Rural Migrant Workers to Buy Houses in Cities After They Are Paid to Give up Their Homesteads 345
32.4 Correcting Misunderstandings 346
33 Accelerating Urban-Rural Integration to Build a Moderately Prosperous Society in All Respects 348
33.1 Ensuring Equal Fundamental Rights for Urban and Rural Residents Is the Precondition for Urban-Rural Integration 349
33.2 Ensuring Equal Access to Public Services for Both Urban and Rural Areas Is a Key Step Toward the Intended Urban-Rural Integration 350
33.3 Income Balance Between Urban and Rural Residents Is the Fundamental Objective of Urban-Rural Integration 351
33.4 Reasonable Allocation of Urban and Rural Factors Is the Inevitable Requirement of Urban-Rural Integration 352
33.5 Three Approaches to Accelerate Reform and Development of Urban-Rural Integration 353
34 Drawing upon the Experience and Lessons of the Netherlands and Japan to Accelerate Agricultural Modernization 355
34.1 The Dutch Agriculture for Instance Focuses on Large-Scale Production Incorporating Various Social Sectors with Cooperatives as Major Players, While the Japanese Agriculture Prioritizes Small Production, with Farming Households as the Major Players 356
34.2 Back to the Netherlands, That’s Why the Country’s Agricultural Industry Is Considered Highly Lucrative Whereas that of Japan Can Barely Survive Minus Government Subsidies 357
34.3 While the Netherlands Demands High Quality from Its Agricultural Workforce, Japan’s Agriculture Has Been Reduced to an Aging Industry 357
34.4 While the Netherlands Is Devoted to Developing High Value-Added Exports, Japan Is Trying Its Utmost to Protect Its Farm Produce Market 358
35 Urban-Rural Integration Is the Greatest New Driver for Growth 360
35.1 Economic Restructuring Is the Driver of New Development 360
35.2 How Urban-Rural Integration Can Gain Momentum 361
35.3 Focusing on Reforms for Urban-Rural Integration Is the Only Way by Which to Release a Great New Momentum 363
35.4 Correcting Misunderstandings to Accelerate Urban-Rural Integration 366
36 Regarding Attractive Towns as the Breakthrough for Urban-Rural Integration 368
Innovation 372
37 Innovation: The Key to Transforming the Growth Pattern 373
37.1 Innovation Is the Key to Transforming the Economic Growth Pattern 373
37.2 Preparations for Realizing Innovation Are Done 374
37.3 Build an Innovation System Featuring Collaboration Between Academia and Industry 376
37.4 Set the Stage for Innovation 377
38 Multiple Approaches to Greater Innovation Capacity 380
39 Huawei: The Secret to Its Success 385
39.1 Market Orientation 385
39.2 High Input 386
39.3 Incentive Mechanisms 387
39.4 Joint Struggle 388
39.5 Global Resources 388
40 Innovation Is Central to Realizing Industrial Upgrading 390
40.1 The Urgency of Highlighting Innovation in the Post-crisis Era 390
40.2 Innovation: A Core Strategy of Development for Enterprises 392
40.3 Improving the Establishment of Innovation Policies and the Social Environment 394
40.4 Give Full Play to SampT Resources in the International Market to Enhance Innovation Capacity 395
41 Why Shenzhen’s Patent Application Leads the World 397
42 Expediting Setting Up an Economic System and Development Pattern Centered on Innovation 401
42.1 China Has Entered a New Phase of Innovation-Driven Sustainable Growth 401
42.2 How to Build an Economic System Led and Supported by Innovation 403
42.3 How to Build an Innovation-Driven Development Model 405
Industrial Revitalization 408
43 The Cultivation and Development of Pillar Industries in the 1990s 409
43.1 The New Stage and Major Tasks of Economic Growth 409
43.2 The New Economic Growth Areas in the 1990s 410
43.3 The Development of Pillar Industries Requires Powerful Industry Organizational Policies 413
43.4 Establishing Effective and Flexible Investment and Financing Mechanisms 415
44 On the Strategy of Big Enterprises and Groups of China 416
44.1 Assurance that the Large Enterprise Group Strategy Is Principal in China’s Economic Development and Institutional Transformation in the Near Future 416
44.2 Fully Understanding the Economies of Scale of Enterprise Groups and Its Role in Stabilizing and Coordinating the Economy 418
44.3 Lessons China Can Learn from the Western Market Economy in Promoting Economic Collectivization and Large Enterprise Policies 420
44.4 The Implementation of China’s Large Group Strategy Must Be Promoted with a Coordination of Structural Adjustments in Existing State-Owned Assets and the Revitalization of Pillar Industries 422
44.5 The Key to Implementing a Large Enterprise Group Strategy Is to Establish a Policy Guarantee System 425
45 Mobilizing Various Sectors to Develop the Tertiary Industry 428
46 Adjusting the Investment Structure for New Industrialization 432
46.1 The Departure of the Investment Structure from the Development Strategy Is a Pressing Issue 432
46.2 The Main Reasons for the Resurgence of the Extensive Growth Model 434
46.3 The Directions and Tasks for Adjustment of the Investment Structure 437
46.4 Carrying Out Economic Approaches in a Coordinated Manner to Direct the Allocation of Resources 440
47 Solving Major Problems to Advance Supply-Side Structural Reform 443
47.1 Focus on Rural Reforms and Boost the Development of Urban-Rural Integration 443
47.2 Focus on the Reform of the Investment System and Increase the Supply of Public Goods 446
47.3 Focus on Technology and Education Reform, and Increase the Supply of Technology and Talent 447
Conclusion 450
48 Exploring Methods of Reform Practically Suited to China’s National Conditions 451
48.1 Using Economic Development as the Standard for Testing Reforms 451
48.2 Always Keeping Reforms Market-Oriented 452
48.3 Adhering to Gradual Reforms 453
48.4 Adhering to the System of Testing and then Expanding Reforms 454
48.5 Adhering to Openness to Promote Reform and Development 455
48.6 Coordinating and Promoting Reforms 456
Appendix 457
Contents of the Collected Works of Zheng Xinli 457