China’s economy must ‘return to basics’ amid tech reform push, outspoken economist Wu Jinglian says

Veteran economist Wu Jinglian, 94, was asked for his views on how China should proceed in transforming its economy
The discussions focused on the relation between President Xi Jinping’s ‘new quality productive forces’ and reform and opening-up policies

China's economic recovery

Kinling Loin Beijing

Published: 1:00pm, 4 Apr 2024

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One of China’s most outspoken and liberal economists has called for the Chinese economy to “return to the basics” by building an “open, competitive and orderly” market.

Wu Jinglian, 94, believes the key lies in the “reform of the economic system, transformation of the growth model” and is dependent on the form of the market and the rule of law.

“Right now, it is important to coordinate all short and long-term policies and make building a unified, open, competitive, orderly market system a core mission,” Wu said in the March issue of the Exploration and Free Views academic journal.

“[China] should seize the new wave of tech reform, and push further on reform and opening up.”

Actions still louder than words for foreign firms, expats as China ups the ante

Wu was quoted among his peers for his views on how China should proceed in transforming its economy.

His comments were part of academic discussions organised by the monthly publication over the relation between President Xi Jinping’s “new quality productive forces”, a catchphrase largely referring to tech innovation, and reform and opening-up policies.

Wu was a key adviser to the Chinese government from the 1980s during China’s famous reform and opening-up movement, which was one of the most important governance legacies of China’s late paramount leader Deng Xiaoping, that helped transform China into the world’s second-largest economy.

The open discussions over the economic reforms have gradually died down in recent years, despite China’s economy encountering a variety of problems, including a slowdown of headline growth, a property slump and a demographic crisis.

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Xi has vowed to deepen reforms and open the market wider several times during speeches and also in government documents, with the latest made during his field inspection in the central province of Hunan last month.

However, overseas questions remain over China increasingly swaying away from the direction of an open market.

There has also been an increase in state ownership in the overall economy and in the fickle regulatory environment, including introducing new laws, including the anti-espionage law seen by foreign businesses as deterring investment.

Reforms suggested by pro-reformists over the years include raising the retirement age, reforming state-owned enterprises and the hukou household registration document, and also the removal of market entry barriers for private firms.

And despite appearing less in public events in recent years, Wu continued to speak about implementing Beijing’s 2013 reform document, which for the first time mentioned letting the market play a “decisive” role in the economy and set out 336 detailed reform tasks.

A report published by the US-based Rhodium Group in February suggested that results of China’s efforts to turn into a “market-based” economy were mixed, as the government had made “meaningful” progress in attracting foreign investment, but had not addressed structural problems that resulted in mounting local government debt.

‘Too soon to let our guards down’ for China’s economic recovery despite uptick

China’s economic indicators have shown signs of a moderate pick up in the first quarter following an uneven recovery from the coronavirus pandemic last year.

But the property slump, ballooning local government debts following years of large-scale credit and investment expansions continue to weaken confidence in the private sector, and are weighed further down by problems such as the ageing population.

International Monetary Fund managing director Kristalina Georgieva called for “deep structural reforms” to “enhance conditions for entrepreneurship, innovation and economic performance” during the China Development Forum in Beijing last month.