Wu Jinglian: Fair competition has long stayed on the slogan

Reform has reached a time when it is becoming more and more difficult and dangerous.

Where is the difficulty and where is the danger? And how to climb steep slopes and pass dangerous passes?

Economist Wu Jinglian delivered a video speech at the "China Reform (2018) Annual Conference" held in Jiangyin, Jiangsu Province on the 27th, pointing out that China has made great achievements in the 40 years of reform and opening up, but now is not the time to stop applauding and cheering for great achievements, because compared with the goals set by the reform, we still have a lot of tasks left.

For example, the Third Plenary Session of the Eighteenth Central Committee mentioned that the construction of a unified, open, competitive and orderly market system has enabled the market to play a decisive role in the allocation of resources.

Wu Jinglian said that the central bank has recently emphasized "competitive neutrality", but in fact, the OECD put forward the principle of competitive neutrality in 2011, and there are many specific regulations, but we have long stayed on the issue of equal competition. We are still far from implementing the principle of competitive neutrality in the eight areas proposed by the OECD.

How can we continue to promote reform in the future?

Wu Jinglian pointed out, "In the past, I was completely sure of the economic system of 'the state regulating the market and the market guiding enterprises', believing that this was a euphemistic expression of the market economy. But in the course of my two years of research, I found that this understanding is biased. In fact, although this model seems to be a market-guided enterprise, the market is still under the control of the state, distorted by industrial policy and other administrative and legal means, and is not a real market. ”

The country is a through train Hou Yutong drawing

The following is the transcript of Wu Jinglian's video speech:

I would like to make two comments.

The first point is that there is no end to reform, so we must step up efforts to promote reform.

In the 40 years of reform and opening up, China has made great achievements, but now is not the time to stop applauding and cheering for great achievements, because we are still facing very serious tasks and need to work hard to achieve better. As far as the various reform tasks put forward by the Party Central Committee since the Eighteenth National Congress are concerned, we have accomplished some of them and made considerable achievements, but compared with the goals we have set, we will find that there are many tasks left.

The requirement of the Third Plenary Session of the Eighteenth Central Committee for economic reform is to build a unified, open, competitive, and orderly market system, so that the market can play a decisive role in the allocation of resources. How did this task go? It should be said that there is still a considerable distance from the demands of the Party Central Committee.

For example, the unified market, the unity of the market is still affected by the division of local protection, industry protection, etc., so that the market still maintains a state of sleep to a certain extent. The requirement of opening up is to open all markets regularly, but now enterprises with different ownership systems are often divided into three, six, nine, etc., and there is no equal comprehensive opening.

The issue of competitiveness is a long-standing problem, but we see that there are actually many policies that have been introduced, which are still not in line with the principle of fair competition. Recently, because of the consideration of equal access to the market and equal access to resources by private enterprises, the responsible comrades of the central bank put forward the principle of "competitive neutrality". But when we look up the literature, the OECD put forward the principle of "competitive neutrality" in 2011, and there are many specific regulations, but we have long stayed on the general slogan on the issue of equal competition. We still have a big gap compared to how the eight areas proposed by the OECD implement the principle of competitive neutrality.

Orderly, orderly means that market transactions are placed on the basis of order and rules. The biggest rule is the law, and the Fourth Plenary Session of the Eighteenth Central Committee specifically proposed to comprehensively promote the rule of law, and it seems that the implementation of this decision also needs to make greater efforts.

Therefore, we cannot be satisfied with the achievements we have made so far, we should see that the environment we are facing is still quite severe, and if we cannot promote reform in accordance with the decisions of the Central Committee since the Eighteenth National Congress, it will be difficult to fundamentally solve some problems that make many people anxious or even wandering.

The second point is how to promote reform.

People in different industries and different positions must do their best to promote reform. We are mainly here in theoretical work or policy formulation, and one thing that can be done is to sum up lessons learned from the path we have traveled, and to point out the direction and path for future work. This allows us to avoid the original deficiencies, shortcomings and mistakes.

Recently, I recalled the reform process I had experienced, and I felt that I could really learn from the past. For example, the setting of reform goals, in the late 1970s and the first half of the 1980s, basically focused on the reform of state-owned enterprises, and improving state-owned enterprises and enhancing the vitality of state-owned enterprises was the central link of reform. How to enhance vitality? It is to decentralize power and make profits, and even to say the extreme, it is to empty ownership and enhance the right to operate.

However, by the mid-1980s there had been a change. Before the mid-1980s, because our understanding of modern economics was very shallow, basically under the influence of Soviet political economy, there was actually only some vague and perceptual understanding of what was a market economy and what was a business in a market economy. After the mid-1980s, on the one hand, some of us who studied economics re-learned modern economics, and on the other hand, a group of young people who had received modern economics entered the ranks of reform research. So, start doing a systematic study.

By the 1985 National Congress, it had accepted the idea that the commodity economic system consisted of three parts. This so-called "three points" of the Seventh Five-Year Plan was later written into the CPC Central Committee's proposal on formulating the Seventh Five-Year Plan. This is the composition of the three parts of the entire commodity economy or the planned commodity economy. The first part is the self-operating, self-financing enterprise, the second competitive market system, and the third macro-management system suitable for the commodity economy. This is actually according to the Kornai classification that everyone agreed to at the time, which means that we decided to choose the 2B model that Kornai talked about, that is, the market coordination model with macroeconomic management.

However, this assumption has encountered some difficulties in advancing reforms. It is that people still feel that it is impossible to coordinate the economy completely with the market. Comrades who hold this opinion, he also has some changes. He took a step back from the Twelfth National Congress, "the planned economy is the mainstay, the market economy is supplemented", not to say that the planned economy is the mainstay and the market conditions are supplemented, and the plan is not the directive plan originally envisaged, called indirect planning, that is, using indirect planning to control the market, and the market to guide enterprises. We used to think that this might be a euphemism for the market economy in the context of the time. But in retrospect, it seems that this is not the case.

Because although from the point of view of the market guiding enterprises, it looks like a market economy. The question is what kind of market is this market? According to the actual situation at that time, the Development Research Center of the State Council wrote a report to the State Council, which should introduce the selective industrial policy of Japan and South Korea, or the differentiated industrial policy, that is, use a set of policy means to support some industries, inhibit other industries, support some enterprises, and suppress other enterprises. All kinds of policy means are used, financial, fiscal, and even administrative means to change the market. Then use the government's intention to change the market to guide the enterprise.

According to the principles of economics, this does not mean that the market plays a fundamental role in the allocation of resources, but in fact, it is still indirectly planned to play a role in the allocation of market resources. In particular, thinking about this question now, it is not only of historical significance.

For example, we have recently faced a problem, that is, supply-side structural reform, to go to production capacity, to make up for shortcomings, because with such a set of things, its industrial structure, the improvement of its economic structure has the best structure in the mind of the predetermined government, and then through various policy means to promote and practice, rather than through reform, through market-oriented reform, through the market to solve structural problems.

This kind of industrial policy was used in Japan in the early days, called selective or differential industrial policy. I remember that Comrade Liu He wrote an article in 1995, saying that this differentiated industrial policy must be transformed into a market-friendly policy conducive to strengthening competition, which is called functional industrial policy in development economics. In 1995, it seems that there is no change in the present, and to change it, it is not to say that the industrial policy will be solved by changing the matter, involving you to establish the entire market system, which can achieve the reward of the good and punish the inferior through the role of the market, and the survival of the fittest.

Therefore, when we look back at the history of reform, we have made some deficiencies and mistakes in some aspects, and we can do better now in further reform.

From: The country is a through train

Author: Zhang Wenjian

Editor: Guo Lingjie