China think-tank debates policy direction

September 20, 2018 16:49
Chinese academics and economists have indulged in rare open criticism of government policies recently. Photo: Reuters

Entrepreneurs and academics in China seem to realize that the biggest headwind for the nation’s economy is a deteriorating internal business environment rather than the US-China trade war.

At the recent Chinese Economists 50 Forum (CE50) gathering, many prominent speakers voiced their concerns, making their unhappiness clear about the current economic policies. 

Ce50, a club co-founded by President Xi Jinping’s top economic adviser Liu He in 1998, convened its 20th anniversary conference on Sunday.

The organization is regarded by many as the nation's top economic think-tank. Among the members are China’s central bank governor Yi Gang, top securities regulator Guo Shuqing, National Social Security Fund Council chairman Lou Jiwei, as well as former central bank governor Zhou Xiaochuan and former World Bank vice president Lin Yifu.

Liu himself did not speak during the conference but listened attentively to the nation’s liberal economists.

Among the speakers, Lou Jiwei noted that government efforts to cut overcapacity, reduce excess inventory, deleverage, lower the costs, and strengthen areas of weakness were intended at deepening reform.

But local governments, rather than allowing market forces to play out, sought to force deleveraging through administrative measures.

"All these measures reminded us of the old-time economic planning era, while there is limited reform in its true sense,” Lou said.

Wu Jinglian, one of the country’s most eminent pro-market economists, stressed that "what we learned from the past 40 years is that we must insist on a market-oriented and law-based direction of reform.”

Li Yang, the chairman of the National Institution of Finance and Development, and Yao Yang, dean of National School of Development of Peking University, both shed light on the recent debate about state-owned firms crowding out private companies.

Citing information gathered during drips to Guangdong and Zhejiang provinces and Shenzhen city, Li said he noticed that while state-owned enterprises (SOEs) have been expanding aggressively, private companies are having a tough time just to survive.

The only option for some of the private entities is getting taken over by SOEs, he noted.

Yao, meanwhile, said bluntly that if SOEs take advantage of the market downturn to acquire private firms, it defeats the purpose of mixed ownership reform.

The weekend event was newsworthy as it's quite unusual for such high-level conference to openly criticize government policies.

It is a sign that a number of senior government officials, academics and entrepreneurs are really concerned about the current situation and feel the need to have their voice heard.

Their willingness to come forward may also indicate that the government is becoming more open to different views, and such conferences could be prelude to policy adjustments.

This article appeared in the Hong Kong Economic Journal on Sept 20

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist