Weekend Long Read: Economist Wu Jinglian Explains Why Reform Has Been So Vital to China’s Prosperity

To commemorate Caixin’s 15th anniversary, a series of interviews with several influential Chinese figures was republished, shedding light on contemporary concerns such as climate change, the green transition, and the ongoing China-U.S. tech war[para. 1]. In 2014, for the 110th anniversary of Deng Xiaoping's birth, Caixin interviewed economist Wu Jinglian to examine Deng's significant influence on market economy reforms in China[para. 2]. The conversation touched on the need for reforms, the obstacles they encountered, and whether challenges resulted from the reforms or their incomplete application[para. 3].

Wu, known as a pro-market economist, supports "holistic reform," arguing that the economic system is interdependent, requiring simultaneous reforms across different areas to establish a market economy[para. 4]. In 1985, he proposed the Three-Linkage Supporting Reform concept, emphasizing synchronized progress in enterprise management, market competitiveness, and macroeconomic stability[para. 5]. Wu’s approach to holistic reform attracted scholars who later took significant roles in China’s financial sector, advocating for tax and fiscal reforms and the establishment of a unified national market[para. 6][para. 7].

The interview took place against the backdrop of China’s economic slowdown post-2008 crisis, prompting discussions on deepening institutional reforms. In this context, the ambitious reform plan unveiled at the Third Plenary Session of the 18th Central Committee in 2013 was highly regarded by Wu[para. 8][para. 9]. He cited Deng’s saying, “If we don't change, we are at a dead end,” as a resonant call for ongoing economic transformation[para. 10]. Wu credited Deng for boosting reforms in the 1980s and 1990s, and acknowledged the importance of leadership in navigating critical decisions[para. 10][para. 11].

Wu observed widespread division in public opinion regarding further reforms, noting the self-defeating nature of the belief that more control can eliminate corruption, as corruption stems from excessive government influence in resource distribution[para. 12][para. 13]. A decade after the interview, China's leadership has reaffirmed its commitment to continue reforms[para. 13] as it faces more complex challenges despite its significant economic growth over past decades[para. 14].

Originally published in 2014, the interview illustrates Deng’s vision post-Cultural Revolution for transitioning China from Soviet-style socialism to a socialist market economy, a process meeting differing opinions on reform pace[para. 16][para. 17]. The 1989 to 1992 stagnation provided reform opponents opportunities to criticize market reforms[para. 18]. Deng's 1992 decision revived reforms, moving beyond state-controlled approaches, and set a 50-item agenda at the third plenum of the 14th Central Committee to establish a socialist market economy[para. 19][para. 20].

The sluggish progress in SOE reform since the 2000s exemplifies the challenges of market transitions as reform continues unevenly[para. 28]. Wu notes that reform accelerates during crises due to desperation forcing consensus on the necessity for change[para. 28][para. 29]. The ideological and pragmatic shifts since the 1980s, compounded by ongoing corruption issues and government intervention, point to slower reform momentum recently[para. 30][para. 31]. Wu emphasizes the pivotal nature of government-market relationships, like those debated at the party’s 18th National Congress, essential for future directions in China’s reforms[para. 33][para. 34].