Weekend Long Read: Economist Suggests a Down-to-Earth Approach for Deepening China’s Reform

In 2010, amid the global financial crisis's repercussions, Hu Shuli, then Caixin Editor-in-Chief, engaged in a detailed discussion with Qian Yingyi, an economist and professor at Tsinghua University. At that time, China had successfully mitigated the crisis's effects with a substantial 4 trillion yuan ($604 billion) stimulus package, leveraging its role as the "world's factory" [para. 1]. Qian, who had witnessed China's dramatic changes since the 1978 reform and opening-up policy, emphasized the necessity for further reforms, acknowledging that China's market-oriented economy was still underdeveloped compared to mature economies [para. 2][para. 3].

Despite considerable progress in market economic reforms, Qian highlighted that China still had a long way to go in achieving its reform goals, including a market-oriented economy, democratic politics, and the rule of law, which he considered mechanisms to attain ultimate human values like freedom, welfare, and justice [para. 4][para. 6]. He argued that while these values are universally accepted, countries might choose different paths based on their unique histories and cultures, with China having its distinctive reform route [para. 7].

China's reform and opening-up experience over the past 30 years could be summarized by three key principles: providing the right incentives, letting the market operate, and opening to the global community [para. 11]. Nonetheless, Qian stressed the ongoing challenges stemming from China’s limited historical experience in market-oriented development and the need for further humble learning and reform, particularly in government operations [para. 12]. He concurred with Gao Shangquan's assessment of China's reform deficiencies, especially noting the lag in government and political reforms compared to economic changes, thus impeding the development of China’s market economy and the rule of law [para. 14][para. 15].

Qian also addressed the stark developmental imbalance between urban and rural China. While large cities appeared prosperous, a comprehensive comparison across countries should include the living standards of middle-income earners, many of whom in China still resided in rural areas. He identified urbanization as the potential solution for achieving more balanced development [para. 20][para. 21].

The concept of a "China model" emerged curiously alongside China's major contributions to overcoming the financial crisis. Qian warned against developing unrealistic self-perceptions or world views, which could lead to misjudgments harmful to China's future interests. He pinpointed two prevalent sentiments in China: a "sense of a great country" and the "revitalization of the people," which, if unchecked, could culminate in extreme nationalism, hindering China's global integration and long-term development [para. 28][para. 30].

Qian advised that mere economic strength would not suffice to earn global respect. For China to advance successfully post-crisis, it must maintain a clear understanding of its position, observe the world objectively, and avoid arrogance, thereby ensuring sustained reform success and progress towards becoming a modern state [para. 33][para. 36].