China’s 40 Years of Reform

172 Pages·2.537 MB·English

by  Wei Liu

Understanding China
Wei Liu   Editor
China’s
40 Years
of Reform
Understanding China
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Wei Liu
Editor
China’s 40 Years of Reform
Editor
Wei Liu
Renmin University of China
Beijing, China
Translated by
Zesi Fan
People’s Publishing House
Chengdu, Sichuan, China
ISSN 2196-3134 ISSN 2196-3142 (electronic)
Understanding China
ISBN 978-981-19-8504-1 ISBN 978-981-19-8505-8 (eBook)
https://doi.org/10.1007/978-981-19-8505-8
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Preface
The year 2018 marks the 40th anniversary of China’s vigorous and ever-new reform
and opening-up, which started in 1978. The path of China’s reform started from
“crossing the river by feeling for stones” and has achieved a new historical dimension
of “adhering to the same blueprint of reform”. This is because we have constantly
advanced the great cause of reform in the past 40 years, which gives us full confidence
in the path, theory, system, and culture of socialism with Chinese characteristics.
In China, the age of 40 signifies decisiveness. In “Zihan” of the Analects of
Confucius, it is stated, “A wise man is not confused, a benevolent man is not
worried, a brave man is not afraid”, which implies a disposition of wisdom and self-
confidence. The 40th anniversary of reform and opening-up means that we should
have stronger confidence in the path, theory, system, and culture of socialism with
Chinese characteristics by better absorbing Chinese wisdom.
The period of 40 years is a short period of time compared with the long history of
humanity. However, the period between 1978 and 2018 has witnessed earth-shaking
changes in China. Over the past four decades, China’s total GDP has grown from
only 1.8% of the world’s total to about 15%, and its per capita income has grown from
being among the lowest in the world to the level of upper-middle-income countries
(according to the standard designated by the World Bank). The country is quickly
approaching the level of high-income countries. In 1978, more than 70% of China’s
laborers were farmers; by 2018, this proportion had dropped to 28%. In 1978, China’s
urbanization level was only 17%; in 2018, it reached 57%. The tremendous changes
in a relatively short period of time mean that many long-term, solidified structural
imbalances and fundamental problems in Chinese history have been reversed or even
resolved, thus highlighting the extraordinariness of this historical period. To put it in
a broader context, since the mid-nineteenth century, generations of Chinese patriots
have been arduously exploring the way forward for China, which is why we can
confidently say that the hard work of more than 100 years has paid off in that we
have found the way to the great national rejuvenation. In other words, in the process
v
vi Preface
of exploring the road for more than 100 years, there have been times when we were
mentally “confused”. Today, we are “not confused” because we have confidence in
the right path we have found.
Some have said that China’s reform and opening-up is a step-by-step process and
lacks systematic theoretical preparation. I am opposed to this idea. China’s reform and
opening-up fully and comprehensively emancipated the country’s ideology and mobi-
lized its theoretical advancement, covering areas of philosophy, scientific socialism,
and political economy. Deng Xiaoping’s theory of socialism with Chinese charac-
teristics, the important thinking of the “Three Represents”, the Scientific Outlook
on Development, and Xi Jinping Thought on Socialism with Chinese Characteristics
for a New Era are all theorized combinations of the basic tenets of Marxism and
the practice of China’s reform that open up a new realm in adapting Marxism to the
conditions in China. Although the reform process is constantly scrutinized, it has
always had a solid ideological and theoretical foundation and firm direction. Thanks
to the theoretical development in the past 40 years, correct judgments were made so
that we can have a comprehensive judgment of the general trend of reform today.
Reform and opening-up is an ongoing journey. As the reform deepens, the great
national rejuvenation is an inevitable trend that cannot be stopped by anyone. Today,
our theoretical research on this process can enhance our theoretical confidence.
China’s process of becoming rich through reform and opening-up is also very
inspiring for the world. On the one hand, the Chinese path, Chinese wisdom, and
Chinese approach brought about by reform and opening-up have provided brand
new choices for other countries and nations that want to both accelerate develop-
ment and maintain their independence; on the other hand, the world today is under-
going profound changes unseen in a century: the traditional drive for globalization is
declining, and the “reversing” policies in the global structure such as the “trade war”
have brought risks and uncertainties to the future of the world. China has adopted
strategic measures to further expand its opening-up, strives to jointly build a commu-
nity with a shared future for mankind with other countries, and has proposed the “Belt
and Road Initiative”, which has injected positive energy into the future of the world.
Looking back over the past four decades of China’s process of approaching the center
stage of the world, we can become more confident in our system.
Renmin University of China is the first new regular university created by the
Communist Party of China (CPC). The 40th anniversary of the reform and opening-
up is also the 40th anniversary of the resumption of Renmin University of China.
Along with reforms, Renmin University of China has always been committed to
studying major theoretical issues in the development of the Party and the country,
while continuously deepening reforms and exploring effective ways for universi-
ties to serve the country. The Chongyang Institute for Financial Studies at Renmin
University of China is a new type of modern university think tank established by
Renmin University of China. It is a product of reform and has also effectively served
the reform. “It takes a teacher to transmit wisdom, impart knowledge, and resolve
Preface vii
doubts”. As an embodiment of our confidence in culture, the present book shows
how the Chongyang Institute for Financial Studies at Renmin University of China
thinks of the reform process and discovers the defining trend of China’s reform.
September 2018 Wei Liu
President of Renmin University of China
Beijing, China
Contents
Introduction China’s Reform and Opening-up from a Historical
and Global Perspective ............................................. 1
1 The World-System and China’s “Four 40 Years” ..................... 2
2 China’s Phase of Rapid Growth from a Global Perspective ............ 4
3 The Global Significance of China Entering a Stage of High-Quality
Development ................................................... 6
4 China Will Lead a New Stage in World History ...................... 8
References ........................................................ 10
From Adjustment to Innovation: How China’s Economic Structure
Has Been Upgraded ............................................... 11
1 Economic Restructuring: Policy Emphasis Since 1978 ................ 12
2 Optimization and Upgrading: The Evolution Path of Industrial Mix ..... 17
3 The New Normal: Opportunities and Challenges in Structural
Transformation ................................................. 19
4 “Innovative Competition” Requires Stock Innovation and New
Economic Drivers ............................................... 21
References ........................................................ 33
From Flat Ground to Tall Building: How China’s Finance Rises ....... 35
1 Starting from Scratch: Development in Tandem with Reform .......... 35
1.1 Financial Development After 1978 to the Early 1990s ........... 36
1.2 Financial Development From 1993 to 2012 ..................... 37
2 From One to Many: Striving to Create a New Situation in Building
a Modern Financial System ....................................... 38
2.1 Deepening the Reform of the Banking Sector ................... 38
2.2 Steadily Advancing the Reform to Make the Interest Rate
Market-Determined ......................................... 39
2.3 Making Key Advancements in Making the RMB
an International Currency .................................... 40
ix
x Contents
3 From One to Many: Key Points and Difficulties in Building
a Multi-Level Capital Market ..................................... 41
3.1 The Necessity of Developing a Multi-Level Capital Market
in China ................................................... 42
3.2 Three Difficulties and Risks for China to Build a Multi-Level
Capital Market ............................................. 43
4 The Road to a Financial Power .................................... 48
4.1 The Necessity of Becoming a Financial Power .................. 48
4.2 China’s Strategic Layout for Becoming a Financial Power ........ 48
From an Auxiliary Role to a Central Role: How to Shape
Enterprise Ecology ................................................ 55
1 Decoding the Meaning of the Era of “Market Anxiety” ............... 55
2 Exploring How the Relationship Between Government
and Enterprises Changed in the Past Four Decades ................... 56
3 Two Dimensions of Enterprise Reform ............................. 60
4 Enterprise Ecology in the Modern Economic System ................. 66
References ........................................................ 67
From “Division of Land” to Revitalization: How Chinese Villages
Achieve Modernization ............................................ 69
1 “Emancipation” and China’s Rural Reform .......................... 70
1.1 Agricultural Production After the Founding of the New China .... 70
1.2 Farmers’ Living Standards After 1949 ......................... 71
2 The Road from Land Contracting to Urbanization .................... 72
2.1 The Emergence of the Contract System with Remuneration
Linked to Output ........................................... 73
2.2 The Gradual Emergence of Issues Related to Agriculture,
Rural Areas, and Farmers .................................... 74
3 Key Points and Difficulties on the Road to Prosperity for All .......... 76
3.1 Restrictions Posed by Traditional Agricultural Production
Methods .................................................. 76
3.2 Insufficiency of Financial Support Policies for Traditional
Agriculture ................................................ 77
3.3 Changes in the Rural Population Mix .......................... 77
4 Revitalizing Rural Through Financial Means ........................ 78
4.1 The Necessity of Rural Financial Reform ...................... 78
4.2 Effective Solutions to Financial Innovation and Issues
Related to Agriculture, Rural Areas, and Farmers ............... 79
From Green Water to Golden Mountains: The Evolution
of Ecological Development ......................................... 83
1 The Deepening of the Green Concept .............................. 83
2 Continuous Strengthening of Green Institutions ...................... 85