Author: Wu Jinglian

Without a clear understanding, the road of comprehensively deepening reform based on marketization and the rule of law will be difficult, and there is even the risk of giving up halfway.-- Wu Jinglian

Since the late 1970s, China's reform and opening up has gone through nearly 40 years. Reform and opening up have brought earth-shaking changes to China's social and economic life, enabling China to become the second largest economy in the world in 2010.

In my opinion, the most important factor driving China's economic rise is that the expansion of the market has given individuals and enterprises a certain amount of room to choose. Although there are still many restrictions, whether it is the production organization and sales pricing behavior of enterprises, or the provision of labor by individuals and the consumption choice of goods and services, compared with before the reform and opening up, people have the right of free choice that they could not imagine at that time. The expansion of the right of free choice based on the market has created convenient conditions for the effective combination of labor, capital and technology in a specific time and space, thus greatly releasing China's economic growth potential.

In this sense, the process of China's economic reform can be attributed to the process of continuous expansion of the market in terms of region and scope. However, under the historical background of planned economy, the emergence and expansion of the market is not a smooth and straight-line process. The view of China's reform and opening up as a policy choice based on Pareto-optimized economic rationality is at best an overly brief description of China's economic reform process. It does not explain what caused China to carefully restart the market under the heavy historical burden of the planned economy, nor can it explain why it has experienced so many twists and turns in the transition from a planned economy to a market economy.And the reform and opening up itself faces the risk of stagnation or even retrogression from time to time.。

In fact,Under the historical background that the traditional industrialization route has gone bankrupt and the society is on the verge of collapse, China's economic reform has been put forward and implemented as an alternative to the command economy, or control economy.Because of its early strong exploratory and exploratory nature, the market was first introduced in those less tightly controlled areas (such as agriculture or urban general services) or relatively isolated specific areas (such as coastal special economic zones). As the main body of the traditional planned economy, the early reform ideas of the state-owned economic sector were deeply influenced by the theory of market socialism in Eastern Europe. People hope to improve economic efficiency through the partial introduction of market price signals and incentive mechanism under the condition of keeping the basic framework of Soviet-style social and economic system unchanged. The result is a swing between the loss of "insider control" in state-owned enterprises and the strengthening of corporate control by the state. This situation clearly showsChina's early reform did not have a clear goal of marketization, but through some flexible economic measures mixed with pragmatism, trying to get rid of the dilemma brought about by the rigid command economy and the ideology of "powerful countries can do anything".

Pragmatism in the guiding ideology of reform and opening up is a double-edged sword, which has a far-reaching impact on the path and long-term performance of China's economic reform.On the one hand, China has bypassed the obstacles by "crossing the river by feeling the stones" and walked out of a path of economic development characterized by "incremental reform". It has achieved great success in the field of general goods and services, thus strengthening the requirements of China's in-depth development towards marketization and the rule of law. On the other handDue to the lack of thorough reflection and broad consensus on the root causes of the ills of the command economy, a controlled economic model, which is derived from the thinking of the command economy and emphasizes the state's high-intensity control over the economy, has received explicit or implicit support at the theoretical level.And often make use of the temporary difficulties or problems encountered in the process of market-oriented reform, such as social differentiation between the rich and the poor and corruption.It makes the management and control of state power over enterprises and markets expand excessively from time to time at the practical level, which brings great resistance to the reform of marketization and rule of law.Especially at the beginning of the 21st century, in the face of the increasingly complex economic and social situation, not only the reform of the key factors such as land and capital was stagnant, but also the situation of "the country advancing and the people retreating" appeared in some industrial enterprises.

However, as the old saying goes, "good fortune leads to misfortune." The problems caused by the stagnation of reform have promoted the public to form a consensus that deepening reform is the only way out, prompting the 18th CPC National Congress in 2012 to make a historic decision to "seize the opportunity to deepen reform in key areas with greater political courage and wisdom." Then, in 2013, the third Plenary session of the 18th CPC Central Committee formulated a master plan, top-level design and roadmap for comprehensively deepening reform. The decision on several Major issues of comprehensively deepening Reform at the third Plenary session of the 18th CPC Central Committee not only determined that the reform of the economic system should be deepened "closely around making the market play a decisive role in the allocation of resources" in the economic field, but also extended the reform to the social and political field. Take "innovating the social governance system", "promoting the modernization of the national governance system and national governance capacity" and "speeding up the institutionalization of socialist democratic politics" as the general goal of comprehensively deepening reform. In this way, it has opened up a new situation for China's reform and development.

The course of China's economic reform clearly showsWhenever the orientation of market economy becomes the dominant idea of China's economic reform policy and allows more resources to be allocated by the market mechanism, the quality and speed of China's economic growth will be better.Innovation and entrepreneurship in non-state-owned economic sectors will flourish and provide a relatively relaxed external environment for the reform of state-owned enterprises. This has been repeatedly proved by the reform of the rural household contract responsibility system in the early stage of reform and opening up and the rise of township enterprises, or the obvious results of the overall reform in the fields of finance, taxation, finance and foreign trade in the mid-1990s in promoting the development of private economy and attracting foreign investment, as well as the huge market and institutional dividends gained by China's economy through accelerating its integration into the global economy after China's entry into the WTO.

On the contraryWhenever China's economic policy is disturbed by the thinking of controlling economy, the non-state-owned economic sector based on the market tends to shrink, the reform of state-owned enterprises comes to a standstill, and the macroeconomic risks and micro-economic benefits show signs of deterioration.The most typical examples are the anti-market economy thoughts that emerged as a result of the political turmoil in 1989-1992, and the unexpected economic consequences of strong stimulus policies adopted by countries after the global financial crisis in 2008.

Thus it can be seen that in order to solve the many problems encountered in the process of China's economic reform, the way out is to adhere to and deepen the comprehensive reform guided by marketization and the rule of law, and further give full play to the role of the market in the process of resource allocation. Instead of resorting to more state intervention.

We can see the long-standing contradictions and conflicts between the two different models of market economy and controlled economy in the process of China's economic reform, as well as the major risks to China's economic and social development brought by the pause of market-oriented and rule-of-law reform.Although "making the market play a decisive role in the allocation of resources" has been written into the resolution of the third Plenary session of the 18th CPC Central Committee, the dispute between the orientation of the market economy and the return to the controlled economic model will not disappear. China's reform and opening up will continue to show great complexity and arduousness. If we lack a clear understanding of this, the road of comprehensively deepening reform based on marketization and the rule of law will be difficult, and there is even the risk of giving up halfway.

The economic guiding ideology and major policy measures since the 18th CPC National Congress have laid a solid political foundation for further market-oriented reform, but various obstacles and obstacles can not be ignored, and whether the existing reform plan can be carried out unswervingly is the key to whether China can successfully achieve sustained and stable development.