CHINA / National

Leading economists urge faster reform
Updated: 2006-04-07 11:26

Two leading Chinese economists have called on the government to interfere less in economic life and for greater opening to foreign and private investment.

Wu Jinglian, an adviser to China's parliament and former head of the cabinet's economic think-tank, said reform was being resisted by opponents wedded to the disastrous system of central planning adopted after 1949.

"In the past two years, some adherents of the old system have taken the discussion about negative [social and economic] phenomena and have redirected it into opposition to market reforms," Prof Wu said in a speech to diplomats, executives and journalists in Beijing.

"For the next five years, the crucial issue will be whether or not we can push forward reform and improve the market and legal environment," he said.

Xu Xiaonian, a colleague of Prof Wu's at China Europe International Business School and expert on financial sector policy, put the debate in even starker terms, suggesting it concerned China's very commitment to the economic strategy of late leader Deng Xiaoping.

"Will we continue the dual national policies of reform and opening up that were set 20 years ago by Comrade Xiaoping. Scholars, economists, business people and all circles of society must offer an answer," Prof Xu said.

Such remarks highlight reformers' concerns at increasingly open opposition to foreign and private involvement in the economy from officials and academics who believe the state - and ruling Communist party - must retain economic primacy.

Planned foreign investments in financial institutions and state-owned companies have in recent months been delayed or complicated by concerns that state assets are not being properly protected.

Passage of a landmark property law was also postponed last month after internal debate sparked by a Marxist academic claim that it would undermine the foundations of China's "socialist market economy".

Such opposition has been fuelled by problems such as growing income disparity and the loss of public assets during poorly regulated privatisations of state enterprises.

However, Prof Wu and Prof Xu insisted that those problems did not show reform had gone too far, but that it had not gone far enough.

"The government is still managing many things that it should not manage or cannot manage well, using huge resources to drive the GDP growth rate in spite of low economic productivity or environmental destruction," said Prof Wu.

Officials should focus instead on areas where they could actually make a positive contribution, such as providing education, an effective legal system and macro-economic stability, he said.

Prof Xu said foreign investors could play a positive role in helping China address the problems of its beleaguered financial sector.


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