August 5, 2008
Watson mm economist, president of Beijing Normal University, Yanjing Overseas Chinese University President Liu Shan mm
China Business Times deputy editor, doctor of economics
Moderator Liu Shan: Hello everybody, here is the Sohu interview 30 people 30 years of reform programs. I am the host of today's Business Times deputy editor Liu Shan, today we have invited guest, Professor Watson is an economist. I simply introduce what Professor Watson, Professor Watson is now the president of Beijing Normal University, he concurrently vice chairman of China Chamber of Commerce Chinese Chamber of Commerce, CPPCC members of Beijing Academy of Social Sciences Graduate School, Adjunct Professor of Southeast University, or Beijing Normal University, Wuhan University Professor. Professor Watson for 30 years he has experienced a major process of reform in China's economic reform three systems change, Professor Watson is the main author and promoter of the theory, these three systems changes include the dual pricing system, asset management responsibility system and the split share structure reform. first of all Chinese professors and say hello.
Watson: Good afternoon.
first part of the Liu Shan
inevitable choice: we all know that in 80 years, China has undergone a major institutional reforms, called the dual pricing system, China's dual pricing system should be from the traditional planned economy to a modern market economy is an important starting point, or a landmark event. that we now ask Professor Watson talk about the proposed dual pricing system Why was this theory, if not two-track system, then the price reform can drive, or can make a breakthrough.
match the price adjustment shall not disturb the Political Bureau of the planned economy remain unchanged
Watson: It was the background of dual pricing system reform proposed in 1984, that time is the early reform period, China was known before 1984, planned economy, market regulation, supplemented by, basically should be said that the planned economy era. At that time the prices of all commodities are provided by the state. I was particularly impressed in the match, was a box of matches is two cents, the price to match changes in Politburo meeting discussed the idea then was that we are the biggest advantages of socialism is price stability, such as a match to everyone involved with things, although very small, but to the Political Bureau of the meeting, talk about the price can not move, it will cause the entire community how much impact.
1984 years is a landmark year, that year held the second Third Plenary Session of the Assembly stresses Deng Xiaoping put forward some new things that are ancestors not the main thing is what? refers to the proposed planned commodity economy, is the planned economy, market regulation, supplemented by changes to a planned commodity economy, the commodity economy as the end result should actually be said that this was the beginning of China's socialist market economy. Although this statement is not made clear to the market economy at that time, high-level view is not entirely uniform, but the above can be unified in thinking, Deng Xiaoping said it was already a big breakthrough It is not the past, our ancestors did not say the words out of new things. In this context, from planned economy to a planned commodity economy to the above, how to turn, obviously, not all at once price liberalization, jump to a market economy, the first is the conditions were not, plan to control all things are now, and let go after the confusion to what extent society will, in effect, that is. From a policy guiding ideology, can not, do you think we have just united can go from a planned economy planned commodity economy, although the commodity economy, or planned, how can you say anything no matter what country, it is certainly not OK. In how to change this direction, it becomes a time of economic reform facing the critical issue is how to do?
Reform
Moganshan meeting planning in this context, the practice of the reform was to promote , after the contract responsibility system in rural areas, rural township enterprises, township enterprises are collective that time, growing fast, including coal mine as we speak now, small coal mines that began from that time, the early 80s, rural operating small coal mines, coal mining township and village enterprises began to ease tight coal supply played a major role. so there are some objective questions on, that small coal mines producing coal in rural areas, not necessarily when he was selling prices in accordance with state regulations selling price if the market may be in short supply a high. But in the circumstances it is not legitimate, coal prices, the state is a fixed price. then there is the promotion of practice, that made 84 years ago, from the urban-rural reforms to the central link of the reform, urban reform, the first difficulty encountered is the price, if the price is dead, how to engage in that market economy? can not do. it is in this context, 84 years , Mogan Mountain in Zhejiang, held the first meeting of young workers in economic science, known as the Mogan meeting was organized by the backbone of the young, and some important people have now entered into the central leadership, and such as Wang Qishan , Ma Kai, more provincial, are participants in the meeting and the main organizer.
Liu Shan: It should be said that the era of economics is the most active gang young scholars.
China Student: Yes, because China's reform started from the countryside, so a lot of the initial strength of a relationship is with the rural reforms, so there are groups of rural development, rural Policy Research, Rural Policy Research at the work of Wang Qishan on, we remember our graduate students engaged in research across the country, in bringing money to pick up the money there, Wang Qishan, the use of summer and winter in rural areas across the country to do research, research came back to report to him. He was there this background, so then to urban reforms, the media involved in this, I can not remember the Commercial Times is not there.
Liu Shan: 84 years have not.
Watson: about a dozen media have Economic Daily, China Youth Daily, China Youth magazine, there is more than a dozen media, little media at that time, only the official media. more than a dozen media organizations to come forward, in fact, these middle-aged in the planning, the conference is clearly very different backgrounds, as many leaders of the Secretary of the meeting are to go , and when China faces such a big breakthrough in the development of a new way to get out to play the role of youth in the country. was for the national essay participants, sent the papers seems to be several thousand, according to paper selection, chose a hundred people. Moganshan held such a meeting. At the meeting there were a lot of topics, of course, is one of price reform, rural reform, etc., more than a dozen sub-topics. Many of us have is the first time on Moganshan meet, like those I mentioned earlier, some of whom we've met, we all met there, most should be said that all graduate students, graduate students, as we are.
Liu Shan: the era of post-graduate work experience is had.
put tune with the experience. So will the above, two ideas on the proposed price reform, the main one is to bring up the idea that, like Tian, a graduate school he was already in the center of the State Council, the price, consider these ideas, to adjust the price. Jiange also went to the meeting, they said can not be major, to minor, small multi-tone, and gradually close to the market equilibrium price, we are called to deploy at the meeting this goal is the same people, how gradually from a planned to a market price prices close to, either through once or twice a substantial mobilization, there is a small fast tune, and gradually close to the market price. Another idea is to let go, that the market price liberalization. is deployed and put the beginning of school competition very intense. then we are also a few people graduate, but not a unit, mainly to our Academy of Social Sciences Graduate School-based economy, several have, and then combined with the University of Jiang Yue people, we get together, We are all young, very lively discussion, and later we feel stressed, put, has its truth, but it seems has its flaws. On this basis let us mention the tone combination is put together to reconcile , unplanned part of the release, partial adjustment scheme to speed up the price of these two tracks to be considered together. So Youji a name called ;. put forward after the meeting is to be great resonance, that is young, not just engage in price and engage in other research, may we all feel that the situation in China is more suitable for two-track transition. after the meeting put forward, just At that time the State Council, State Councilor and Secretary-General of the Central Financial Work Leading Group to Hangzhou Zhang Jinfu, Zhang Jinfu Conference to report to the meeting on behalf of the results, took me sent, and to report on the price.
Liu Shan: sent on behalf of three different ?
Watson: No, the price of one, about ten groups. total to seven, eight.
Liu Shan: It should be said at that time we have some consensus out.
Watson: That there is definitely a consensus, otherwise it would not be so sent. On behalf of the group to report on two-tier price. I have the impression Zhang Jinfu not stand, no stand on the spot, but he asked many questions, such as how to say dual-track system, what problems will arise after release , asked many questions. I am particularly impressed that we reported, he was standing in the room pacing back and forth to listen to our reports. has always been the leader sitting there, not seen leading paced listening reporting. We know he was back to Beijing, the State Council meeting on the proposed transfer with two-track release, he thinks this is a way. so then write a report after the end of the meeting, the Conference General report, the price reform topics, including every project has a report, but the price is also included in the following two different ideas of reform, put a tune I wrote with the dual-track system, there is a written as if the source field to bring up the main ideas. put that Why not write something, I guess it may be some excesses, may be so, so with two reports. have seen no other reports, and other topics did not report in the report below, only the price, the first time illustrates the focus of the conference, while the price is the most heated debate topics, because a report can not summarize these different views. Later, after the report sent to Beijing, Zhang Jinfu soon to do the instructions that have great value. I can not remember the exact words, then quickly instructed the State Council have done so in February from 85, China began to lift the price control scheme, the scheme also increased the intensity of price adjustment, and release plans foreign price controls, while within the tune, on the one hand in the place outside, this two-track reform came to be regarded as the beginning of March 2,3 .85 years, under the State Council in April of this paper .85, the State Price Bureau long as put forward a combination of price reform, adjusting the TV speech. so probably start two-track system is such a case.
Instead, the real controversy surrounding the two-track system is 85 years later. because in the past without this, there is no controversy. One out later, debate on the great. First, theorists are divided, said track system neither fish nor fowl, considered a something, but not the scheme is not the market, more criticism, the World Bank's China office is a negative attitude on this, we Some economists state that it does not.
Liu Shan: the World Bank should be more advocates market-oriented reforms, why are they denied?
Evolution of a breakthrough price mark
Watson: They are from the normative point of view, I feel like that is not clear in this two-track system, which is not the norm, there is no dual system of Western economics. We There are also a group of people, they advocate comprehensive supporting reforms, he said that this is a conflict of two-track road, it should be a comprehensive package to reform the use of price, tax, financial unified action, the transition to a new system. So 85 years from the beginning, in fact, has been in controversy, the real 85 years from the debate began. with two-track process since the implementation of the coexistence of two prices, a Daomaidaomai phenomenon, also increased social criticism. so that, from 85 years to 88 years, the debate on this very intense, that is exactly how to look on the two-track system. Of course we were later in Economic Research, wrote a lot of articles, including a written report to the central fact is just a sign of dual pricing system, in fact, the transition is two-track system with this dual system of China This conversion is the coexistence of the phenomenon of adaptation to each other, is an unavoidable phenomenon. If you want a planned economy to a market economy can not jump over a step, the coexistence of dual system, and gradually weakening the planned economy, and gradually increase the market economy, this process must will exist, so the two-track system is actually a dual system of our country, a form of transition. I checked the 85 years we have written reports to the central, we say that two-track system is a great creation of Chinese people, we found a less conflict, Compatibility great transition mode. of course, who say the conflict against the highly, cited an example of criticism, as if to drive the same road, either relying on the left side open, and can rely on the right side open, certainly crash everywhere. So much controversy 80. should be said that the central leaders on this issue has been also in the balance. in a period which should be said that the new system to quickly convert ideas prevailed, and those who do not think the two-track system is a reform, or to solve this problem, so that there is a price break through the barrier 88. The price break through the barrier, we all know, due to price inflation is expected to pass through the trigger up, there has been a big rush to buy the country, not long break through the barrier to stop the. should be said that the price break through the barrier 88 is a failure, and the 89-year storm should be said that a direct link, that is, inflation expectations up, causing social and economic instability. has much to .89 years into the rectification campaign, this time no one talk about checkpoints, and no one talk about dual-track system. has been to 92 years, Comrade Deng Xiaoping's southern tour, proposed to further reform and opening to gradually establish a socialist market economy. very interesting what is it? to 92 years When market reforms opened, it was considered the most difficult economic reforms, the most dangerous shut off that price reform has been basically do not exist, that did not break 88 years to break into, and then come back 92 years, China is indeed dual-track transition through this invisible barrier to digest them.
Liu Shan: It is not that 89 years after the piece on the program is gradually shrinking?
Watson: Yes, in fact, is this two-track system He has a long elimination. originally proposed the idea of two-track program is part of the price increases continuously with the scheme to move closer, some are unplanned incremental, planned outside part of the increasingly large part of the scheme is the same small, it is also smaller scale. dual system is first proposed about five years to complete this transition, it also is almost 90 years. Of course the 89 storms, including rectification, it is hard after 89 rectification is to accelerate the market-oriented reform, certainly not the case. If that's the case, Comrade Deng Xiaoping 92 years not to talk to emancipation. rectification should be said that there was some resurgence of the time, we know a little bit again, but can be seen even in the repeated process, the incremental part of the market, after opening the year the proportion of year it is growing, so that after 92 years to eliminate this problem for the country. This is why until the mid 90's, including up to now, 80 two-track system at the time, the late 80s, early 90s on the two-track system, is essentially a negative attitude towards the domestic dominant. until the mid-90s, and especially to bring the Russian shock therapy The problem began to shift from the international, that China's reform transition, including the dual-track transition has its merits. but also from the point of view is also more successful results.
Health: Over the years, including some who have praised the Nobel Prize in Economics two-track system. Now, after more than 20 years later, we again look back, we should say more just some, of the two-track process of economic development in China, understanding of the role Some are also more objective. because today is, in a sense, two-track reform has not been fully completed. I have just cited examples of coal, the concept of the beginning of a very small two-track system, called dual-track system of production prices, that's a began to say that the dual system of production prices.
Liu Shan: consumer information it?
Watson: consumer information is a price, that not two prices. You can not buy a price to the state-run stores to shop has a price, that time had no private department. purposes of dual-track system if the price of production is mainly refers to the two-track system.
Liu Shan: As a two-track system of production, is not a relatively large number of power are more likely to be produced information, he then sold in the market, the interests of this section for more?
Watson: Now many people will think so, in fact, the situation was not so simple.
Liu Shan: it was called profiteering.
Watson: Yes, official profiteering. in fact it is the case, consumer information itself, engage in two-pronged objective is not very good, as consumers own reasons, only one price, buy on the shortage. production, because production He was the last to be consumed indirectly, so it's a very serious price distortions, it not a direct threat to the consumer, and our government is most concerned about price stability, the stability of consumer prices, so he is very easy for a pressure, that is, difficulties, he put a piece, do not directly affect the consumer's part, he always do not move him, it accumulated into a growing problem, the most serious price distortions of production. This is what I just said Why is that dual pricing system did not completely solve today? We can look at the coal, the price of small coal mines 84 years, 85 years of dual pricing system reforms began, small coal mines to the market the price. We see today the price of coal has also been control, which had since the sales price of coal, when is that you do not have to control the market completely. but wait until the changes of supply and demand of coal, which is natural, after all, the market is always changing. administrative power, there is a natural approach, that even if the price of dual-track transition to a fully market-oriented transition, he also has a tendency to control his will, control the results and produce a new two-track system. It shows the problem? means of production This piece, when the Government take into account the relatively more stable consumer prices, he is easy to take control of the means of production makes the real market price and demand price out of line. This is the situation we face today is the so-called contract coal and the market price difference between coal.
Liu Shan: It is now more prominent this issue.
Watson: From this point of view, the more you know, many people said why did not engage in market prices, you see we got today, the market price of coal has not engaged in it, you know that there is much interest involved, the stakes are not you just mention the simple person's interest, saying that after engaging in a, well, I can make money, you can sell, not the case. in fact, primarily from the government, a national perspective, they have to consider the social stability, he measures taken. The right to take such measures, it is another question. There are many Do not be afraid of people say that, you let him rise up, rise up, the Government will consider the pressure of inflation, will affect consumers. really consider this, because someone does not mean that control of the coal, so he wants to engage in two-track system is better, I can sell some money, this is not true. you look at today know. the actual situation, we should say today, and also a big difference 80 years, today we know that our coal, the majority of small coal mines, provides nearly half the amount of coal mines are privately owned and we all know, today said he should have a greater incentive to reselling, we do not do this, not because today we encourage the reselling of the Government, but to consider the inflationary pressures . And in the 80's, when, although that time was called profiteering, in fact, the private economy is basically 80's did not have the self-employed, self-employed are basically reselling the goods, so-called two-track system at that time due to the benefits of reselling the vast majority of all fell upon the then state-owned and collective enterprises.
Liu Shan: two-track system because of reselling, and so also the development of collective enterprises.
Watson: Yes, especially when the collective enterprises and township enterprises great development, if not two-track system, when the township enterprises and collective enterprises can not get the national plan, it can not develop. reselling is speculation before the reform was hit.
Liu Shan: At that time the ownership of discrimination, the program is only to state-owned enterprises, such as a large number of township enterprises in rural areas have no plans of production within.
Watson: Yes, I want to say this is a big problem, we easily see that with today's eyes, and said dual track what you look at them how much money reselling, all fell to the private pockets gone, in fact, that's not private enterprise, so that the reselling, fell out of the benefits are state-owned enterprises, state-owned enterprises are being reformed, collective enterprises and township enterprises have been.
Liu Shan: should it also contributed to the seeds of the private economy.
Watson: Yes, in fact, he promoted the development of this part of the market.
Liu Shan: is the market and consumer goods belong to the market this one. So now we look back again this dialectic, many people at the time considered to be profiteering, official profiteering through reselling approval, and then made a fortune, but we look at this issue objectively, the actual on its promotion of collective enterprises and township enterprises, is that part of non-plan the development of enterprises played an important role.
Watson: And on the business plan to gradually push them into the market also played role, such as your original is a large state-owned enterprises, to sell out all of our products, such as steel, were all sold in accordance with state regulations state, two-track out, well, the State acquired 10 million a year for you, you give him some of overcapacity can follow the market price to sell at high prices, this change in thinking on the state-owned enterprises, to understand the market, to accept the market rules, but also a learning process and a driving force.
Liu Shan: In fact, the price of a new signal to stimulated him to become a price incentive.
Watson: Yes.
the second part of state-owned enterprises operating in the capital and a major breakthrough
Liu Shan: Speaking of state-owned enterprises, I remember you was made 85 years asset management responsibility system of state-owned enterprises, the reform of the reform of state-owned enterprises now have more far-reaching implications not?
Watson: Back then, with the background of price reform, in fact, we are also proposed , the price reform for a start, started after the two-track system, we propose to ownership reform and the transformation of micro-economic basis, at the time that case, the capital market has not, privatization is a very sensitive topic.
Liu Shan: when private ownership is a very sensitive topic, there were only self-employed, I remember how many self-employed and employed workers, be considered exploitation.
Watson: Yes, employed more than seven is capitalists. when we brought in a large state-owned economy framework for how to do the following economic sectors reform, he proposed to engage in state-owned assets management responsibility system, when we propose to establish a State-owned Assets Management Office, at all levels to build the state-owned assets management system, management of state assets as the asset value to use The only evaluation criteria.
Liu Shan: It should be mentioned that this theory is quite advanced.
Watson: Yes, it was 85 years.
Liu Shan: In fact, it has not fully resolved .
Watson: It was proposed to establish a State-owned Assets Management Office, into possession of assets from the management of personnel, to separate the functions of administrative and funding. one is above the appraisal approach to evaluation of the assets, to pay attention to asset management responsibilities , competition for operators to use the approach to recruitment and selection operators, summed up this call several asset management responsibility system. At the time that the environment, were talking about and said it What's the difference with the stock? Our words which also said, if it is state-controlled, then the asset management responsibility is only half a step away from the stock, is simply asked about it, once you have a wide range of other investors, naturally you are stock, no diversified investment , the State also through this channel to manage enterprise assets, rather than administrative means. This proposed after many cities in the country at that time we also did some experiments, of course, the support of the following in the central leadership, I am also went to Shenyang, the Shenyang City to do the pilot, the pilot made in Chongqing, Xiao Yang was the mayor, the pilot also made in Wuhan. In the 80's did not push up, is indeed very important because there are limitations of the times, when the capital market no. all for the state-owned enterprises must establish the state-owned asset management system. property owners, investors these concepts are not able to accept, I remember when I reported in the train, several leaders of the State Council on the report, is to establish State-owned assets management responsibility system, was a leader to ask me, I was impressed, he said that now all my money is in the Treasury's pocket, you let me out of a state asset management bureau, is not this loaded into another pocket money, more of a pocket, what is the use? you from this problem you can tell, that is, we think anyway, the money was to be handed over to finance, why pursue it investors are Well the country, engaged in a multi-sectoral, multi-out what is the meaning of a system, then we are not very understanding. But 88 years later, or set up a state-owned Assets Administration Bureau, of course, the Bureau of Administration of us think of a grid of low- .
Liu Shan: a sub-ministerial level.
Watson: And the key is to do policy research, not as we speak only of the asset management, value-added responsibility, in fact, than today's state-owned assets Committee is also such a powerful department is to control his only state-owned assets.
Liu Shan: you were to consider is the asset management Office is independent of the Ministry of Finance.
Watson: At that time we that he is not completely independent, but this Administration is the asset management of public finances should be separated with, is in charge of all state-owned assets, he added all of the state-owned assets, the development of responsible.
Liu Shan: the actual the money is divided into two, in part, to do public finance, money, and part is to increase the value of state assets.
Watson: The state-owned assets to make money. was in the 80's, done a lot of efforts, but also to do a pilot, but did not develop. We put forward 85 years, until 2003 when the establishment of the SASAC, the Congress party formally proposed to establish a system of state-owned investors. this time the condition is clearly different, because the capital market has been a great development. Of course, this reform, my view is not complete, when I proposed to asset management responsibility, but then I also wrote an article 90 years later, I said from asset management to capital management in today's circumstances to do state-owned capital business, is capital management. because this level of capital to be able to with a variety of ownership structure, a variety of capital integration, to adjust to this day and age requirements. of course we are now the status quo, should be said that even our only asset is responsible for such a system for investors, is still not complete, or is not complete. Now in this regard, I am going to study is a topic, in fact, is not only the previously proposed not to do something, then proposed a historical limitations, in the absence of capital markets in case there are some limitations, this is actually a need for capital management, business this regard, it should also have a major breakthrough in China's SOE reform, the reform of ownership can truly entered a new era. I think this is probably 30 years ago left us a major issue.
Liu Shan : You at that time, when the reform, 89 years ago is a very bad condition, you as a theory of worker, was involved in many important decision-making, 87 years to go abroad, and abroad seems to be a relatively long time.
Watson: But I came back 88 years, six months. and then all the way to 93,94 years later, in foreign countries, seven, eight years, to recharge.
third part of the share reform was very successful
Liu Shan : That is a great concentration of a number of things, that history is also more idiosyncratic. So now everyone more concerned about the split share structure reform, especially in the past two years, officially engaged in the split share structure reform, the stock market experienced a rise The relatively rapid, the adjustment is relatively fast, the process of share reform, you write a lot of theoretical articles, a great impetus to this process, but looking back, do you think split share structure reform is more to do some appropriate or fast, or did not think there are some problems, anxious for it? including now we are all talking about the size of the non-reduction of the problem, at that time everyone should be aware of market supply increased, the equilibrium price should be move down, you talk about is how did you think.
Watson: That is my home after the mid-90s returned home, 94,95 years back, some of the problems in China started to pay attention. in a foreign country, of course, at Oxford, Cambridge, learned a lot of economics, access to some advanced things, devote themselves to do some study and research, I happened to be Margaret Thatcher 87 years to engage in privatization, let the state-owned enterprises are listed, I also participated in the London's capital markets.
Liu Shan: At that time everyone was very enthusiastic Thatcher's privatization theory.
Watson: Yes, why participate? because the British are about fairness, that is, students to there can still purchase the stock, that is state-owned enterprises listed on the average distribution of people across the country.
Liu Shan: Students of local taxpayers, he is not, nor nationality can participate?
Watson: can, as long as a person have an address, was living in the UK, legally resident individual has the right purchase.
Liu Shan: But he would limit your sources of funding you?
Watson: No restrictions.
Liu Shan : I am very interested in this issue, if you are a local long-term residents, a number of funds from the domestic past can you get?
Watson: I tell you, it can, but he was, like the United Kingdom Steel, British Rail, British Water these are listed, state-owned enterprises listed to give you a little discount, so that people across the country is very active subscription, including us, after all, a limited number of students, that time may be ten thousand UK may not add up a. Do you have more money he does not care, purchase time, such as a total of 5 billion shares out to purchase, the results we purchase to 50 billion shares, 500 million is not enough points, he has a way, 500 million is not enough points, he saw He said that those who purchase more than one million shares at the moment not to, again, a thousand to one million shares, well, a person to 500 shares, less than a thousand shares, each for 300 shares. He is The average distribution of species means more money is useless to you, do not say you are Chinese, more money, and the British more money, that's not the Chinese people have more money, we are relying on scholarships.
Liu Shan: At that time your purchase to you?
Watson: Application to. small purchase in the ballot who would like you to purchase 500 shares, distribution of the national average of 200 shares, you must have 200 shares. This is my home Write the first article, is not written in the split share structure, writing this, writing is
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