Saturday, September 26, 2009
Excellent new York times piece in wu jinglian. Lao Wu is right, the rent seeking interests are getting powerful!
http://www.nytimes.com/2009/09/27/business/global/27spy.html?_r=1&partner=rss&emc=rss
China’s Wu Jinglian Keeps Talking
By DAVID BARBOZA
Published: September 26, 2009
AT 79, Wu Jinglian is considered China’s most famous economist.
Enlarge This Image
Gilles Sabrie for The New York Times
Wu Jinglian helped to create China's market economy, and now he is defending it against conservative hardliners in the Communist Party.
Multimedia
Graphic
A Life Woven Into Modern China’s History
In the 1980s and ’90s, he was an adviser to China’s leaders, includingDeng Xiaoping. He helped push through some of this country’s earliest market reforms, paving the way for China’s spectacular rise and earning him the nickname “Market Wu.”
Last year, China’s state-controlled media slapped him with a new moniker: spy.
Mr. Wu has not been interrogated, charged or imprisoned. But the fact that a state newspaper, The People’s Daily, among others, was allowed to publish Internet rumors alleging that he had been detained on suspicions of being a spy for the United States hints that he is annoying some very important people in the government.
He denied the allegations, and soon after they were published, China’s cabinet denied that an investigation was under way.
But in a country that often jails critics, Mr. Wu seems to be testing the limits of what Beijing deems permissible. While many economists argue that China’s growth model is flawed, rarely does a prominent Chinese figure, in the government or out, speak with such candor about flaws he sees in China’s leadership.
Mr. Wu — who still holds a research post at an institute affiliated with the State Council, China’s cabinet — has white hair and an amiable face, and he appears frail. But his assessments are often harsh. In books, speeches, interviews and television appearances, he warns that conservative hardliners in the Communist Party have gained influence in the government and are trying to dismantle the market reforms he helped formulate.
He complains that business tycoons and corrupt officials have hijacked the economy and manipulated it for their own ends, a system he calls crony capitalism. He has even called on Beijing to establish a British-style democracy, arguing that political reform is inevitable.
Provocative statements have made him a kind of dissident economist here, and revealed the sharp debates behind the scenes, at the highest levels of the Communist Party, about the direction of China’s half-market, half-socialist economy.
In many ways, it is a continuation of the debate that has been raging for three decades: What role should the government play in China’s hybrid economy?
Mr. Wu says the spy rumors were “dirty tricks” employed by his critics to discredit him.
“I have two enemies,” he said in a recent interview. “The crony capitalists and the Maoists. They will use any means to attack me.”
Nevertheless, some analysts believe that Mr. Wu’s critiques are aiding one government faction in a power struggle with another, and that he is protected.
His pro-market ideas have influenced a generation of younger economists who now hold senior government posts, including Zhou Xiaochuan, the leader of China’s central bank, and Lou Jiwei, chairman of the country’s huge sovereign wealth fund.
“He is like the father of economics here,” says Laurence Brahm, who wrote several books about China’s reform period. “What he said was the blueprint for reform.”
Critics say Mr. Wu’s influence on government is waning. (They note that he is not invited to weekly economics seminars held for top leaders, including Prime Minister Wen Jiabao.)
Given this, some people say, Mr. Wu is courting danger by speaking out.
“You have to remember, China is a dictatorship,” says Victor Shih, a professor of political science at Northwestern University. “If they want to shut him up, they can.”
GIVEN the risks, it’s hard not to wonder why one of the architects of China’s reforms has turned so negative, so angry and so defiant.
Mr. Wu’s personality and tumultuous life story provide some clues.Even his supporters acknowledge that he has a combative streak and describe him as a stubborn idealist whose verbal jousting skills were honed during years of hardship and political warfare.
“He always expressed his ideas in the sharpest way,” says Zhang Chunlin, who was a student of Mr. Wu. “He’s not diplomatic. Even at close to 80 years old, he argues with journalists.”
That he has lived such a long life would have surprised his parents, wealthy intellectuals who ran one of the country’s largest independent newspapers, in Nanjing. A sickly child with tuberculosis, he was not expected to live past the age of 1. He spent much of his youth confined to bed, reading Russian novels and the works of Lu Xun, an influential Chinese writer from the 1920s.
One of his earliest memories is arriving in the wartime capital, Chongqing, in 1937, at the age of 7, as his family fled Nanjing and the invading Japanese. The emaciated rickshaw driver stopped for opium; the destitute were everywhere.
“In Shanghai or Nanjing, beggars would help you and then ask for money,” he recalls. “But in Chongqing, they’d grab food from your mouth.”
Such experiences helped mold him into an idealistic socialist, as many Chinese were during that era. He studied Marxist economics in college and graduated with honors in 1954 from Fudan University in Shanghai. That won him a position at the country’s elite research institute, the Chinese Academy of Sciences in Beijing.
Soon after he arrived, however, China was engulfed by political campaigns, like the Great Leap Forward, that required little research. The cruelest was the Cultural Revolution, from 1966 to 1976, when intellectuals and the descendants of landlords were identified as “counterrevolutionaries.” In Beijing, Mr. Wu says, Red Guards shaved half the head of his wife, Zhou Nan, and ransacked his mother’s home.
Mao Zedong wanted intellectuals sent to the countryside to be “re-educated.” So in 1969, virtually the entire Academy was sent to Henan Province to learn to farm and to build houses in remote villages.
Ms. Zhou was ordered to work as a peasant in Shanxi Province; their two children, ages 4 and 6, were left with relatives in Beijing.
“When I left, I was prepared never to return home again,” Mr. Wu says solemnly. “We were told we’d farm for the rest of our lives.”
Mr. Wu says the hardships included sessions in which he was denounced as an anti-Maoist. When pressed to confess, or to denounce others, he says he refused, and then was beaten and placed in solitary confinement.
“They sent me to the stage to confess, then they started beating me,” he says. “Of course I felt extreme anger. But I realized it wouldn’t last for long; it was too absurd.”
This didn’t shake his faith in socialism, but he began to distrust the people around Mao who were calling believers like him enemies of the people.
His only solace, he later said, was the friendship he developed with a scholar named Gu Zhun, who was an early critic of central planning, and an advocate of market reform. Mr. Gu encouraged him to learn English and to explore the outside world, which Mr. Gu said was the only hope for China to develop.
When Mr. Wu returned home three years later, in 1972, his daughter said he was still “under the spell of Communism,” partly because of the guilt he felt for having grown up in a wealthy home.
“He said a person should have just one shirt,” recalls his daughter, Shelley, 46. “And he didn’t like my sister and I to write our names on our personal property.”
AFTER the Cultural Revolution ended with Mao’s death in 1976, Mr. Wu says he began to see that Mao’s economic policies had brought the country to the brink of collapse.
In 1978, when Deng Xiaoping began to press ahead with bold reforms aimed at opening up the country, Mr. Wu was heavily influenced by the thought and advice of his colleague Mr. Gu, who had died in 1974. He learned English, and in 1983 went to Yale as a visiting scholar. Much of his time there was spent studying modern economic theory.
Mr. Wu returned to Beijing in 1984, just as China’s economic reforms were gathering momentum under Zhao Ziyang, the party leader and chief economic planner.
That year, Mr. Wu says he helped Ma Hong, a top government adviser, draft a paper that defined the country’s shift from a planned to a market economy. “This was a very important turning point for China’s economy,” he says.
Once the proposal was accepted, Mr. Wu was elevated to the Development Research Center, the institute affiliated with the powerful State Council. Soon, he was visiting Zhongnanhai, Beijing’s leadership compound, to offer advice and debate economic policy.
Several research institutes advised Mr. Zhao and Mr. Deng on how to remake the old socialist system with elements of free enterprise. Some who sat in on those meetings say that Mr. Wu was argumentative and prickly when debating economic policy, even with Mr. Zhao.
The reforms, though, fueled strong growth and are widely credited with changing the course of the nation.
But by the late 1980s the reforms also opened the doors to corruption and soaring inflation, feeding public anger that contributed to the 1989 student demonstrations in Tiananmen Square.
Mr. Zhao was removed from office just ahead of the bloody assault on the students and the campaign against dissent and “liberalization.” The reforms stalled.
Not long after, Mr. Wu and other reformers were attacked for favoring a Western-style market system.
Bao Tong, a former aide to Mr. Zhao, said the reformers faced strong opposition from Soviet-trained economists who were wedded to the ideas of central planning.
“For the first guys who advocated a market system, it was pretty dangerous,” Mr. Wu said in a recent telephone interview.
He was among them, and so he was derisively branded “Market Wu.” For a time, publishers refused to sell his books.
“That’s when the conservatives came in and said the reforms had messed everything up,” says Barry J. Naughton, a professor at the University of California, San Diego, and author of “The Chinese Economy.”
Mr. Naughton says: “Wu Jinglian fought against the backlash. He said, ‘We need more market reform, not less.’ ”
The reform camp became stronger after Mr. Deng’s famous 1992 “southern tour” — in which he called for bolder reforms and encouraged people to get rich.
Soon, Mr. Wu’s influence in government grew. In the 1990s, he served as an adviser toZhu Rongji and Jiang Zemin, the country’s top leaders, helping them speed up reforms and restructure badly run state-owned companies.
Every step of the way, he fought off opposition, and debated, often publicly, the shape and pace of the reforms.
“This debate about the market economy is the most important discussion throughout the 30 years of reform,” says Liang Guiquan, an economist at the Guangdong Academy of Social Sciences. “And it’s still going on now. Wu Jinglian has always been at the center of that debate.”
BY most measures, China’s economic transformation has been a resounding success. Anyone who travels here can see it: the change in people’s living standards, the makeover of big cities — what has come to be called China’s economic miracle.
But Mr. Wu sees the defects: a government prone to “meddling” in the marketplace; a widening income gap; inefficient monopolies; and crony capitalism.
His critique sharpened considerably after Jiang Zemin stepped down as president in 2003, and Mr. Wu’s role was diminished.
In interviews, Mr. Wu says he feels compelled to speak out because conservatives and “old-style Maoists” have been gaining influence in the government since 2004. These groups, he said, are pressing for a return to central planning and placing blame for corruption and social inequality on the very market reforms he championed.
At the same time, Mr. Wu says, corrupt bureaucrats are pushing for the state to take a larger economic role so they can cash in on their positions through payoffs and bribes, as well as by steering business to allies.
“I’m not optimistic about the future,” Mr. Wu said. “The Maoists want to go back to central planning and the cronies want to get richer.”
http://www.nytimes.com/2009/09/27/business/global/27spy.html?_r=1&partner=rss&emc=rss
China’s Wu Jinglian Keeps Talking
By DAVID BARBOZA
Published: September 26, 2009
AT 79, Wu Jinglian is considered China’s most famous economist.
Enlarge This Image
Gilles Sabrie for The New York Times
Wu Jinglian helped to create China's market economy, and now he is defending it against conservative hardliners in the Communist Party.
Multimedia
Graphic
A Life Woven Into Modern China’s History
In the 1980s and ’90s, he was an adviser to China’s leaders, includingDeng Xiaoping. He helped push through some of this country’s earliest market reforms, paving the way for China’s spectacular rise and earning him the nickname “Market Wu.”
Last year, China’s state-controlled media slapped him with a new moniker: spy.
Mr. Wu has not been interrogated, charged or imprisoned. But the fact that a state newspaper, The People’s Daily, among others, was allowed to publish Internet rumors alleging that he had been detained on suspicions of being a spy for the United States hints that he is annoying some very important people in the government.
He denied the allegations, and soon after they were published, China’s cabinet denied that an investigation was under way.
But in a country that often jails critics, Mr. Wu seems to be testing the limits of what Beijing deems permissible. While many economists argue that China’s growth model is flawed, rarely does a prominent Chinese figure, in the government or out, speak with such candor about flaws he sees in China’s leadership.
Mr. Wu — who still holds a research post at an institute affiliated with the State Council, China’s cabinet — has white hair and an amiable face, and he appears frail. But his assessments are often harsh. In books, speeches, interviews and television appearances, he warns that conservative hardliners in the Communist Party have gained influence in the government and are trying to dismantle the market reforms he helped formulate.
He complains that business tycoons and corrupt officials have hijacked the economy and manipulated it for their own ends, a system he calls crony capitalism. He has even called on Beijing to establish a British-style democracy, arguing that political reform is inevitable.
Provocative statements have made him a kind of dissident economist here, and revealed the sharp debates behind the scenes, at the highest levels of the Communist Party, about the direction of China’s half-market, half-socialist economy.
In many ways, it is a continuation of the debate that has been raging for three decades: What role should the government play in China’s hybrid economy?
Mr. Wu says the spy rumors were “dirty tricks” employed by his critics to discredit him.
“I have two enemies,” he said in a recent interview. “The crony capitalists and the Maoists. They will use any means to attack me.”
Nevertheless, some analysts believe that Mr. Wu’s critiques are aiding one government faction in a power struggle with another, and that he is protected.
His pro-market ideas have influenced a generation of younger economists who now hold senior government posts, including Zhou Xiaochuan, the leader of China’s central bank, and Lou Jiwei, chairman of the country’s huge sovereign wealth fund.
“He is like the father of economics here,” says Laurence Brahm, who wrote several books about China’s reform period. “What he said was the blueprint for reform.”
Critics say Mr. Wu’s influence on government is waning. (They note that he is not invited to weekly economics seminars held for top leaders, including Prime Minister Wen Jiabao.)
Given this, some people say, Mr. Wu is courting danger by speaking out.
“You have to remember, China is a dictatorship,” says Victor Shih, a professor of political science at Northwestern University. “If they want to shut him up, they can.”
GIVEN the risks, it’s hard not to wonder why one of the architects of China’s reforms has turned so negative, so angry and so defiant.
Mr. Wu’s personality and tumultuous life story provide some clues.Even his supporters acknowledge that he has a combative streak and describe him as a stubborn idealist whose verbal jousting skills were honed during years of hardship and political warfare.
“He always expressed his ideas in the sharpest way,” says Zhang Chunlin, who was a student of Mr. Wu. “He’s not diplomatic. Even at close to 80 years old, he argues with journalists.”
That he has lived such a long life would have surprised his parents, wealthy intellectuals who ran one of the country’s largest independent newspapers, in Nanjing. A sickly child with tuberculosis, he was not expected to live past the age of 1. He spent much of his youth confined to bed, reading Russian novels and the works of Lu Xun, an influential Chinese writer from the 1920s.
One of his earliest memories is arriving in the wartime capital, Chongqing, in 1937, at the age of 7, as his family fled Nanjing and the invading Japanese. The emaciated rickshaw driver stopped for opium; the destitute were everywhere.
“In Shanghai or Nanjing, beggars would help you and then ask for money,” he recalls. “But in Chongqing, they’d grab food from your mouth.”
Such experiences helped mold him into an idealistic socialist, as many Chinese were during that era. He studied Marxist economics in college and graduated with honors in 1954 from Fudan University in Shanghai. That won him a position at the country’s elite research institute, the Chinese Academy of Sciences in Beijing.
Soon after he arrived, however, China was engulfed by political campaigns, like the Great Leap Forward, that required little research. The cruelest was the Cultural Revolution, from 1966 to 1976, when intellectuals and the descendants of landlords were identified as “counterrevolutionaries.” In Beijing, Mr. Wu says, Red Guards shaved half the head of his wife, Zhou Nan, and ransacked his mother’s home.
Mao Zedong wanted intellectuals sent to the countryside to be “re-educated.” So in 1969, virtually the entire Academy was sent to Henan Province to learn to farm and to build houses in remote villages.
Ms. Zhou was ordered to work as a peasant in Shanxi Province; their two children, ages 4 and 6, were left with relatives in Beijing.
“When I left, I was prepared never to return home again,” Mr. Wu says solemnly. “We were told we’d farm for the rest of our lives.”
Mr. Wu says the hardships included sessions in which he was denounced as an anti-Maoist. When pressed to confess, or to denounce others, he says he refused, and then was beaten and placed in solitary confinement.
“They sent me to the stage to confess, then they started beating me,” he says. “Of course I felt extreme anger. But I realized it wouldn’t last for long; it was too absurd.”
This didn’t shake his faith in socialism, but he began to distrust the people around Mao who were calling believers like him enemies of the people.
His only solace, he later said, was the friendship he developed with a scholar named Gu Zhun, who was an early critic of central planning, and an advocate of market reform. Mr. Gu encouraged him to learn English and to explore the outside world, which Mr. Gu said was the only hope for China to develop.
When Mr. Wu returned home three years later, in 1972, his daughter said he was still “under the spell of Communism,” partly because of the guilt he felt for having grown up in a wealthy home.
“He said a person should have just one shirt,” recalls his daughter, Shelley, 46. “And he didn’t like my sister and I to write our names on our personal property.”
AFTER the Cultural Revolution ended with Mao’s death in 1976, Mr. Wu says he began to see that Mao’s economic policies had brought the country to the brink of collapse.
In 1978, when Deng Xiaoping began to press ahead with bold reforms aimed at opening up the country, Mr. Wu was heavily influenced by the thought and advice of his colleague Mr. Gu, who had died in 1974. He learned English, and in 1983 went to Yale as a visiting scholar. Much of his time there was spent studying modern economic theory.
Mr. Wu returned to Beijing in 1984, just as China’s economic reforms were gathering momentum under Zhao Ziyang, the party leader and chief economic planner.
That year, Mr. Wu says he helped Ma Hong, a top government adviser, draft a paper that defined the country’s shift from a planned to a market economy. “This was a very important turning point for China’s economy,” he says.
Once the proposal was accepted, Mr. Wu was elevated to the Development Research Center, the institute affiliated with the powerful State Council. Soon, he was visiting Zhongnanhai, Beijing’s leadership compound, to offer advice and debate economic policy.
Several research institutes advised Mr. Zhao and Mr. Deng on how to remake the old socialist system with elements of free enterprise. Some who sat in on those meetings say that Mr. Wu was argumentative and prickly when debating economic policy, even with Mr. Zhao.
The reforms, though, fueled strong growth and are widely credited with changing the course of the nation.
But by the late 1980s the reforms also opened the doors to corruption and soaring inflation, feeding public anger that contributed to the 1989 student demonstrations in Tiananmen Square.
Mr. Zhao was removed from office just ahead of the bloody assault on the students and the campaign against dissent and “liberalization.” The reforms stalled.
Not long after, Mr. Wu and other reformers were attacked for favoring a Western-style market system.
Bao Tong, a former aide to Mr. Zhao, said the reformers faced strong opposition from Soviet-trained economists who were wedded to the ideas of central planning.
“For the first guys who advocated a market system, it was pretty dangerous,” Mr. Wu said in a recent telephone interview.
He was among them, and so he was derisively branded “Market Wu.” For a time, publishers refused to sell his books.
“That’s when the conservatives came in and said the reforms had messed everything up,” says Barry J. Naughton, a professor at the University of California, San Diego, and author of “The Chinese Economy.”
Mr. Naughton says: “Wu Jinglian fought against the backlash. He said, ‘We need more market reform, not less.’ ”
The reform camp became stronger after Mr. Deng’s famous 1992 “southern tour” — in which he called for bolder reforms and encouraged people to get rich.
Soon, Mr. Wu’s influence in government grew. In the 1990s, he served as an adviser toZhu Rongji and Jiang Zemin, the country’s top leaders, helping them speed up reforms and restructure badly run state-owned companies.
Every step of the way, he fought off opposition, and debated, often publicly, the shape and pace of the reforms.
“This debate about the market economy is the most important discussion throughout the 30 years of reform,” says Liang Guiquan, an economist at the Guangdong Academy of Social Sciences. “And it’s still going on now. Wu Jinglian has always been at the center of that debate.”
BY most measures, China’s economic transformation has been a resounding success. Anyone who travels here can see it: the change in people’s living standards, the makeover of big cities — what has come to be called China’s economic miracle.
But Mr. Wu sees the defects: a government prone to “meddling” in the marketplace; a widening income gap; inefficient monopolies; and crony capitalism.
His critique sharpened considerably after Jiang Zemin stepped down as president in 2003, and Mr. Wu’s role was diminished.
In interviews, Mr. Wu says he feels compelled to speak out because conservatives and “old-style Maoists” have been gaining influence in the government since 2004. These groups, he said, are pressing for a return to central planning and placing blame for corruption and social inequality on the very market reforms he championed.
At the same time, Mr. Wu says, corrupt bureaucrats are pushing for the state to take a larger economic role so they can cash in on their positions through payoffs and bribes, as well as by steering business to allies.
“I’m not optimistic about the future,” Mr. Wu said. “The Maoists want to go back to central planning and the cronies want to get richer.”
Comments:
They are getting powerful? They are already so entrenched that there does not seem to be a way out to me other than a bureaucratic war that replaces factional control with effective and objective mechanisms for making policy. Look at the failures of implementing the labor law, anti-monopoly law (which excludes most of the monopolies), bankruptcy etc, etc. I see a bad moon rising.
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