After reading Professor Steven Cheung’s paper (Chinese version), there are a few issues that maybe worthwhile to think about.
- 層層承包 is a clever way to conduct the economic reform Without creating too many shocks and resistance. The label of ‘Communist’ can still be kept. Having said that, is this system the Best in human history? If not, should China continue to upgrade 層層承包 (走自己的路)or gradually shifts to the American system? Should the American system be the final destination (Cheung disagrees but Demsetz seems to hold this view)? These are all very important questions to answer.
- Monetary policy: One major reason that Zhu was able to maintain rather stable exchange and inflation rates had to do with China’s capital control. Unlike Cheung, my concern is not that China is shifting to US’ monetary approach, but rather how China may relax her capital control without having to suffer severe financial crisis. The improvement of existing financial infrastructures, unfortunately, is not covered in the paper.
- Unlike most papers and reports that focus on statistics and figures, this paper focuses a lot on the institutional arrangement, which is definitely essential to interpret China’s emergence.
I have a feeling that China may not go all the way to the British/US’ approach, but would definitely need to borrow some key elements from the British tradition.
1. Rule of law (a constitution that protects human rights and property rights and most importantly, is well enforced);
2. Independence of courts (China seems to be very hesitant to use the term ‘separation of powers’. Even so, the increasing dependence of courts is a MUST!);
3. The relationship between businessmen and officials (the problem is that many officials are now taking up businessmen’s role to promote business opportunities; the competition among provinces helps to control; the degree of corruption <an official who ‘charges’ too high would lose the business to other regions>; even so, China should start to redefine officials’ role and keep them away actively involved in businesses);
4. Freedom of media must be further enhanced to monitor the government(s)
Whether Universal suffrage and muti-party system…are necessary? These are the two elements that I am not so sure and keep asking myself. The bottom line is to be correct rather than politically correct.