Chinese pro-market economist Wu Jinglian warns of ‘state capitalism’ dangers
- Influential figure speaks out against state-led growth model, saying it’s ‘inconsistent with our reforms’
- Remarks come amid growing concerns about Beijing’s intervention in the economy and commitment to economic liberalisation
An influential Chinese pro-market economist has warned of the dangers of “state capitalism”, joining a chorus of liberals who say state intrusion is eroding confidence in the country’s economic future.
Wu Jinglian, who turns 89 this month, made the remarks in a video message delivered at a seminar in Beijing last week, hosted by liberal private think tank the Hongfan Institute of Legal and Economic Studies.
He said pursuing state control of the economy could easily lead to “crony capitalism” and bring back memories of the 1950s, when private assets were forced or coerced into state hands – a process that would eventually lead to a failed Soviet-style command economy.
“It’s inconsistent with our reforms. We have made it clear that we will pursue a market economy … rather than state control of the national economy,” Wu said in the 20-minute pre-recorded video message.
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Wu’s comments come amid growing concerns both within China and overseas about state intervention in the economy and Beijing’s commitment to economic liberalisation.
“One of the fatal errors [made by the Soviets] is that they followed a political system with highly centralised power,” Hu said. “Another [mistake] was their rigid economic system. By the same token, not all socialist countries must practise a planned economy,” he said.
The Chinese government has officially adhered to the “reform and opening up” path decided four decades ago by former paramount leader Deng Xiaoping, and Beijing is promising to treat private businesses on an equal basis with state firms.
But in his message, Wu – who advised the then leadership to publicly endorse the idea of a market economy in the 1990s – argued that the government needs to take action to honour what it says.
“We won’t be able to accomplish the goals by just chanting two slogans – ‘reform and opening up’. Instead, many detailed issues need to be analysed and lessons should be learned,” Wu said.
A fellow at the Development Research Centre of the State Council, the well-known economist is respected by some of China’ most powerful financial cadres. He is a key member of an economists club founded by Vice-Premier Liu He, the top economic aide to President Xi Jinping. Wu has also worked closely with figures such as central bank governor Yi Gang and Guo Shuqing, head of the banking and insurance regulator.
While the “spiritual leader” of the pro-market reformist camp has openly complained about the slow progress being made in China’s economic liberalisation and its failure to deliver reform promises in a timely manner, he has refrained from criticising the one-party state.
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In his message, Wu also said American scholar Francis Fukuyama’s “end of history” statement – referring to the victory of capitalism after the collapse of the Soviet Union – was wrong.
“The history doesn’t end. The relationship between the government and the market remains an issue [in China],” Wu said. “There’s always some people expecting an alternative solution.”
