We can't conclude that our market economy will be a great success in the future and that the next century will belong to China, if we judge only on our previous achievements in market reform. Throughout history, many countries which once maintained a fast economic growth rate abruptly lost their momentum. For example, in the Great Depression of the 1930s, in the Asian financial crisis and when the Soviet Union disintegrated, there were many such cases. The history of China also saw many periods of rapid development, but they were not sustained.
China's market economy still in its primary stage
Generally speaking, I hold that China's market economy is still in its primary stage, and it deserves no great reputation.
Firstly, with regard to income per capita, productivity level and efficiency, China's market economy efficiency is yet to improve. Resource consumption per 10,000 Yuan GDP is several times that of Western countries.
Secondly, operating costs of China's current market economy are still very high. The involvement of capital from certain authorities means there are problems of corruption emerging. In fact, in this regard, there is concern about whether China's market economy will ever become a sound market economy.
Thirdly, concerning corresponding economic systems, China's market economy is far from being mature. One good example is the stock market where, because the defects in the system, the share index once dropped by 1000 points.
Fourthly, our market lacks basic morality such as a sense of credit, or a sense of cooperation. Pragmatism is still rampant in people's minds. The only difference is that people have converted from polity-worship to commodity-and-money-worship.
Why there is no Chinese world-class major company?
Under the current situation, there is much remaining to be done before we talk of embracing a "Century of China." One of the things we need to do is to nurture and build up market morality.
We must keep in mind that the key factors to the sound development of a market economy will boil down to a morality system. In the past, we paid much attention to the opening and development of tangible systems but less attention to the intangibles. Now it's clear that the lack of a moral system will curb China's development.
However, emphasizing the importance of a moral system doesn't mean belittling the legal system. The legal system could be compared to a high voltage wire; whoever touches it is subject to great danger. But on most occasions, the law is not your opponent, because social morality should dictate your behavior.
The building of a market morality system is vital to the development of Chinese enterprises. The reason why there is no Chinese world-class mega enterprise is that there is a lack of humanity in most Chinese enterprises. That is to say, all of them lack a spirit of cooperation, credit or common objective-orientation.
Our core visions on values
In the western world, the building of the market economy is chiefly based on the Christian moral system. In Japan, the development of her many mega enterprises is, to a certain extent, attributed to staff loyalty to their companies, a spirit that has its roots in the traditional Japanese warrior mentality. How about China.
For sure, we may offer some specific suggestions as how to build China's market economy, such as improving efficiency while lowering economic consumption, or allowing privatization in more fields such as insurance, securities and banking, or building a more effective legal system to uphold the operation of the market economy. However, all these suggestions are closely related to a deeper side - moral econstruction.
Above all, despite the fact that the running of a market economy depends on the support of a legal system, the construction of a legal system, in turn, is based on a moral system. That's because without a sense of morality, laws are usually not obeyed. In that case, the law loses its significance.
That's why I say a prosperous "Century of China" can only be built on the construction of a market morality system. In this sense, China's development process could be viewed as the building of a business moral culture.
(Translated by Wu Nuo and proofread by David Kelleway)
About the writer:
Post Doctorate Zhao Xiao is the director of Macro-strategy of Economic Institute of the State-owned Assets Supervision and Administration Commission of China's State Council (SASAC). He is one of the most active and influential new-generation economists in China nowadays. His study focuses on macroeconomics, corporate reform and transformation of market system.