China's Economic Reform (review)

396 China Review International: Vol. 4, No. 2, Fall 1997 peared as a plan for political change thought out by some impractical academics was actually realized by political power" (p. 112). 17.Max Weber, From Max Weber: Essays in Sociology, trans. H. H. Gerth and C. Wright Mills (New York: Oxford University Press, 1946), pp. 224-228. 18.See A. C. Graham, "The Place of Reason in Ancient Chinese Philosophical Tradition." 19.See Zhang Qiyun, Zhonghua wuqian nian shi. 20.Feng Youlan traces the origin of the "rule of man" before the emergence oflegalism. See Feng, Zhongguo zhexue shi (A history of Chinese philosophy), vol. 2, Sansongtang quanji, pt 1 (Henan People's Press, 1988), pp. 292-295. Liang Qichao discusses the legalist attacks on the Confucian belief of personality as a factor in successful government (History ofChinese Political Thought, p. 119). Finally, Solomon shows very powerfully the Confucian family value system as an origin of China's "rule ofman." See Richard H. Solomon, Mao's Revolution and the Chinese Political Culture (Berkeley: University of California Press), 1971. Shangquan Gao. China's Economic Reform. London and New York: St. Martin's Press, 1996. 251 pp. Hardcover $69.95, isbn 0-312-12034-6. Much has been written about China's economic reform since its inception in 1978. Most of the publications on this subject are by experts outside China. The book under review here, by Shangquan Gao, is one of the few studies contributed by an insider. Gao is Vice Minister of the State Commission for Restructuring the Economic System of the State Council, and the President of China Reform and Development Institute. Recognized in China as the leading expert on China's economic reform, Gao's book can be viewed as an official explanation ofit. The book is preceded by forewords from two prominent British experts, Edward Health, a member of the British Parliament, and Sir Alec Caimcross—both ofwhom have expressed high praise for the work—followed by nine chapters and one appendix. Chapters 1-8 chart the course of China's gradual transformation during the first decade of the reform. Chapter 9 contains several interviews with Chinese and foreign journalists. The 64-page appendix is a detailed chronicle of the major events during the ten years from 1978 to 1988. In general, the book presents a succinct review of the changes during the early phase of the reform. Chapter 1 starts with a historical-background analysis of China's evolution© 1997 by University from a Soviet-type, centrally planned economy to a market economy. The market ojHawai ? Presseconomy in China is different from the general pattern prevailing in other countries ; it is officially labeled a "socialist market economy." According to the author, Reviews 397 one salient feature ofthe Chinese system is that it is based on public ownership, while in other countries the market economy is privately operated. The basic vision ofthe "socialist market economy" involves the establishment of: (1) a modem enterprise system, making state enterprises integral to the market ; (2) an open, unified, and ordered market system such that the entire sphere ofproduction can enter the market; (3) a macroeconomic management system appropriate to the socialist market economy that will precipitate the transformation ofgovernmental functions; (4) a social security system fit for the socialist market economy; and (5) market discipline and a legal framework appropriate for the socialist market system. While the new system may represent a breakthrough from the original centrally planned one, the aufhor fails to explain how a market system based on competition and spontaneous decision making could dovetail with a public-ownership system that is based on bureaucratic control and state monopoly. Chapter 2 reviews both the achievements and the problems of China's economic reform. According to the author, its most significant accomplishment is die transition from a product economy to a system founded on the commodity market . The reform has promoted the development ofproductive forces, improved national economic strength, and enhanced people's living standards. During the ten-year period from 1978 to 1988, the average annual growth rate offhe country's GNP reached 9.6 percent, substantially higher than the 6.1 percent achieved in the preceding twenty...