China’s New Industrialization Strategy

China’s New Industrialization Strategy

Was Chairman Mao Really Necessary?

Y. Y. Kueh

Deng Xiaoping’s economic strategy is widely regarded as a complete anathema to Mao’s, but this study strongly argues that without the material foundations laid by Mao, it would have been very difficult for Deng to launch his reform and open-door policy. Deng basically shared Mao’s aspirations and approach in pursuit of China’s industrialization, and this had in fact helped to condition him to the successful gradualist methodology. Deng lost patience at times and resorted to the ‘big bang’ strategy, only to fail miserably. Taken together, the book tells a new story about the economics of China’s transition. This is a highly thought-provoking study, blending institutional and convincing statistical analysis.

Chapter 9: Growth Imperatives, Economic Efficiency and ‘Optimum Decentralization’

Y. Y. Kueh

Subjects: asian studies, asian economics, economics and finance, asian economics, economic psychology

Extract

9. Growth imperatives, economic efficiency and ‘optimum decentralization’* THE SEARCH FOR AN ‘OPTIMUM’ SOLUTION’ All the policy signs emanating from China following the crushing of the Tiananmen Square protests of mid-June 1989 point clearly to a ‘backlash’ to the ten-year-old programme of economic reforms. There is little doubt that the new policy measures are more than a matter of how to enhance the ‘fight inflation’ campaign launched in September 1988. The perceived need for re-strengthening economic controls is most clearly spelled out by none other than Yao Yilin, the veteran central planner, who until December 1989 was chairman of the powerful State Planning Commission. Shortly prior to his departure, Yao granted a prominent Chinese-American journalist a rare interview in which he stressed the need for renewed centralized financial and allocative controls over the economy (DGB, 23 December 1989). At the same time, the Chinese leadership has, however, also repeatedly stated that enterprise reforms will continue to be ‘intensified’ (shenhua) by way of the continuing campaign of economic retrenchment (Zhang Yanning, 1990; Li, 1990). This ‘intensification’ can literally only be taken to imply continued decentralization or some mild modification of the existing reform measures as the means to solve the persistent problems of ailing enterprise performance. While the term may appear to be semantically confusing, the message should be clear enough for students conversant with the perennial search by all the Soviet-type economies since the early 1960s for an ‘optimum’ decentralization. Specifically, this decentralization should...

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