Chinas Unfinished Open Economy Reforms

China's Unfinished Economic Revolution offers a fundamentally different interpretation of China's economic reform. The common view that China's gradualistic approach has served it well overlooks the fact that state-owned banks for the last two decades have channeled a large share of sharply rising household savings into what are mostly unreformed, money-losing companies. The result is that several of China's largest financial institutions now are insolvent. To avoid a major domestic banking crisis the book argues that China must recapitalize and restructure its domestic banking system and end the long-standing practice of making lending decisions based on political rather than economic criteria. Nicholas Lardy explains that this course will inevitably be costly in political terms, in part because it will lead for a time to a slower rate of economic growth. But the alternative is even less attractive—permanently slower growth, continued macroeconomic instability, an inability to meet the expectations of the international community for the opening of its domestic financial markets, and insufficient resources to deal with severe environmental deterioration, growing water shortages, and a rapidly aging population. This timely book also analyzes the new reform initiatives China has launched in the wake of the Asian financial crisis, suggests additional steps that must be taken, and evaluates the implications for U.S. policy.

" In 1978, China launched economic reforms that have resulted in one of history’s most dramatic national transformations. The reforms removed bureaucratic obstacles to economic growth and tapped China’s immense reserves of labor and entrepreneurial talent to unleash unparalleled economic growth in the country. In the four decades since, China has become the world’s second-largest economy after the United States, and a leading force in international trade and investment. As the contributors to this volume show, China also faces daunting challenges in sustaining growth, continuing its economic ransformation, addressing the adverse consequences of economic success, and dealing with mounting suspicion from the United States and other trade and investment partners. China also confronts risks stemming from the project to expand its influence across the globe through infrastructure investments and other projects under the Belt and Road Initiative. At the same time, China’s current leader, Xi Jinping, appears determined to make his own lasting mark on the country and on China’s use of its economic clout to shape the world around it. "

China has quickly moved into a critical point in the sense that its past performance in economic growth and development has created so many unsolved problems, and for such problems to be addressed, a better understanding of these problems and a clear policy framework are required for policy makers to conduct reforms. Based on highOColevel empirical research on China''s economic development by each of the contributors, this edited book provides an in-depth and clear analysis of many of important issues facing China''s move to new phase of economic development and transformation, and discusses policy issues involved in further reforms.

China has made some remarkable achievements during the first three decades of economic reform and opening up, rising to become one of the world's most dynamic and globally-integrated market economies. Yet there remains much unfinished business on the reform and development agenda, coupled with newly emerging challenges. CHINA: THE NEXT TWENTY YEARS OF REFORM AND DEVELOPMENT highlights how the deepening of reforms in critical areas such as domestic factor markets, the exchange rate regime and the health system, combined with the strengthening of channels for effective policy implementation, will enable China to cope with the challenges that lie ahead. These include responding to the pending exhaustion of the unlimited supply of labour; playing a constructive role in reducing global trade imbalances; enhancing firms' ability to innovate; coping with migration, urbanisation and rising inequalities on scales unknown in world history; and dealing with rising energy and metal demand in an era in which low-carbon growth has become a necessity rather than a choice.

Nine papers by various authors discussing aspects of economic reform in China over a 20 year period.

Introduction : China's reform and opening in a globalized world / John Wong and Bo Zhiyue -- pt. I. China's reform in perspective. 1. China and democracy : Not a contradiction in terms / Zheng Yongnian. 2. China's three-decade reform : An economic perspective / John Wong. 3. Social reforms in the cities : Modernity, time warp, and marketing among disparate urban social strata / Dorothy J. Solinger -- pt. II. China's reform in the East Asian context. 4. The role of Japan in China's three-decade economic reform / Xing Yuqing. 5. Korea's development experiences and China's economic reform / Young-Rok Cheong. 6. Singapore's economic involvement in China's reform / Lye Liang Fook. 7. From outward processing to the closer partnership economic arrangement : The evolving economic relations between Hong Kong and Guangdong / Lim Tin Seng. 8. Local economic transition in China : A perspective on Taiwan investment / Chien Shiuh-Shen and Zhao Litao -- pt. III. China, the former Soviet Union, and the developed world. 9. China's reforms compared to those of Mikhail Gorbachev / Thomas P. Bernstein. 10. China-US economic relations : Cooperative competition / Wang Yong. 11. China and the heterogeneous European welfare state / Roger Greatrex -- pt. IV. Looking to the future. 12. China's unfinished business in economic reform / Wu Yanrui and Bo Zhiyue. 13. Political reform in China : What's next? / Bo Zhiyue

Twenty-five years of reform have transformed China from a centrally planned and closed system to a predominantly market-driven and open economy. As a consequence, China is emerging as the new powerhouse for the world economy. China: new engine for world growth discusses the impact and significance of this transformation. It points out risks to the growth process and unfinished tasks of reform. It presents conclusions from recent research on growth, trade and investment, the financial sector, income and regional disparities, industrial location and private sector development.