云南建水
The Economics of Transition, 1(2):135-170, June, 1993.
Why China's Economic Reforms Differ:
The M-Form Hierarchy and Entry/Expansion of the Non-State Sector
by
Yingyi Qian and Chenggang Xu1闭嘴英文
China's thirteen years of economic reforms (1979-1991) have achieved an average GNP
annual growth rate of 8.6%. What makes China's reforms differ from tho of Eastern
Europe and the Soviet Union is the sustained entry and expansion of the non-state
ctor. We argue that the organization structure of the economy matters. Unlike their
unitary hierarchical structure bad on functional or specialization principles (the U-
form), China's hierarchical economy has been the multi-layer-multi-regional one mainly
bad on territorial principle (the deep M-form, or briefly, the M-form). Reforms have
further decentralized the M-form economy along regional lines, which provided
flexibility and opportunities for carrying out regional experiments, for the ri of non-
state enterpris, and for the emergence of markets. This is why China's non-state ctor
share of industrial output incread from 22% in 1978 to 47% in 1991 and its private
ctor's share from zero to about 10%, both being achieved without mass privatization
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and changes in the political system.
1. Introduction
Recently, there has been a revived interest among economists in China's economic reforms. Since 1979, economic reforms in China have generated a significant growth across the board: the overall performance of the Chine economy has been better than its own past record, better than most developing countries at similar development levels, and also better than Eastern Europe and the former Soviet Union,
1 Stanford University and London School of Economics, respectively. We would like to thank Philippe Aghion, Masahiko Aoki, Patrick Bolton, Avner Grief, Athar Hussain, Carla Krüger, Nicholas Lardy, John Litwack, Eric Maskin, John McMillan, Paul Milgrom, Dwight Perkins, Louis Putterman, Gerard Roland, Anna Seleny, Barry Weingast, Martin Weitzman, Jinglian Wu, and an anonymous referee for helpful discussions and comments. Qian's rearch is sponsored by the Center for Economic Policy Rearch (CEPR), the Hewlett Fund of the Institute of International Studies (IIS), and Center for East Asian Studies (CEAS) at Stanford University, and Xu's rearch is sponsored by the Center for Economic Performance (CEP) and the Suntory-Toyota International Center for Economics and Related Disciplines (STICERD) at London School of Economics.
both before and after their radical transformations in 1989. It appears that China had no coherent reform programs, no commitment to private ownership, and no changes in the political system, and China's economy was still not fully liberalized. From both the theoretical and policy perspectives, China's different reform strategies and outstanding reform performances are particularly interesting and puzzling.
The economic reforms in China formally started in 1979 following the Third Plenum of the Eleventh Congress of the Chine Communist Party in December 1978. The starting time was later than that
of Yugoslavia (1950) and Hungary (1968) and was about the same as for Poland (1980), and earlier than the Soviet Union (1986). Between 1979 and 1991, China's GNP grew at an average annual rate of 8.6%, or at 7.2% on the per capita basis.2 In 1992, the growth of GNP reached 12.8%.3 Exports grew at a faster pace, so that China's export-GNP ratio incread from below 5% in 1978 to nearly 20% in 1991.4 Also in this period, inflation was kept within a single-digit range except for three years (11.9% in 1985, 20.7% in 1988 and 16.3% in 1989); the houhold bank deposits to GNP ratio incread from 6% in 1978 to 46% in 1991; and the government budget deficit accounted for about 2-3% of GNP, about half of which was financed from bond issues (Table 1.1).
Even more convincing evidence of the success of the reform is the increa in consumption and consumer durable goods by an average Chine consumer in physical terms. For example, between 1978 and 1991, an average Chine consumer incread his/her consumption about three times for edible vegetable oil, pork, and eggs (Table 1.2). In the rural areas, which account for about 75% of total population, the living space per person incread about 130% between 1978 and 1991 (Table 1.3). The
2 Data sources in this paper are from Statistical Yearbook of China (various issues from 1985 to 1992), otherwi noted.
3 Statistical Communique of the State Statistical Bureau on the 1992 National Economic and Social Development, February 18, 1992.
4 The export-GNP ratios are calculated bad on the official exchange rate and are upward biad. But the dramatic increa of export share in GNP during the reform is unmistaken.
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average per houhold consumer durable goods, such as television ts, refrigerators and washing machines, also incread dramatically. For instance, in 1991, on average, every two rural houholds had one television t, and every urban houhold had more than one (Tables 1.4 and 1.5). There is no doubt that China is still a low-income developing country, but the evidence reveals clearly a substantial improvement in living standards due to economic reforms.
The Chine economic performance is in contrast to that of Eastern Europe and the former Soviet Union. Even if the two-digit annual decline of GNP in 1990 and 1991 in the countries was largely transitory, the magnitude was still too large to be ignored. What is more important, but tends to be neglected, is the economic stagnation in Eastern Europe and the Soviet Union in the decade of 1980s before the radical changes. According to official statistics, the average growth rate of GDP in
Hungary was 1.8% between 1981 and 1985 and almost zero in 1988 and 1989. In Poland, the average GDP growth rate was less than 2% between 1981 and 1989.5 The situation in the Soviet Union was no better.
Political considerations aside, two arguments often come into discussions on the differences between China and Eastern Europe. The first argument is about different levels of economic development: Eastern Europe and the Soviet Union were at a much higher development stage than China -- China had a very low per capita income with a dominant agriculture ctor while the Eastern European and Soviet economies were "over-industrialized."6 The cond argument is about different reform strategies: China has followed a gradual and piecemeal approach as oppod to the "big bang" strategy in most of after 1989 Eastern Europe and the former Soviet Union, like the shock therapy for stabilization in Poland and Russia,
美如斯
5 Data source for Hungary and Poland is from Table 9.1 of Kornai (1992).
6 For example, Summers (1992) expresd this view when he highly praid China's reform performance. Sachs (1992) also expresd similar ideas during his interview with the Chine Journal of Comparative Economic and Social Systems.
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and fast and mass privatization in Czechoslovakia.7望岳原文及翻译>下的笔顺怎么写
We feel that both views are relevant but unsatisfactory, or at least, are incomplete. China's level of industrialization was perhaps higher than most people would think. In 1978, China's gross industrial output value accounted for 62% of the total output value of society (35% in heavy industry and 27% in light industry), despite the fact that only 29% of the total labor force was employed in the non-agriculture ctor. In terms of GNP, China's industry accounted for about half in 1978, as compared to 60% to 65% in Eastern Europe. Furthermore, in China, reforms have been more successful in the more industrialized regions with a weak central government control (like provinces of Guangdong, Jiangsu, and Zhejiang). Reforms have not been very successful in both the less industrialized regions (like the Northwest provinces) and the more industrialized regions with a strong central government control (like Shanghai and provinces of Liaoning and Jilin), the latter share similar problems of the earlier Hungarian reform. This fact suggests that one cannot explain the success of the reforms by low level of development alone.
The argument for gradualism also rais more questions than answers. First, the agricultural reform
in China proceeded very fast in the early 1980s. The abolishment of the commune system and the nationwide execution of the houhold responsibility system (an ownership reform) was implemented almost at one stroke, thus can be viewed as a big bang. More importantly, Eastern Europe's radical transition should not be examined in isolation: it came after deep troubles or failures of many years of gradual reform. In fact, the Hungarian reform started in 1968 with some initial success, but then ran into difficulties in the 1980s. Ironically, in veral aspects China followed Eastern Europe's gradual reform measures. If China's gradualism is a success, why has it worked in China but not in Eastern Europe? On the other hand, why was China's success not a temporary one, and will China soon encounter problems similar to Hungary's?
7 This view is reflected in Singh (1991), McMillan and Naughton (1992), and Chen, Jefferson and Singh (1992).
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In this paper, we propo a theory to explain the differences between China's reforms and tho of Eastern Europe and the Soviet Union. We first make an obrvation and provide extended evidence showing that, unlike the ca of Eastern Europe and the Soviet Union, sustained entry and expansio
n of the non-state ctor in China during the reforms were forceful and fast enough to become an important engine of growth by the end of the 1980s.8 We then theorize an institutional reason which is responsible for this phenomenal expansion and for the concurrent emergence of the market. We argue that the difference in the initial institutional conditions concerning the organizational structure of the planning hierarchy plays important roles in different transition paths of China and Eastern Europe and the former Soviet Union. The organization structures of both Eastern Europe and the Soviet Union were of a unitary form bad on the functional or specialization principles (the "U-form" economy), and in contrast, the Chine hierarchy has been of a multi-layer-multi-regional form mainly bad on a territorial principle since 1958 (the "deep M-form" economy, or in short, the "M-form" economy). The M-form structure has been further decentralized along regional lines during reform with both incread authority and incentives for regional governments, which provided flexibility and opportunities for carrying out regional experiments, for the ri of non-state enterpris, and for the emergence of markets. Our institutional approach is able not only to incorporate and link together aspects of the arguments concerning the level of development and gradualism, but also to explain richer phenomena such as the successful u of experiments in China but not elwhere.
篮球五个位置详解Under the M-form organization in China, interdependence between regional economies is not as strong as that of the U-form organization in Eastern Europe and the Soviet Union, becau each region is relatively "lf-contained." Unlike in Eastern Europe and the Soviet Union, regional governments in China (be it province, county, or township, village) have had considerable responsibility of coordination within the region. In particular, a large number of state-owned enterpris, including many in heavy industries, were
8 We deliberately avoid the issue of the state ctor. Evaluation of the reform in the state-ctor has been controversial among China experts and Chine economists.
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