Re­forms are seen as con­tin­u­a­tion of Deng’s poli­cies

China Daily (Canada) - - ANALYSIS -

China’s sup­ply-side re­forms can be com­pared to those of Mar­garet Thatcher in Bri­tain in the 1980s, ac­cord­ing to one of the for­mer United King­dom prime min­is­ter’s eco­nomic ad­vis­ers.

Patrick Min­ford, now pro­fes­sor of ap­plied eco­nom­ics at Cardiff Busi­ness School, said they both have sim­i­lar aims of ex­tend­ing the role of mar­ket forces in their re­spec­tive economies.

“They are both aimed at deal­ing with in­ef­fi­cien­cies and a lack of en­ter­prise in par­tic­u­lar sec­tors and in gen­er­at­ing growth,” he said.

The sup­ply- side el­e­ments of Thatcherism were largely curb­ing trade union power and there­fore al­low­ing the la­bor mar­ket to op­er­ate more freely and pri­va­tiz­ing in­ef­fi­cient State-owned en­ter­prises, be­gin­ning with Bri­tish Telecom in 1984.

“There is an el­e­ment of para­dox in China with, on the one hand, the State con­trol­ling the econ­omy while try­ing to lib­er­al­ize var­i­ous el­e­ments of it. I see it more as a con­tin­u­a­tion of Deng Xiaop­ing’s re­forms that be­gan in the late 1970s,” he said.

Tim Cong­don, an­other eco­nomic ad­viser to Lady Thatcher, par­tic­u­larly in her later years, said China might have some­thing to learn from Thatcherism in re­la­tion to State-owned en­ter­prises.

“What peo­ple don’t re­al­ize is that pri­va­ti­za­tion in Bri­tain was an ac­ci­dent. It wasn’t some­thing that Mrs Thatcher was go­ing to do when she was first elected in 1979,” he said.

“When they did their first big pri­va­ti­za­tion in 1984, the state ac­tu­ally re­tained quite a big share­hold­ing and in the end it worked out fine.

“So what­ever way China re­forms its State-owned en­ter­prises, this grad­ual ap­proach would be bet­ter than that of the east Euro­pean one of just sell­ing off ev­ery­thing, where you got all this avarice and crook­ery.”

Charles Good­hart, who was an ad­viser to the Bank of Eng­land dur­ing the Thatcher years, be­lieves China should look to France when it comes to re­form­ing State-owned en­ter­prises and not to Bri­tain or the United States.

“The French are very cen­tral­ized and the de­bates there have been con­cerned with how much cen­tral con­trol there should be and how much pri­vate sec­tor in­flu­ence. I think this is quite close to what is hap­pen­ing in China,” he said.

Cong­don pointed out that the Chi­nese in try­ing to re­form the hukou sys­tem — mak­ing it eas­ier for peo­ple to move from ru­ral ar­eas — are not the first to con­tend with this is­sue.

“This is what many Euro­pean coun­tries have had to deal with in the past.

“In Bri­tain they had to end set­tle­ment laws in the 19th cen­tury to en­able the In­dus­trial Rev­o­lu­tion to hap­pen,” he said.

What­ever way China re­forms its State-owned en­ter­prises, this grad­ual ap­proach would be bet­ter than that of the east Euro­pean one of just sell­ing off ev­ery­thing.”

an eco­nomic ad­viser to

Lady Thatcher

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