China must keep moving forward, economic researchers agree

The Third Great Transformation By: Li Zuojun Publisher: Citic Press Year Published: 2014.6 Price: 58 yuan ($9.33) Pages: 268 pages

Wu, long known as a believer in the role of the market (he’s nicknamed "Market Wu"), has never wavered in his stand. And his study in the past few years has led him to see that the biggest obstacle to smooth reform still comes from the market not playing its proper role.

"Here are the two major obstacles evident since 2007: One (it’s not the market) but the government that’s standing at the very center of resource allocation, which is an institutional problem," he said in a speech on reform in May.

"The other thing that holds back reform is corruption, which can again be cured through the use of market and the rule of law."

"We have had numerous regulations and proposals to address each of the problems of the Chinese economy, but we sometimes lose sight of the root problem," he said.

"I hope to bring more awareness to the fundamentals when we’re trying to cope with the great transformation now." Li Zuojun, author of The Third Great Transformation and research fellow at the Development Research Center of the State Council, agrees that now is a most pivotal time.

He also maintains that the country is confronting the most complex circumstances compared with the previous two transformations — the founding of the republic in 1949 and the opening-up reform in 1978.

"We’re stepping onto a new stage where the growth rate has slowed, we’ve entered the middle-income trap, our edge in human, land and other raw material costs no longer exists, and people are demanding change."

"Today’s change will decide the future of the Chinese dream," he concludes in The Third Transformation, which argues that the country will go through reforms on several fronts, most notably institutional transformation.

"Everything depends on it," Li writes. "It will change our focus from quantity to quality. It will change our fuel of growth from export and investment to inner demand."

 "At this stage, we must do the right things."