Decentralize and diversify

For the next round of reforms, the question of what social and political systems fit the market economy needs to be answered first. Unlike the centralized decision-making of the planned system, the market system is essentially polycentric, whereby individuals are independent decision-makers. In other words, the transformation from the planned system to a market system increases the room for individual decisions.

More room for economic freedom brings more room for development. This needs to be stressed as monopoly groups with vested interests hamper the workings of the market. Monopolies, such as those controlling land, oil and mines, and restrictions on access to financial services, and the telecommunications and aviation sectors, as well as the barriers erected by the household registration system can, to a large extent, be ascribed to forceful arrangements by administrative power. So political restructuring is related to the deepening of economic reform and needs to focus on overcoming vested interests.

Only if administrative power is restrained and market monopolies broken can further reform be stimulated. There needs to be more tolerance for civil freedoms, especially freedom of speech stipulated by the country's Constitution, and wider participation in the political process. Political reforms are therefore a precondition for deepening economic reform, and a corollary to the polycentric and open structure created by economic freedoms.

Those social reforms that have already been launched are the interim period between economic reform and political reform. They not only include efforts to reduce social inequality and ease social contradictions, they also restructure social power distribution and promote the growth and maturation of a civil society.

A modern society with a market economy and technological progress is a humane society, an informed society and an open society. These characteristics mean such a society must be based on individual rationality, personal responsibility, equal rules and open systems. A planned society is outdated and limited under such circumstances, and self-governance according to the law should be established instead. For reform and opening-up to stay on track and progress further, the freedoms delivered by the market economy should be gradually extended to social and public governance fields.

The author is deputy director of NGO Research Center at Tsinghua University.

(China Daily 01/04/2013 page8)