Barry Naughton

China's Evolving Managerial Labor Market

Recent reforms of Chinese state-owned enterprises strengthened a nascent managerial labor market by incorporating incentives suggestive of competitive Western labor markets. Poorly performing firms were more likely to have a new manager selected by auction, to be required to post a higher security deposit, and to be subject to more frequent review of the managers contract. Managers could, be, and were, fired for poor performance. Managerial pay was linked to the firms sales and profits, and reform strengthened the profit link and weakened the sales link. Thus the economic reforms helped develop an improved system of managerial resource allocation responsive to market forces.

The Third Front: Defence Industrialization in the Chinese Interior

Between 1964 and 1971 China carried out a massive programme of investment in the remote regions of south-western and western China. This development programme – called “the Third Front” – envisaged the creation of a huge self-sufficient industrial base area to serve as a strategic reserve in the event of China being drawn into war. Reflecting its primarily military orientation, the programme was considered top secret for many years; recent Chinese articles have discussed the huge costs and legacy of problems associated with the programme, but these discussions have been oblique and anecdotal, and no systematic appraisal has ever been published.2 Since Chinese analysts have avoided discussion of the Third Front, western accounts of Chinas development have also given it inadequate emphasis, and it has not been incorporated into our understanding of China during the 1960s and 1970s. It is common to assume that the “Cultural Revolution decade” was dominated by domestic political conflict, and characterized by an economic system made dysfunctional by excessive politicization, fragmented control, and an emphasis on small-scale locally self-sufficient development. The Third Front, however, was a purposive, large-scale, centrally-directed programme of development carried out in response to a perceived external threat with the broad support of Chinas national leaders. Moreover, this programme was immensely costly, having a negative impact on Chinas economic development that was certainly more far-reaching than the disruption of the Cultural Revolution.

Implications of the State Monopoly Over Industry and Its Relaxation

This article argues that a single simple interpretative framework explains a great deal about Chinas reform process. This framework, which I label the monopoly industry framework, can account for many of the most important observed facts in Chinas industry and financial development over the past decade. In some respects it may be considered a superior alternative to the centralization/decentralization paradigm that has dominated much of the writing about the Chinese reform process. The basic argument is as follows. Chinese economic policy since 1949 has been founded on the governments monopoly control of industry and the price system, which was used to pump resources into government industrialization programs. Economic reforms since 1978 have substantially weakened the governments monopoly, shrinking government fiscal resources while stimulating growth of the nonstate sector. This process has had beneficial economic effects but at the same time, because no new fiscal system has been created to replace industrial monopolies, has also created serious problems. The first selection of this article puts state monopoly control over industry and prices in the context of overall development strategy in the Chinese command economy; it describes three implications of the price structure and development strategy of command economies which have received inadequate attention. The second section briefly describes changes in the role of the government budget since 1978, and shows that these changes are closely linked to changes in the states monopoly over industry; I hypothesize that changes in the states monopoly can explain the changes in the role of the budget.

Holding China together : diversity and national integration in the post-Deng era

List of figures and tables List of contributors Holding China together: introduction Barry J. Naughton and Dali L. Yang Part I. The Institutions for Political and Economic Control: Adaptation of a Hierarchical System: 1. Political localism versus institutional restraints: elite recruitment in the Jiang era Cheng Li 2. The institutionalization of elite management in China Zhiyue Bo 3. The cadre evaluation system at the grass roots: the paradox of party rule Susan Whiting 4. Economic transformation and state rebuilding in China Dali L. Yang Part II. Case Studies of Policy Implementation: 5. Policy consistency in the midst of the Asian crisis: managing the furloughed and the farmers in three cities Dorothy J. Solinger 6. Population control and state coercion in China Yanzhong Huang and Dali L. Yang 7. The political economy of industrial restructuring in Chinas coal industry, 1992-9 Fubing Su 8. The western development program Barry J. Naughton Index.

China's Macroeconomy in Transition

Is macroeconomic stability the Achilles heel of the Chinese economy? Recurrent bouts of inflationary disorder lead some observers to worry that the Chinese government is unable to control the economy. Macroeconomic difficulties show up in a pattern of repeated boom and bust cycles, in which each boom is accompanied by an acute inflationary phase and significant disruption. Moreover, since the reform era began, the peak annual inflation rate of each successive cycle has been higher than that of the preceding one. The most recent attempts to cool off the economy have only led to additional questions. An austerity policy was decreed at the end of June 1993, yet inflation actually accelerated in 1994, and it was not until mid-1995 that it dropped to the levels of mid-1993. The Chinese government was engaged in a quest for an economic “soft landing” for two years without a net reduction in the inflation rate!

Deng Xiaoping: The Economist

Deng Xiaopings economic legacy is overwhelmingly positive and quite secure-in this, it stands in contrast to his troubled and ambiguous political legacy. Of all of Dengs achievements, the transformation of Chinas economic system is the only one that is currently judged to have succeeded, and to have benefited large numbers of people. Deng presided over the Chinese government during a period of enormous economic change. Under his leadership, the government extricated itself from a legacy of massive economic problems and began a sustained programme of economic reform. Reforms transformed the economic system and initiated a period of explosive economic growth, bringing the country out of isolation and into the modem world economy.

China's Economic Think Tanks: Their Changing Role in the 1990s

During the 1980s, economic think tanks played a key role as centres of expertise, with distinctive philosophies and approaches to economic transition. Although they were all government-sponsored, they served as important alternatives to the policies and advice available within the formal government bureaucracy. In the 1990s, think tanks continued to play an important role but lost some of their distinctive personality. Expertise was absorbed into the bureaucracy, but at the same time independent think tanks emerged. Think tanks were knit into a web of policy debate and advice which Premier Zhu Rongji, in particular, uses as a source of ideas and analysis. The total network of advisers has become more important, while think tanks have become less distinctive nodes of that network.

China's experience with guidance planning

Abstract Before economic reforms, Chinas economy was weakly planned. Reforms have coincided with more sophisticated and realistic planning, but plans have still not accurately predicted outcomes because of inconsistent central government policy. As market forces have grown, planners have attempted to use guidance planning to steer the economy, but guidance planning more closely resembles bureaucratic bargaining than a systematic attempt to correct market and institutional coordination failures. As a result, rapid growth has been combined with high levels of instability and persistent imbalances.

State capitalism, institutional adaptation, and the Chinese miracle

1. Introduction: state capitalism and the Chinese economic miracle Kellee S. Tsai and Barry Naughton Part I. Evolution of the State Sector: 2. State-owned business and party-state regulation in Chinas modern political economy Margaret M. Pearson 3. The transformation of the state sector: SASAC, the market economy, and the new national champions Barry Naughton Part II. Outcomes and Processes: 4. Stability, asset management, and gradual change in Chinas reform economy Doug Guthrie, Zhixing Xiao and Junmin Wang 5. The emergence and evolution of Chinese business groups: are pyramidal groups forming? Dylan Sutherland and Ning Lutao 6. Competition and upgrading in Chinese industry Loren Brandt and Eric Thun Part III. The Big Picture: Historical, Social, and Systemic Perspectives: 7. Explaining the dynamics of change: transformation and evolution of Chinas public economy through war, revolution, and peace, 1928-2008 Morris L. Bian 8. The evolution of a welfare state under Chinas state capitalism Mark W. Frazier 9. Did China follow the East Asian development model? Andrea Boltho and Maria Weber.

On the theory of household saving in the presence of rationing

Abstract In many disequilibrium models of centrally planned economies it is assumed that there is a strictly negative relationship between current ration levels and saving. This assumed relationship is not well founded. We use the Neary Roberts “virtual prices” approach to show that there is no general regular relationship between individual household saving and ration levels or rationed goods prices. However, the relationships between saving and changes in ration levels or rationed goods prices may be decomposed into expenditure displacement, income, and substitution effects. These effects may be signed and compared in the usual neoclassical manner.