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Cato Policy Report, September/October 1997

Cato Holds Second Conference in Shanghai

Market reforms proposed on eve of Hong Kong takeover

On June 15-18 the Cato Institute cosponsored a conference in Shanghai with Fudan University, which had also hosted Cato's 1988 conference in Shanghai. Titled "China as a Global Economic Power: Market Reforms in the New Millennium," the conference brought together Chinese officials, scholars, and students to discuss how China can move more rapidly toward economic and political liberalization. In the first panel discussion, "China's Place in the Global Trading Order," William A. Niskanen and Ted Galen Carpenter of the Cato Institute maintained that the United States would benefit if China were admitted to the World Trade Organization and granted unconditional most favored nation status. Carpenter also argued that it would be a mistake for the United State to adopt a policy of "containment" toward China and drew some criticism by chiding China for excessive sensitivity and bellicosity.

Zhou Den Ren of Fudan University introduces panelists David Boaz, Roberto Salinas-León, José Piñera, Y.C. Richard Wong, and Zhang Shuguang at an Open Forum at Fudan during Cato's Shanghai conference.

Also of great concern were the state of China's economic reforms and its relationship with Hong Kong. James A. Dorn, vice president for academic affairs at the Cato Institute and conference organizer, argued against half-way reforms. "What China needs is not market socialism but market liberalism. In the long run, market socialism, like central planning, is bound to fail."

Yeung Wai Hong, publisher of Hong Kong's Next magazine, maintained that China would do well to follow Hong Kong's example and adopt unilateral free-trade policies, and Joseph Y. W. Pang, executive director of the Bank of East Asia, argued that a "one country, two systems" policy that would allow Hong Kong to maintain its current institutional framework must be adopted.

Ed Crane kicked off day two of the conference with an address, "Civil Society versus Political Society: China at a Crossroads." Crane told the crowd that there are only two ways to organize society: through the coercion of the state, which might be called "political society," or through the voluntary actions of individuals, businesses, and social organizations, which might be called "civil society." Countries that have maximized the latter and minimized the former, Crane reminded conference participants, have flourished both economically and culturally; those that have done the opposite have stagnated. Crane closed his talk by stating, "Your struggle in China is to create a constitution of liberty. The struggle of the United States is to rediscover and enforce our own. Act for the people's benefit. Trust them. Leave them alone."

Kate Xiao Zhou talked about "Market Development and Rural Women's Revolution in Contemporary China." Zhou, a native of China who is currently teaching at the University of Hawaii at Manoa, argued that liberalization in China has greatly increased the economic bargaining power of women and has given them greater financial and social freedom. "Market development in the past several years has done more to reduce patriarchy in China than government action did in the previous four decades."

Michael Tanner, director of health and welfare studies at the Cato Institute, urged China to adopt a privately run defined-contribution retirement system similar to the one in Chile. The man who developed that system, José Piñera, co-chairman of the Cato Project on Social Security Privatization, told the crowd that since Chile privatized its pension system in the early 1980s, it has experienced an average annual growth rate of 7 percent. After the conference, Piñera met with the official in charge of developing China's pension system, who expressed great interest in Chile's successful move toward privatization, and gave six reasons why a private system for China would be preferable to a pay-as-you-go state-run system.

Jerry Taylor, director of natural resource studies at the Cato Institute, advised China to abandon its obsession with the fashionable Western notion of sustainable development. In the long run, "economic growth, not sustainable development, is the only policy that can produce a clean and healthy environment for China."

Closing the conference was Liu Ji, vice president of the Chinese Academy of Social Sciences. He discussed "Prospects of Reform in China's Economic System." Although While not a believer in laissez-faire capitalism, he maintained that the only people in China who still cling to the idea of central planning are "fossilized, dogmatic Marxists."

In addition to the formal presentations, Fudan University hosted an Open Forum for students and conference participants. David Boaz of the Cato Institute; Roberto Salinas-León of the Center for Free Enterprise Research in Mexico City; Richard Y. C. Wong of the Hong Centre for Economic Research; Zhang Shuguang of the Unirule Institute of Economics in China; and José Piñera of the International Center for Pension Reform discussed the roles their organizations play and entertained questions from the crowd. More than 150 students from Fudan University attended the event.

The papers presented at the conference will be published as a book early next year.

  For more information on this conference, click here.

This article originally appeared in the September/October 1997 edition of Cato Policy Report.