On the Market’s Logic?

January/​February 2015 • Policy Report

“Of the most well‐​known Chinese economists, few have advocated laissez‐​faire market economics so strongly, and so unstintingly, as Zhang Weiying,” News China wrote in an interview with the 55‐​year‐​old in October. “Zhang is one of an academic minority in China who subscribe to non‐​Keynesian principles, and has thus been labeled by the media as ‘spokesperson for vested interest groups,’ and even, on more than one occasion, ‘an enemy of the people.’ ”

In January the Cato Institute published Zhang’s The Logic of the Market: An Insider’s View of Chinese Economic Reform. First published in China, where it became a bestseller, the book is a collection of the economist’s most influential essays on Chinese economic reforms. As the director of Peking University’s Center for Market and Network Economy, Zhang is considered China’s leading market liberal, and his book offers a unique perspective on the country’s past economic developments as well as its prospects for further reform in the future. “All debates over issues of China’s reforms reflect people’s common misunderstanding of the market,” Zhang writes.

He identifies two flawed conceptions in particular. The first assumes that China’s economic miracle stems from a unique Chinese model, based on strong government intervention and powerful state owned enterprises. The second holds that China’s current obstacles, such as corruption and pollution, are a result of market reforms. “I disagree with both,” Zhang adds.

“Both have blind faith in government power and distrust the logic of the market, have blind faith in the foresight of government officials but distrust the judgments of entrepreneurs,” he writes. This allegiance to authority over liberty is what has led to China’s ongoing contradictions. By contrast, it was the relaxation of government control that ushered in the country’s transformation.

Zhang goes on to discuss, in accessible terms, how China can build upon its past revolution with further economic and political reforms. It’s a message that has given him a prominent voice on the world stage. “Chinese officials no longer treat Mr. Zhang as a pariah,” the Wall Street Journal reported in a weekend interview. “He says that when he recently wrote an article praising the late Austrian economist Murray Rothbard, the Communist Party secretary of Shanghai — a fairly high‐​level apparatchik — told him he liked it.”

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