To Establish Goals and Keep on Writing

Hu Jiayong (Hereinafter referred to as Hu): Mr. Zhang, as we know you are an economist. How did you step into economics? I believe young students will benefit a lot from your study and life experiences in your early years and your explorations in economics.

Zhang Zhuoyuan (Hereinafter referred to as Zhang): In September 1954, I was dispatched to the Institute for Economics to engage in economic research. By now, I have been working there for over half a century. In my experience, the most important factor for us to make achievements in economics, just like in other subjects, is that we should have an interest. The more interest we have, the more achievements we will make. Furthermore, we should work hard without any relaxation.

I took an interest in economics in my senior year of high school. At that time, my hometown had just been liberated and I came across Political Economics by Leontief, a Soviet economist. I was quickly attracted by its contents. I surprisingly found that outside of my familiar mountain city, there was a wonderful capitalist and imperialist world, where there was an enviable high material civilization full of contradictions and frictions. At the other extreme, socialism was vigorously developing just like the rising sun. The desire for knowledge made me take a deep interest in economics. In the autumn of 1950, I got my wish to study in the department of Economics of Chung-shan University. At that time, the construction of the New China had begun and many close classmates had signed up for the examination of science and engineering. But I wholeheartedly wanted to study in the department of Economics. That I studied well in university could not be separated from my strong interest, hard study and careful thought. Sometimes, my classmates would go to the playground to see films while I stayed in the dormitory to read leisurely because of my great interest in economics. I was chosen by the Institute of Economics of the Chinese Academy of Sciences because of my good score.

Diligence is also very important. One cannot make any achievements without diligence no matter how clever they are. I worked as an editor at the editorial department of Economics Research from 1955 to 1983, except during the period of the Great Cultural Revolution. I adhered to a system of fixed office hours and worked from five o’clock in the morning to seven o’clock in the afternoon. Sunday and holidays, including the Spring Festival, were the  best time for writing and I could write four thousand words with mature considerations. Many of my articles were finished overtime before the 1980s.

Non-stop writing and not using student ghostwriting are diligent attitudes. There is a law that the more you write, the more  you will find it easy, and vice versa. Writing pushes you to refer to documents, opposing views and arguments. In recent years, I have found that some master students who have written many articles in the past do not like to write or have turned to ghostwriters now. Some have even stopped writing and they turn to ghostwriters even for a short essay. The most convenient thing is to turn to students’ drafts. Therefore, they have become scholars who cannot write, which is lamentable. As age increases, we should not stop writing but write less. Ceasing to write means that you do not engage in research any more. Sometimes, students can help us to collect some material but we should not turn to ghostwriting.

Hu: Before the reform and opening up, China was in a period of highly centralized planned economy, when the planned economy dominated and the market economy was denied. The "Political Economy Textbook" of the Soviet Union was the mainstream in economic theories and market strategies of commodity, capital and value rules were denied. But the strenuous theoretical exploration in China’s economics never stopped for a moment. That period was regarded as a sprouting period for the socialist market economy theory. Would you like to introduce some of the theoretical heresies and your academic research from that time so that our youth can accurately grasp the development history of the theory of the socialist market economy?

Zhang: In 1957, the older economist Sun Yefang worked as the director of the Institute of Economic Research. On the one hand, I worked as a magazine editor; on the other hand, I worked as an assistant for Sun Yefang in writing. With an open mind and a profound academic foundation, Sun Yefang studied abroad in the Soviet Union and he was one of the pioneers of our economic theory reform. After the New China was founded, he successively worked as the division head of the Heavy-industry Division of the Shanghai Military Control Commission, deputy minister of the Industry Ministry of the East-China Military and Political Commission and deputy director of the National Bureau of Statistics. He had a clear awareness of our economic development and construction. After he came to work in our institute, he brought about fresh study and research styles and his novel views, rigorous academic attitudes and noble moral sentiments which deeply struck our young selves. In 1956, the socialist transformation had been completed and the public-ownership economy dominated. The question of what roles  commodity production and value laws played in  socialist China had to be solved. Sun Yefang issued Establishing Planning and Statistics Based on Value Laws in which he pointed out that value laws existed in the Capitalist, socialist and communist countries. The planned economy in the socialist countries should conscientiously abide by value laws. In 1957, he issued Talking from Gross Output Value in which he pointed out that profit was the best embodiment of the enterprises’ operations. Yet, these outstanding papers brought about political risks and disasters.

Sun Yefang had a strong influence on me. In 1959, he organized all researchers to write Views on the Socialist Economy under huge pressure, and made a roll call for participation, which was the first close cooperation I had with him. Inspired by his shining genius, I issued a paper in no. 8 of the Jianghan Journal in 1962, talking about the significance of price in organizing and managing the socialist economy, and I put forward the opinion that confirmation of cost and profit were the core of the socialist price. Price was first of all the tool to measure social labor consumption and also a balance for the repartition of national revenues. We should set prices according to social value and social cost to fully make use of its balance in social lives. In 1964, in cooperation with He Jianzhang, I issued papers to argue that we should take financial profit rate as a standard to evaluate the socialist economic activities and make prices based on production price, arguments which were demolished by other scholars with traditional economic arguments. Value, Price, Cost and Profit in the Socialist Economy published in 1983, On the Socialist Price Theory and Price Reform and Selected Works of Zhang Zhuoyuan published in 1987  all represented my long-term thinking over the socialist commodity and market economy theories before and at the beginning of the reform and opening-up.

Hu: In the late 20^th century, the socialist countries all embarked on economic structural transformation. Our country started the economic structural reform in 1978, and until now it has lasted nearly 30 years. Russia started the economic structural transformation at the beginning of the 1990s, and until now it has passed through nearly 20 years. As a representative of  gradual reform, China has made great success with a sustained and rapid development of the economy, stable prices and the peoples’ lives improved. Most of those countries which carried out Shock Therapy faced a declined transformation in the beginning with hyperinflation and unequal distribution. As a representative of gradual reform, you have a great influence on China’s reform, would you like to show us more?

Zhang: Responding to the Party's call, China’s economists eagerly put forward plans and strategies for the reform and opening-up and the construction of socialist modernization since the beginning of the reform and opening-up in 1978. It is worth specially mentioning that some economists of the Chinese of Academy Sciences, including myself, actively accepted research subjects from the CPC central committee or relevant departments, and we bravely put forward arguments in their support. They actively attended Letting a Hundred Schools of Thought Contend and made the Chinese Academy of Sciences the headquarters of the school of steady reform. . In 1987, we put forward the idea of making progress while ensuring stability. We thought we should stabilize the development of the economy. The reform would make a solid space on the basis of stabilizing the economy. In deepening the reforms, we insisted that we should simultaneously carry out the reform of the micro foundation (enterprise reform) and the reform of the economic operation system (price reform). It was different from those with price-centered theory and price reform-oriented theory, who developed a school of their own. I had made many addresses in papers and seminars since 1988. I opposed supporting economic growth by means of inflation and I opposed making price confirmations on the basis of the above 10 percent price increase. I thought that only if we stabilize the price can we make a successful march towards the reform and opening-up. It seems that these arguments were very right and withstood the test of time. In September 1995, the Economy & Management Publishing House published my collected papers  “Works on Stable Macro Economic Policies and Market-oriented Reform”, which  covered my representative papers on macro-economic policies and market-oriented reform written from 1988 to 1995. The basic thought behind this paper was stable reform and gradual development.

Hu: Mr. Zhang, as we know, economics is the doctrine of practicality whose true value is to guide practices, influence decisions, increase social wealth and improve public welfare. Since the reform and opening-up, economics rose to being an eminent field of study and its theoretical power was fully released. Chinese economists all participated in this social reform to a different extent, something which would influence the fates of millions of people. They exerted their influences in different ways, which is what Chinese economists are proud of. As we know, you have participated in drafting many documents many times, given counsel and made direct contributions leaving deep impressions. Would you like to show us more?

Zhang: Since  1993, I have been invited to draft some important documents of the CPC central committee many times, an  onerous task which has taken up much of my time including holidays. In the beginning, I felt very fresh because I could get to know how the important decisions of the CPC central committee came into being and what their procedures were. And also, I could get in touch with some leaders of some economic departments and get familiar with how they worked and how they thought. As time went by, sometimes I would complain that it had taken up too much time. Later, I gradually understood that as an economist, I should not only fulfill my task of drafting documents but also study while working. We should draft documents with questions, make full use of our own skills, collect theoretical and practical material and think about different questions so that we can make a better connection between our economic theory research and the objective reality.

In 1993, the Third Session of the Fourteenth Central Committee of the CPC initialized the basic framework for the socialist market economy system in Decisions of the CPC Central Committee on Issues Regarding the Establishment of the Socialist Market Economic System, which is made up of five items, the ownership structure & the enterprise system, the market system, macro control, the distribution system and the social security system. At that time, some leaders claimed that these five items represented our level of understanding. With the rapid development of our economy and the constant deepening of  reform, our understanding of the socialist market economic system would surely unceasingly  develop and be enriched. Ten years later, the Third Session of the Sixteenth Central Committee of the CPC put forward Decisions of the CPC Central Committee on Issues Regarding the Improvement of the Socialist Market Economic System(shorted for 《Decision》) in 2003. With the gradual progress of our economic reform, our understanding of the socialist market economic system greatly deepens. The theme of the Decision had gone from establishing the socialist market economic system to improving it. For example, it was decided that the basic economic system would include public ownership playing a dominant role and diverse forms of ownership developing side by side. This system develops from establishing a modern enterprise system to establishing and perfecting a modern property rights system. It should establish a state assets management system integrated with staff administration, affairs administration and assets administration. The central and local governments should separately exert their contribution duties representing the country with owners’ equities. Thus, rights are integrated with duties and responsibilities. The stock system is the primary form to realize the common system. We shall promote reform and development with the opening-up. Entering the WTO marks the fact that our opening-up has entered a new stage. We shall establish the correct reform concepts consistent with a scientific outlook on development.  The socialist market economy is an economy under the rule of law.

The CPC central committee put forward the Proposal on the Formulation of the Tenth five Year Plans for National Economic and Social Development in 2000, which was the first medium-long term plan of our country in the 21st century. It was not only the first medium-long term plan to implement the third strategic plan by Deng Xiaoping, but also the first medium-long term plan after we had preliminarily established the system of the socialist market economy. The tenth five-year plan developed from a general plan outline, key special plans and industrial plans & regional plans. Those key special plans on important problems concerning the overall situation and key fields was a big feature of the tenth five-year plan. The Western Development Strategy which attracted such extensive attention also belongs to the key special plans. The past five-year plans always put the speed of development in a prominent place, while the tenth five-year plan took the economy’s restructuring, especially industrial restructuring, as a cardinal line. To restructure the economy means improving how the economy is run. We shall not pay much attention to the specific speed of development but make the whole industrial restructuring and economic restructuring meet the demands of Chinese economic development. In my opinion, my consistent thinking of seeking progress amidst stability is accordance with the above guidelines.

I have paid close attention to economic system reform, and I would collect this kind of materials while drafting documents of the central committee and researching. I would write what I have learned and published. I have published tens of papers over the years. In 2004, I collected all the papers of mine to have been published since 2000 in “China’s Economic Reform in New Century and New State”, and referred it to the Economic Management Publishing House for publishing. They represented my study and research achievements in recent years.

Hu: At present, China is going through a transitional period in the economy and society, and new contradictions and  issues emerge here and there. As an economist, how did you decide on a research direction, define your research fields and make your research more valuable and practical? Mr. Zhang, we know that you have always kept close to important theories and practices in your 50-years of research with many theoretical innovations, would you like to show us more of your experiences so as to guide our young economists?

Zhang: We shall establish our goals and seek out general laws. As researchers of the Chinese Academy of Sciences, we shall use the standpoints, viewpoints and ways of Marxism to study theoretical, strategic and regular issues instead of paying more attention to research on constructive issues, which is slightly different from researchers in the business department.

I worked as the director of the Finance and Commerce Institute for about ten years (from 1983 to 1993) and I published several monographs and symposiums during that period. In my opinion, the greatest achievement I have made was my exploration of regularities in our price reforms. I put forward the idea that the way to go about price reform was to transmit the administrative pricing mechanism to the market pricing mechanism. The difficulty of price reform was that we should not only deal with the price relations well but also prevent soaring prices. One adjustment, two releases and three connections are the trilogy of Chinese price reform. The double-track system of the prices of the means of production is the inevitable outcome of our gradual price reform. We shall expand the price reform from the narrow sense to the broader sense. Price reform is the key point of the reform of the economic operation system.

In recent years, I gradually felt that it was necessary to make careful research on the regularities of the socialist market economic development. China is a large developing country with a population above one billion. The same China is developing a market economy under socialist conditions for organic integration between  socialism and the market economy, and the publicly-owned economy and the market economy, and this is a great unprecedented pioneering work.   Realizing optimal development starting from our national conditions under the common rules of the market economy is a process of theoretical innovation and institutional innovation, which attracts economists’ attention and interest. China has a 28-year experience of developing a market economy. In 1992, the Fourteenth Party Congress defined the establishment of a socialist market economy as the goal of economic restructuring in China. At present, China has basically established a socialist market economy, which is to be improved. The socialist market economic law has been gradually exposed and we would do well to study and master it. In 2004, I wrote a paper about this and I began to explore this kind of question. I primarily summarized the characteristics and inherent laws of the socialist market economy as follows: markets play the basic role in the allocation of resources and the law of value adjusts social production and flows; the enterprise is the main body of activity in the market economy  and the functions of the government must be truly separate from those of the enterprises and the capital; the national macro-control’s  main goal is to implement a scientific outlook on development and to promote a stable and rapid development of the national economy; we should scientifically evaluate the results of the market economy  in ensuring the sustainable development of the socialist market economy; and we should normalize the market economy  to guarantee its healthy operation. Because the socialist market economy in China is in booming development, new things appear constantly, new experiences are gradually accumulated and its inherent laws will also come to be accepted by the people. We must make a follow-up study. I want to make a further study on it in future and I hope there will be new achievements. I feel deeply that the main responsibilities of our researchers in the Chinese Academy of Sciences are to probe into those unknown regularities.

Hu: Our young economists always face the question of inheritance and development. Inheritance is to absorb the essence of human civilization and grasp it thoroughly. Development refers to theoretical innovation. Innovation is an inexhaustible source of scientific development. At present, a rare historical opportunity presents itself for our economists.  Like you just said, our economic restructuring and economy has developed for dozens of years and plenty of regularities have presented themselves and risen to the level of theories. Mr. Zhang, can you tell us what kind of attitude we should take to probe into unknown regularities and grasp rare opportunities?

Zhang: We should be bold in making innovations and actively participate in the disagreements of a hundred schools. Economic theories are not unchangeable and the same goes for Marxist economic theories, which are unceasingly enriched and  developed. Especially since the latter half of the 20^th century, world science and technology have developed rapidly and the economy has become increasingly active with new things and new phenomena emerging in an endless stream, which require our engaging in economic research to constantly renew our knowledge structures and make new theoretical generalizations on new practices and new phenomena, so that we can better grasp the objective world which has developed and change it. So, as a worker on economic theory, one should be bold in making innovations and actively push forward theoretical innovations. 

On this point, Mr. Sun Yefang set a good example for us. He encouraged us to be bold in making innovations and actively participate in the debates between a hundred schools in economic research as soon as he had taken his office. He also took the lead in doing that and forged some economists with social influence. From my personal experiences, I wrote two creative papers in the early of 1960s, which were separately published in the economic issues of Guangming Daily and Economic Research. One paper thoroughly corroborated the theory that value was the relation of production cost to effect, which was put forward by Engels in early years. The other one talked about the question of whether there exist categories of average profit margin and production price in the socialist economy. The above two papers brought about my further studies on the value and price theories in a socialist economy. Because I confirmed that price should be made on the basis of the production price in the socialist economy, I was regarded as a representative of the doctrine of productive price together with Mr. Sun Yefang. This doctrine was regarded as paganism and criticized on the eve of the Great Cultural Revolution and during the period of the Great Cultural Revolution. But at present, these arguments were just expressing doubts on the  traditional socialist economic theories and its structures, and its courage was admirable. To let a hundred schools of thought strive is a proper policy for prosperity and the development of scientific affairs. For us doing theoretical work in economics, active participation in thought contending would fully stimulate our knowledge potential, encourage us to think hard and increase our competence. All economists have different opinions and some opinions are very sharp. The important point is to participate and not to stand by. From the end of the 1980s to the early 1990s, there was a dispute on how the double-track system of  pricing the means of production should go in Chinese economics circles. Some thought that we should stick to the single-track system of planned price and some thought that we should stick to the single-track system of market price. I adhered to the latter argument together with some experts of the institute of finance and commerce and took issue with the former argument on different occasions. This argument not only promoted the reform of the Chinese price system but also cultivated many research talents.

Hu: Mr. Zhang, finally I want to ask you about research methods of economics. In contrast with the beginning of the reform and opening-up, the domestic and international situation which we face at present has gone through great changes. And so have the problems and contradictions in front of us. Can you tell us how we should study the difficult economic issues of China to make our research achievements suitable for the Chinese realities and find out the direction which the further deepening of economic restructuring will take?

Zhang: We know that the research methods of economics are a large topic. I have strong feelings on two aspects, a widening of vision and a good data basis.

Firstly, China has stepped out from closed positions since the reform and opening-up. In 2001, China entered the WTO and our economy has become more and more open. I feel we should widen our vision to probe into the inherent regularity of our reform and opening-up and observe and analyze it. With the rapid changes in science and technology all over the world and constant development of economic global trends, the development of our socialist market economy is greatly influenced by global economic development changes. After entering the WTO, China’s foreign trade dependency is above 60 percent. The foreign trade dependency for main mineral products and technologies is also high. The opportunities and challenges in front of us are unprecedented. We would refer to the experiences and draw on the lessons of foreign countries, and gain a better understanding of foreign countries’ situations while studying our economic growth and social development. For example, China’s double balance of payments surplus in the past years was very large, something which had a close relation with the world economic imbalance, especially the foreign-trade deficit in the United States and the financial deficit. Under these circumstances, developed countries including the United States put pressure on our country again and again and required us to improve the RMB exchange rate. We should not only consider the endurance of our economy and industries but also study the world economic trends and the experiences of foreign countries (for instance the negative results of the increase in the Yen’s exchange rate after the Square Agreement). Once I published a paper to present my opinion that just like other reforms of product prices, the reform of the RMB’s exchange rate should not only adhere to market-oriented operations but also gradually develop. We should not complete it in one step, to prevent any influence on our financial and industrial security.

Secondly, the practice of our economic reform and development in these years tell us that we should step out of the scope of economic restructuring and reform to deepen reforms to take studies over the economic reform and the improvement of socialist market economic system. We should improve the new system by means of accelerating the reform of the administrative system and transforming government functions. The Fifth Meeting of the Sixteenth Central Committee of the CPC Congress proposed that we should accelerate the reform of the administrative management system, which is the key point to thoroughly deepen the reform and improve the level of the opening-up. That is the truth. Up to now,  deepening the reform of economic restructuring and solving profound problems (the problems of how to give full play to the basic role of the market in the allocation of resources,  introduce competition into the reform of monopolized industries,  establish a public financial system,  promote the market-oriented reform of the production factors and resource products’ price,  push ahead with the innovation of the financial system,  deepen rural reform,  establish an all-round social security system,  transform the mode of economic growth  and  enlarge the opening-up) require transforming the governmental functions together with the reform of the administrative management system. So, accelerating the government reform has become a key research subject in recent years.

And also, economists should not only study the economy for the sake of economic growth, but also study its costs, the quality of growth, the relationship between economic growth and social development, and the harmony between economic growth and social development. Achieving economic growth is done to improve people’s living standards and qualities. But we must strengthen social construction and develop various social causes to improve people’s standard and quality of life. Those social causes include education, culture and medicine, which if developed well will push ahead economic growth. For example, to gradually achieve equalization in social public services is an important responsibility of the government, an important target to develop various social causes, an important content of the public finance system construction and an important subject for economic research.

In addition, economics is a strict science depending on data, which needs to be proved with ideas and opinions. To be a qualified economist, one should have a preference for and be naturally sensitive to statistical data. One should do a good job of remembering important statistical data and answer fluently. In the meanwhile, one should widely collect various economic data and make a proper judgment of them. In the 1980s, during the period of rapid economic growth and gradual development of price reform, I wrote again and again because I thought it was a better junction with about 8 percent of economic growth rate and 5 percent of price rise rates according to our actual conditions. It is suitable that the increase in the speed of the annual money supply is no more than one time the increase in the speed of GDP growth. Thus, it is preferential for the harmony between reform, development and stability, a conclusion which is made after analysis on some economic data.

Hu: Thanks very much for your interview and wish you good health and happiness.

Hu Jiayong, male, born in November of 1962

Hu is a researcher and doctoral supervisor. He acts as the director of the Political Economics Research Laboratory of the Economic Research Institute of CASS. As a specialist enjoying the special subsidies of the State Council, he mainly engages in research on the socialist market economic theories, economic transformation theories and efficient governmental theories.

        (Translated by Zhufuxiaofei)