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Zheng Yongnian and John Wong (eds.), Goh Keng Swee on China,
Selected Essays, Singapore: World Scientific Publishing Company,
2012. 200 pp.
“Dr. Goh”, as he is fondly remembered in
Monetary Authority of Singapore (MAS), is
widely known as the architect of modern
Singapore’s economic miracle. His vast
knowledge and sharp insightful views in
economic development benefited not only
Singapore but also China, a country of 1.3
billion population and many thousand
kilometers away from Singapore.
Other than the first chapter, Goh Keng
Swee on China, Selected Essays, edited by
Zheng Yongnian and John Wong, is a
collection of Goh’s writings and speeches on China during and after his tenure
(1985-1990) as an economic advisor to China’s Special Economic Zones and
coastal cities. The book is a presentation of Goh’s views and concerns of
China’s economic as well as political reform, post-Tiananmen Square incident.
It gives a good account of the early concerns as to what next China should
tackle in its reforms. The market reform was at a crossroads. It is not difficult
to see clearly his early pessimism about the setback of reform in China, a
view that was shared by many Western scholars and politicians, especially in
the United States. However, in the later chapters, he displayed a more
optimistic view for the long-term while remaining cautiously optimistic about
things might improve after the passing of the last Long-March comrade. The
irony is that in 1992 Deng Xiaoping, the paramount leader at that time and
one of the Long-March comrades, openly called for further opening up of
China to foreign trade and foreign investment, a real turning point in China’s
reform after the Tiananmen incident. This book could serve as a useful
historical check on the past years of reform in China, and as
recommendation/advice for the forthcoming reform in economic and political
areas.
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The book consists of eleven chapters. Chapter 1 gives a brief description
of China’s economic policies in a historical perspective at an international
conference in 1987. It traces back to Emperor Qianlong of the Qing dynasty in
1793 when he refused Lord Macartney’s request to open up China to trade
with the British. It then took two Opium Wars to force China to open up to
foreign trade. The first Opium war was from 1839-42 and the second Opium
war 1856-60. These were long, ugly periods of suffering for the Chinese
people. The Qing dynasty collapsed in 1911. That in turn gave the
Communists the chance to take power in 1949 which closed China’s door
again until 1978, when Shenzhen was selected as a testing point for future
economic reform in China. Goh cautioned foreign investors about the dualprice system and warned that many state-owned enterprises were not
operating under a free market system.
Drawing on 19 out of some 60 papers from the two-volume study
commissioned by the Joint Economic Committee of the U.S. Congress,
entitled China’s Economic Dilemmas in the 1990s:The Problems of Reforms,
Modernization and Interdependence, Goh went on to assemble a list of
problems and issues that concerned the Americans. These are discussed in
Chapters 2 to 5 under the titles “America Looks at China: Part I – After Deng,
What?”, “America Looks at China: Part II – Future of Reform”, “America
Looks at China: Part III – Absorbing Modern Technology”, and “America
Looks at China: Part IV – Correcting Systemic Weaknesses”.
As the study was carried out when the Tiananmen incident was still fresh
in the authors’ minds, American scholars held very pessimistic views about
post-Tiananmen and post-Deng China. Goh took the view of David Lampton,
President of the National Committee on US-China Relations: “The dreams of
China’s intellectuals seem not to be the dreams of China’s peasants and
workers,” but that Chinese fear of chaos would prevent further social chaos.
In other words, stability will prevail.
Goh noted that American scholars were concerned with issues such as
inflation, the dual-price system, chronic budget deficits, high unemployment,
inefficient SOEs, lack of independent commercial banking, diminished
legitimacy of the leaders, and uncertainty of future leadership succession etc.
He further noted that the Seventh Party Plenum in December 1990 had come
up with more reform-oriented proposals to tackle some of the problems that
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were discussed by American experts. One example was the “Bird Cage”
version of restricted market reform suggested by Chen Yun, then Chairman of
the Central Advisory Commission of the People’s Republic of China. As a
result, the future economic growth rate, productivity and living standards in
China were ultimately determined by the fate of China’s economic reforms,
which Goh was not optimistic.
As Americans lamented the ability of a half-reformed system to absorb
modern technology, Goh pointed out one area that American scholars were
not aware of: the fast growing sector of “township enterprises”. These were
small scale and rural enterprises privately owned or owned by the county or
township authorities, largely operating outside the limits of state control, but
were the largest buyers of technology in the newly established technology
market. According to IMF statistics, they were registering phenomenal growth
rates of an average of 45.5% per year between 1984 and 1988. It is this sector,
coupled with the large surplus of unemployed rural workers, that pushed
economic growth to double-digit rates.
Goh pointed out that “China’s dilemma is that ideology advances
stability but impedes progress.” Major economic decisions made on political
grounds and “Iron-Rice Bowl” type of “Danwei (unit or employer) Socialism”
practiced by the SOEs brought stagnation and inefficiency. Nevertheless,
China would “muddle through” the trade-off between ideology and economic
progress.
After examining and presenting the Americans’ views, in Chapter 6 Goh
turned his attention to the management of SOEs, which is equivalent to the
GLCs (government-linked companies) in Singapore. He tracked closely the
measures proposed by the then Chinese Premier Li Peng for reforming
China’s SOEs. The measures were limited to modernizing the management
system and upgrading production technology, measures he deemed inadequate.
It can only offer a short-term relief. The system needed a major overhaul. He
sadly concluded that the “completion of reforms will, therefore, be a task left
to future generations of leaders”, pointing to a long period of gradual
progression in economic reform.
In Chapters 7 and 8, Goh drew on the experience of Russia and China
and argued that the “main influence on the course of events in the 21st century
will depend on the outcome of the efforts of the Russian Federation and the
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People’s Republic of China in putting their houses in order.” He listed a host
of problems and complaints ranging from China’s central-local relations to the
deterioration of SOE performance, and recommended further research be done
according to the short-term and long-term perspective.
Among all the problems identified in the economic reform, China’s coal
industry stood up as the single most representative of all the SOEs’ malaise.
This captured Goh’s attention and he pointed out that this was due to the strict
state planning control and the dual-price system. In Chapter 9, he
painstakingly showed that all state mines were SOEs operating on a “soft
budget constraint”, an equivalent term of subsidy in economics. They were
money-losing state enterprises, controlled by the State Planning Commission
(SPC) in their coal production and distribution. Goh saw no way out of this
situation for the coal industry.
Doing business in China? Goh had the answer. In his view, China is an
awakening giant in Asia, a view shared by Napoleon Bonaparte in the 19th
century: “China is a sleeping giant. Let her sleep, for when she wakes she will
move the world.” In spite of all the difficulties and challenges faced by the
half-reformed economy and the one-party monopoly of political power in
China, Goh, in the last two Chapters 10 and 11, shares his optimistic view for
the future growth of China: The economy had regained overseas investors’
confidence with massive influxes of foreign direct investment after Deng
Xiaoping’s visit to Shenzhen in 1992. Thanks to the First Five-Year Plan
(1952 to 1957), which had laid down a strong industrial foundation, the
economic reform had reaped the rewards of the emphasis on science and
technology in education. However, he cautioned foreign investors about
China’s different business culture and unique operating environment while
she continues her reform.
In conclusion, Goh took a sober view of the economic as well as political
reform of China. Like many American scholars, he shared many concerns of
the half-reformed economy and the one-party monopoly of political power in
China. However, he differed widely in the perceptions and biases towards the
issues. Goh held similar pessimistic sentiment as the Americans in the early
nineties, but showed more hope for the unfinished reform in the later period.
Apparently he understood better the oriental culture and the importance of
education in science and technology, the basis of his high hopes for the
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Chinese economic and political reformation in the long run. He said: “China’s
rapid economic growth could not have been possible without the great effort
made to accumulate knowledge in science and engineering since
1949…Gradual reforms at first produced expansion of output but later
brought great strains on the system, because of the rigidities of the political
system…These will have to be addressed, perhaps with greater chances of
success in the post-Deng era.”
John Eng
Southern University College, Malaysia
[email protected]
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