Managing Economic Reforms in Post-Mao China (review)

Abstract

Reviewed by: Managing Economic Reforms in Post-Mao China Fred Herschede (bio) Kuotsai Tom Liou. Managing Economic Reforms in Post-Mao China. Westport and London: Praeger Publishers, Inc., 1998. xii, 169 pp. Hardcover $59.95, ISBN 0-275-95792-6. In his Managing Economic Reforms in Post-Mao China, Kuotsai Tom Liou, an associate professor of public administration at the University of Central Florida, examines the economic reform process and its ramifications in post-Mao China. His particular focus is on the government's role in managing the recent reforms. The book's targeted audience includes those interested in public management and policy as well as those concerned about governmental efforts to promote economic development. The fundamental economic reform policies of the post-Mao era include gradually introducing private market mechanisms into the agricultural and industrial sectors, decentralizing decision-making power to local administrators and business managers, encouraging foreign investment and linking the Chinese economy to the world market, and establishing the infrastructure needed for a market economy. The book can conveniently be divided into two parts: the first part, over three chapters, examines economic reforms since 1976, and the second part, also over three chapters, considers three major issues related to these reforms. The first chapter on economic reforms, "Background of China's Economic Reforms," begins with a brief, cursory description of the policies that guided economic development from 1949 through the Fifth Five-Year Plan of 1980. This is followed by a statistical survey of the economic results in the early periods. Liou chooses national income, industrial production, agricultural production, and foreign trade as the benchmarks to assess economic performance. His survey primarily utilizes the rates of growth of these variables and includes very little economic analysis beyond presenting the data. The author's probe into the causes of economic problems during these periods is rather conventional and elementary—for example: "there were major differences in economic development strategies between the right-line and left-line policies" (p. 23). The second chapter on economic reforms concentrates on the policies of the post-Mao period. Liou breaks this period into the following stages: the rural-agricultural reform, 1978-1984; the urban-industrial reform, 1985-1988; the slowdown of economic reforms, 1989-1991; the macroeconomic-structural reform since 1992; and the open-door policy since the 1970s. The breakdown and descriptions are again conventional and offer no particular insights not found in many other research reports. Oftentimes statements are general and vague—for example: "Production decisions [which ones?] were made by a higher authority and often did not consider local conditions [such as?]" (p. 31). This chapter relies chiefly on [End Page 478] description, reporting the findings of others, and offers little in terms of rigorous analysis. The third chapter of the first part evaluates the output and effects of the post-Mao reforms. In addition to national income, industrial output, agricultural output, and foreign trade, the author also presents statistics on gross national product, gross national output per capita, unemployment, sectoral changes in agriculture, enterprises by type, foreign loans, and direct foreign investment. Unfortunately, output and income data are given in nominal values; hence, the high rate of inflation experienced throughout the entire post-Mao period has not been removed from these data. Gross national product increased at an annual rate of 9.8 percent between 1978 and 1995, whereas retail prices grew at an annual rate of 7.5 percent. As a consequence, the growth in real, inflation-adjusted output and income was modest. The author's conclusion that "The record of economic growth is very impressive" (p. 51) is not warranted. In addition, although there is a discussion of urban unemployment, joblessness in the countryside is left out of the analysis. This would have been a valuable addition. This chapter also suffers from other shortcomings. For example, the data used to measure economic performance come exclusively from the 1996 edition of the China Statistical Yearbook, issued by the State Statistical Bureau. Reliance on this source alone is dangerous and raises questions about why the author did not pursue other estimates and analyses. In the chapter's first footnote, Liou acknowledges that "many researchers have noticed some problems...