Highlights

China’s Society Should Have Common Values

MAO Yushi

The contemporary society in China is very peculiar. On one hand, China has the biggest rate of economic growth in the world today. The Chinese people’s living standards have been considerably improved, with the average monthly salary equal to the annual income 30 years ago (compared to purchasing power). The Chinese have enjoyed 30 years’ all-time peace and growth since the first Opium War in 1840 (The past 173 years can be divided into 6 periods of 30 years each, and since the policy of reform and opening up, China has enjoyed a unique 30-year period of peace and growth). Such prosperous period has never been seen before in Chinese history, and has been regarded as China’s miracle in the world.
On the other hand, things have changed for the worse. As the political situation is very unstable, to maintain stability is the first task of the authority. There are a variety of social conflicts and increasing violence. For example, members of Urban Management Department and hawkers chased to kill each other, the patient killed the doctor, and the citizen killed the government official. Although today marks 40 years since the start of the Cultural Revolution, there are still several people who insist on “struggle” sessions, holding placards saying “overthrow XXX”. The death penalty in most countries in the world has been abolished whereas the annual number of executions in China has been on the increase. Some criminals may have suffered injustice, yet they still have been put to executions. The United Nation appeals to go against the death penalty, while most Chinese people are in support of the executions and some of them even call for resuming the lingering death to scare law breakers. Pedestrians quarreled with each other and one of them even fiercely lifted the infant of the other person involved over his head and dropped the baby in the pram to the road. The Cultural Revolution has ruined public morality for thousands of years——cruelty instead of kindness, struggle instead of courtliness. The morality as a social bond has no longer been in existence.
Nowadays, the extreme practices of the Cultural Revolution have been ceased, yet new moral values and solid foundation of unbiased judgment have failed to be established so far. Due to the political needs, lying is a general practice, which brings more troubles in the reconstruction of morality. Attributed to the lack of essential values, vulgar trend of thought has crept into our society. This is so-called money-oriented commonplace. What it benefits a lot is that it may cause the sharp increase of economics, on the other hand, our society may also lose its orientation of development and individual values may become distorted.
In the past hundred years, the values of Chinese have changed a lot.
Traditional Confucianism was the dominant value system in Qing Dynasty before it was shocked by the Opium War. China had to learn to model out foreign rifles and bombs. Thus at that time there was widespread public debate over traditional Chinese values aided with modern Western management and technology. Marx's theory was introduced into China at the very beginning of the last century.

By 1949, Marx’s values have become the unified value system in China. The Chinese people struggled for the realization of communism, forming a consistent faith in Chinese society. It survived the three-year famine, in which more than 30,000,000 people starved to death, and in persistent class struggle as a great test, which hurt hundreds of millions of people and no one was distracted, as well as that the individual standard of judgment was rarely influenced. However, the communist belief has no roots, with the impact of Cultural Revolution and the collapse of the Soviet Union, more and more people no longer believe in communism.

Due to the opening policy and the exchange of a large amount of elites, western values have rushed into the contemporary society. The personal privacy which was ignored in the past, for example, now has become the focus of many contradictions. China has entered the age of the big clash of values.
Although Chinese people have gradually accepted diversified values after reformation, it is still hard for them to get rid of obsolescence. Take constitutional amendment for example, we have no longer adhered to public ownership (with acknowledgement of private enterprises as an essential segment in national economy and of the need to protect private property) and dictatorship of the proletariat, and have come to accept useful modern values like human rights, legality and constitutionalism. However, Marxist doctrines like exploitation, labor theory of value and class struggle are still convincing and attracting lots of sympathizers, especially in such circumstance where the social rich and poor differentiation becomes increasingly serious. With the “class struggle” as weapons, they pose a giant threat to society.
Early in last century, the doctrines of surplus value, exploitation theory and class struggle were once recognized by one third of population around the world, thus presenting the socialism camp including overall public ownership and planned economy. However, almost a hundred years’ practice proved that wiping out the exploitative public ownership was worse than keeping the private ownership. Therefore, the majority of countries practicing public ownership successively started reforming, gave up this set of principle and walked on the path to class harmony and common prosperity. China which has undergone such catastrophe as the Great Cultural Revolution should be supposed to have a more profound understanding and to discard this set of principle with more determination. Unfortunately, we missed the opportunities and still stick to it, which handicapped the process of Chinese society embracing new concepts. Thus, united values failed to be formed in Chinese society and there even existed no united standard for people to judge right from wrong.
Although history is made by a collection of coincidences, the general trend of historical changes should be clearer after the development of more than one hundred years. Freedom and equality, democracy and legality, human rights and constitutionalism are the general trend of history evolution. Like what Sun Yat-sen said a hundred years ago, the global trend moves forward with great strength and vigor. Those who go along with it will thrive and those who resist it will perish.
In consideration of rulers’ long-term stability, we should take the initiative to figure out the right direction, keep up with the pace of the trend and avoid being left behind the history again.

(First published by China-Review)

Professor MAO Yushi
Honorary President of Unirule Institute of Economics

Current Events

What Influence do Eastern Confucian Ethics Have on Modern Western Business?

On December 5th, the China Entrepreneur Research Center of Unirule Institute of Economics hosted a seminar on Business Ethics and Economic Development. The research center is not only concerned with economic entrepreneurs in the field of theory and practice, but also focused on business ethics. Do the eastern Confucian ethics have any effect on the western business? And if, what is it? Dr. Keli 'I Akina, the director of Hawaii grassroots research institute, has given his own answer to the question in the seminar. The commentators participating in the seminar included Professor YAO Zhongqiu, the president of Unirule Institute of Economics; Professor HU Biliang, the dean of the Emerging Market Research Institute of Beijing Normal University; Professor JIA Xijin with her assistant JIANG Peng of the Public Administration Research Institute of Tsinghua University; FENG Zhe, the dean of Sihai Confucius Research Institute; LIU Yan, the chief editor of Financial magazine and the entrepreneur CAI Jingzhong. The meeting was hosted by Zhang Lin of Unirule Institute of Economics. More than 20 scholars and entrepreneurs have engaged in the meeting.

Dr. Akina has generalized the ethical characteristics of eastern and western entrepreneurs from the concepts of Confucian benevolence, propriety, righteousness, faith, and combined these concepts with western management experience. He believes that Confucian ethics can greatly contribute to a managers’ success. Director YAO Zhongqiu agreed with Akina’s perception, and commented that “people” are at the core of Confucian ethics. Director Yao believed that the perception of caring for others, respect for others and attaching importance to human development should be recognized not only by managers, but also by entrepreneurs, politicians and ordinary people. He also believed that the Confucian idea can bring a constructive rather than destructive social atmosphere. Combined with his own rural finance and trade research experience, President HU Biliang proved to us that Confucian ideas contribute to the formation of a good informal institution of the society and the development of the economy. Professor JIA Xijin from Tsinghua University said that Akina’s ethical spirit has also been reflected in other schools of thought. She believed that the development of the modern economy is different from ancient China. Thus, she is more inclined to trust the power of the institution. FENG Zhe, the dean of Sihai Confucius Research Institute, has mentioned his study of Confucianism and the rural gentry’s class. He stated that Confucian ethics can be applied to business. Ms. LIU Yan has explained why ethics are important. The reason is that ethics can reconstruct people’s inner consensus and ultimately affect the improvement of social reality.

Unirule Institute of Economics Received Mr. Gerhard Stahl

November 22nd, Mr. Gerhard Stahl, Secretary General of the Committee of Regions of the European Union, visited Unirule Institute of Economics during his stay in Beijing. He learned about the history, development, finance, commission and aims of Unirule, and acknowledged Unirule’s endeavor in promoting liberalization of the market, development of civil society and urbanization, and the elimination of monopolies. He also spoke highly of Unirule and its scholars’ accomplishment over the years.

News

Professor SHENG Hong Delivered a Video Speech on Market Is The Real “Red Line”

Professor SHENG Hong was interviewed by Hexun TV.com in December 2013 and delivered a video speech on Market Is The Real “Red Line”. (For more information)

Professor GAO Yan Leads to Attend “China’s Economic System Reform in New Age” Academic Seminar in France

At the invitation of French Institute For International Relations (IFRI), Professor GAO Yan, Deputy Director of Unirule Institute of Economics, led to attend “China’s Economic System Reform in New Age” academic seminar from December 4th to 6th . Unirule scholars produced academic reports on the theme of “China’s Reform after the Third Plenary Session”. Professor Gao Yan introduced research achievements of Unirule Institute on China’s Crude and Processed Oil Reform. The Chinese and the French scholars had beneficial interaction with each other.

Professor SHENG Hong Attends the Seminar on State-owned Enterprises & Foreign Investment in Canada

From December 10th to 11th, Professor SHENG Hong was invited to attend the seminar on State-owned Enterprises & Foreign Investment and delivered a speech on Further Understanding China’s state-owned Enterprises at the Public Policy College of the University of Calgary.

Current Researches/ Consulting

Theoretical Research and Reforming Solution on Opening the Markets of Crude Oil and Petroleum Products

The present system of petroleum industry in China generally has 3 characteristics —— it focuses on state-owned business, price control and restricted access. Thus China’s petroleum industry has a highly administrative monopoly. A few enterprises have completely monopolized the supply lines from its exploration, mining, refining, wholesale and retail, even to its imports and exports. The research intends to break the administrative monopoly of petroleum industry, stating its objective for the reform and meanwhile figuring out feasibility reforming solution to further liberate the markets of crude oil and product oil.

Strategy of Developing Areas and Planning Studies on Urban Industrialization For Yangcheng County in Jincheng City of Shanxi Province

On the basis of rethinking the strategy of development, the transformation of urban functions and the adjustment to industrial structure for Yangcheng County, Unirule Institute of Economics has developed a unique space-institution mathematical economic model which can reunite three-dimensional space time of cities and regions, their industries and institutions, and their economic policy analysis. The Unirule Institute will put the strategy into practice. Meanwhile, such mathematical model will be used to simulate market mechanism, to predict the final size for the long-term developing balance of cities and regions, the space distribution of population density and other economic density, the development time and process of cities and regions, the industrial distribution and its development track, and to test the flexibility of economic systems and policies. Thus the model can be used for the spatial planning of urban and rural areas in Yangcheng County.

Fairness and Efficiency of Financial Resource Allocation

The first scale problem of the fairness and efficiency of financial resource allocation is whether the overall tax bearing standard falls within the optimal interval, whether the design of tax kinds and the mechanism will harm the development of the economy. The second scale problem is whether the expenditure structure of the existing financial resource allocation, especially transfer payment, obeys the principal of justice, and the efficiency of financial expenditure especially the general administrative costs.
Unirule Institute of Economics is going to undertake research on the fairness and efficiency of financial resource allocation with the emphasis on the second scale problem. In order to fulfill the ideal of justice in a society, the involvement of financial resource allocation is one of the methods, and a universal one. A state can promote justice by implying financial expenditure in two ways: the direct and the indirect way. When applying the direct way of implying financial expenditure measures to promote justice, financial expenditure is directly distributed to individuals to fill the gap of incomes between individuals. Among the financial expenditure items of China are pensions and relief funds for social welfare, rural relief funds as well as social insurance funds. The indirect way is by governments' increase in expenditure used for supporting agriculture and villagers, construction of infrastructure, education and medical treatments. This research is on the justice of financial resource allocation and it deals mainly with whether the transfer payment of financial resources obeys the second rule of Rawls's theory of justice, which states that when violation to the first rule has to be made, resource allocation can be towards the poorest group of people. Besides the justice issue, efficiency is also involved in the financial resource allocation. The administrative costs of China have long been above the average standard of other countries in the world, therefore, a big amount of public financial resources are wasted (trillions of RMB per year as estimated). In regard with the efficiency issue of the financial resource allocation, this research deals mainly with the change of ratio of administrative costs by government agencies (in addition to other costs, such as medical treatments of government officials covered by public budgets, and housing subsidies) of financial income. The reform of the fiscal and taxation system is one of the core issues in China's on-going reforms. This research aims not at a comprehensive examination of the fiscal and taxation system, but a specific aspect which is the "fairness and efficiency of financial resource allocation", and evaluating the status quo of China's financial resource allocation.

Research on China's Urbanization on the Local Level

Urbanization is one of the most essential economic and social policies of the new administration. The emphasis of this policy is posed on medium and small cities as well as townships. As noticed, there are thousands of industrialized townships in China with their social governance lagging far behind their economic development.
Firstly, a big population is located in between the urban and rural level, which can't transform into citizens. Hundreds of millions of people have left their villages and moved to commercialized and industrialized towns. They are in industrial and commercial occupations and it is highly unlikely that they would go back to their villages. However, they are not entitled to local Hukou registration, which further leads to the deprivation of various rights, for example, the right of education. Secondly, public governance in such industrialized and commercialized towns, in general, is at a rudimentary level. The number of officially budgeted posts is asymmetric with the population governed, which leads to the employment of a large number of unofficially budgeted staff and unjustified power to govern. There is a lack of financial resources for the local government to carry out infrastructure construction or to provide public goods sufficiently. Thirdly, the urbanization results in imbalanced development of the structure of society. Since the industrialized and commercialized townships are unable to complete urbanization, urbanization in China has basically become mega-urbanization which is dominated by administrative power. Local governments centralize periphery resources with administrative power and construct cities artificially, which impedes townships and villages from evolving into cities by spontaneous order. Fourthly, industry upgrading can't be undertaken in those industrialized and commercialized townships and the capacity for future economic development is greatly limited. The industry upgrading is, in essence, the upgrading of people. Enterprises ought to draw and maintain technicians, researchers, and investors, to meet their needs for living standards, which cannot be satisfied by townships. Similarly, the lagging urbanization reversely sets back the cultivation and development of the service industry, especially the medium and high-end services.
Unirule Institute of Economics is going to carry out research on urbanization of China on the local level, aiming at improving public governance of the industrialized townships, optimizing the urbanization methodologies, and improving the "citizenization" of migrant workers, therefore further pushing social governance towards self-governance and democracy.

Public Governance Index of Provincial Capitals

At the beginning of the year 2013, Unirule conducted field survey, including more than 10 thousands of households in 30 local capital cities. According to the field survey, the Public Governance Index was derived. The main conclusions of the PGI report as below:
Three statements summarize the status quo of public governance in provincial capitals. Firstly, public services have generally just gotten a pass. Secondly, protection to civil rights is disturbing. Finally, governance methodologies need improvements. These statements point out the solution: the structure of the society needs to be altered from that with a government monopoly to a civil society with diverse governance subjects. The ranking of provincial capitals in the public governance assessment from the top to the bottom is as follows: Hangzhou, Nanjing, Urumqi, Tianjin, Chengdu, Shanghai, Beijing, Nanchang, Xi'an, Xining, Shijiazhuang, Wuhan, Guangzhou, Yinchuan, Hohhot, Chongqing, Shenyang, Changsha, Jinan, Kunming, Nanning, Haikou, Fuzhou, Guiyang, Harbin, Hefei, Changchun, Zhengzhou, Taiyuan and Lanzhou. Generally speaking, all provincial capitals are graded comparatively low in the three public governance assessments from 2008 to 2012. Even those that ranked the highest in performance have just barely passed the bar of 60 points. Few provincial capitals with poor public governance got over 50 points.
There is a certain amount of correlation between the changes of ranking and improvements in public governance in provincial capitals. In the short term, should the capital cities be willing to raise their rankings, they can achieve this by increasing transparency in government information and civil servants selection, encouraging local non-governmental organizations, or promoting wider participation in local affairs. There is but a weak correlation between public governance and the local GDP level. However, a strong correlation exists between the rankings and the equity of local fiscal transfer payment. That is to say, a region gets a higher ranking in public governance if subsidies to local social security, medical care, education and housing are distributed more to the poorest residents in that region. On the contrary, a region's ranking falls if such resources are distributed with prejudice to the groups with high incomes. This phenomenon shows that equity is of significance in the assessment of the government by the people.
When residents are not satisfied with medical care, elderly support system, water supply and electricity supply, the situation can be improved when they complain to the government. But when similar situations take place in public transportation, environment greening, heating systems, and garbage management, whether by collective actions or filing complaints to government agencies, residents can hardly be satisfied with what the government does.
According to the three public governance assessments carried out from 2008 to2012, we discovered that the Gini coefficient of residents in provincial capitals was decreasing and the income fluidity was improving. From 2010 to 2012, citizens' comments on protection of civil rights are deteriorating, especially in terms of property and personal security. The request for freedom of speech is also increasing. For the moment, citizens in provincial capitals have a low evaluation on the cleanness and honesty of local governments.

Research on Disclosure of Government Information

Room for reforms is getting narrower as the opening-up and reforms deepen. It also leads to a more stabilized vertical mobilization of the demographic structure with the conflicts in the distribution of interests exacerbating. A collaborative system centering the political and law system and involving close cooperation between the police, courts, petition offices, and the city guards (Chengguan) is developed to deal with social unrest. This system is operated by local governments and finalized as a system of maintaining stability (Weiwen). There have been Internet spats over the amount of Weiwen funds. It is unsustainable to maintain such a Weiwen system, and the disclosure of government information is the most significant approach for this end. The essence of public governance is to dissolute conflicts instead of hiding and neglecting them. And one way to achieve this is by sufficient communication. Public and transparent appraisement and supervision cannot be achieved without transparent government information, otherwise the result will be the exclusion of citizens from public governance.
Unirule Institute of Economics has been undertaking research on the disclosure of government information since 2011. This research is carried out not only from the perspective of the regulations for the disclosure of government information which evaluates whether governments of various levels are obeying the regulations and their performances, but also by examining information disclosure laws in developed countries while looking at the status quo in China. There are seven aspects where government information disclosure can be improved, namely, information disclosure of government officials, transparency of finance, transparency in the decision-making mechanism, transparency in administration, transparency in public services, transparency of enterprises owned by local governments, and transparency in civil rights protection.

Upcoming Events

The 2nd Unirule Saloon for Chinese Entrepreneurs in 2013

The 2nd Unirule Saloon for Chinese Entrepreneurs will be held in Beijing on December 28th in 2013. The theme of the saloon is “Capital and Anxiety of Entrepreneurs Identities”, for the purpose of responding the worrying problems of Chinese Entrepreneurs’ Identities. With the discussion of some theories and ideas, the saloon is to help the group of Chinese entrepreneurs establish their identities, become mentally mature and take social responsibility. (For more information)

Academic Seminar on Ronald Coase’s Thoughts

The Academic Seminar on Ronald Coase’s Thoughts was held jointly by Unirule Institute of Economics, Gengdan Institute of Beijing University of Technology, Center of Ronald Coase’s Studies of Zhangjiang University and South China Agricultural University College of Economics, at Gengdan Institute of Beijing University of Technology on December 29th, 2013. That day was also Professor Coase’s 103rd birthday. The seminar was in commemoration of the 103rd birthday of Professor Ronald Coase, with the purpose of discussing Professor Coase’s theories and thoughts, his contribution to the establishment and development of institutional economics and the implications of China’s reform.

Unirule Biweekly Symposiums

Unirule's Biweekly Symposiums are known in China and throughout the world for their long history of open and in-depth discussions and exchanges of ideas in economics and other social sciences. Over 380 sessions have been held and over 15,000 scholars, policy makers, and students, as well as countless readers on the web, have directly and indirectly, and participated in the Biweekly Symposium for close to 20 years.

Biweekly Symposiums begin at 2 p.m. every other Friday and are free and open to the public.

Schedule

Biweekly Symposium No. 488: 3rd January, 2014
Biweekly Symposium No. 489: 17th January, 2014

Previous Biweekly Symposiums

Biweekly Symposium No. 488: Re-think Hayek’s Theoretical Heritage

Time: October 25th , 2013
Topic:Re-think Hayek’s Theoretical Heritage
Lecturer:GAO Quanxi
Commentators:HAN Zhaohua, FENG Xingyuan, MO Zhihong, LIU Yejin, ZHU Junsheng

In this forum, with the analysis of Hayek’s theoretical heritage from a new angle, Professor GAO Quanxi pointed out that Hayek’s theory had played an important part in analyzing China’s reality, yet it still needed to be improved, based on the development of Chinese liberalism theory. Meanwhile, concerning the current situation, Professor GAO claimed that we should provide more sense of security to the society and open our minds.
Commentator MO Zhihong agreed with Professor Gao’s evaluation of traditional liberal thought, and he indicated that we should be beyond the general understanding of liberalism, and that environment change could lead to the change of relation between Hayek’s theory and China. So it would gradually become common for people to rethink Hayek’s theory. Professor LIU Yejin analyzed in two conditions that freedom would become necessary. He thought that Hayek’s theory had possessed a general significance, and had offered us some suggestion in China’s reform from different levels. He also pointed out that Hayek’s theory was worthy of being studied repeatedly and being developed further. Commentator ZHU Junsheng emphasized the importance of rethinking Hayek’s theory currently, and also analyzed the problems at the present time. He pointed out that Hayek’s theory advocated to restrict the government by law, and to develop one’s mind and courage to take responsibility. Commentator HAN Zhaohua briefly analyzed the three parts of the report. He thought that the understanding of liberalism in China should be improved, that Professor GAO had overestimated the importance of Hayek’s theory, and that we should rethink the understanding of liberalism since the 1980s. Professor FENG Xingyuan firstly approved of Hayek’s theory, and explained the reason why Hayek’s thought could not become the mainstream. He didn’t think that Hayek’s theory was against nationalism, yet he admitted that Hayek’s theory was spread widely in China and some parts of Hayek’s theory needed to be modified. He pointed out the researching method on Hayek’s theory and its great significance.

Biweekly Symposium No. 491: The Economic Nature of the Permanent Land Tenancy

Time:?December 13rd, 2013
Topic: The Economic Nature of the Permanent Land Tenancy
Lecturer:SHENG Hong
Commentators: ZHENG Zhenyuan, TAN Shuhao, GAO Wangling, YANG Xiaowei, ZHAO Nong, LIU Yejin

Professor SHENG Hong has introduced the economic nature of the permanent land tenancy and its contemporary significance. He believes that the permanent land tenancy is a peculiar economic institution. As a product of property division, the permanent land tenancy seems to be a sort of right of land ownership. The segmentation of permanent tenancy rights and land ownership can be considered as a division of labor in property rights among  several activities. Permanent land for rent with its stable rents will bring great changes to the property boundary. At the same time, he also explained that the permanent tenant farmers’ direct control of land assets would bring some influences to the property right, as well as the permanent tenancy efficiency implications. Permanent tenancy is an effective system. It not only guarantees the permanent contracts, but also helps the allocation of property resources among people. Based on the incentive for landlords, it can solve the protection for the land property rights. It can also narrow the scale of land property and reduce the financing cost of land transactions. Finally, he pointed out that permanent land tenancy can provide reference and solutions to the problem of leisure internal institution.
All the commentators admitted that the research theory has practical significance for the contemporary land system. ZHENG Zhenyuan believed that both the permanent land tenancy and the contracting right, separated from the ownership, are a kind of useful property system. They believed that the ancient permanent tenancy can still be applied to the present and give significant reference to the reform of the land system, like the family-contrast responsibility system. The permanent land tenancy can be used as a path or a choice to our future reform (ZHENG Zhenyuan, ZHAN Nong, LIU Yejin). GAO Wangling believed that tenant farmers will have the advantage of landlords when they have conflicts of property rights. Professor YAO Xiaowei pointed out both the division of permanent tenancy rights and its efficiency can be generally further studied. That means the more segmentation, the better the efficiency. Professor LIU Yejin claimed that property is a kind of adaptive device for refinement and it contributes to the overall social productivity. In reality, the “real collective position” of the collective land ownership should be recognized in the land reform.
At the same time, some commentators held that this study has ignored the relationship between the fully utilization of entrepreneurial spirit and the property right system (LIU Jinye). TAN Shuhao said this study must focus on the origin of permanent land tenancy, its existence and its historical development. Professor YANG Xiaowei has questioned whether land cost is constant, and whether it will be influenced by natural disasters, population change, wars and other factors.

Executive Editor: LIU Qian
Editor: LIAO Fenfang
Revisor: Hannah Luftensteiner