Highlights

Monopolistic State-Owned Enterprises and Economic stagnation

SHENG Hong

For the last two years, we've been undertaking research on state-owned enterprises and administrative monopolies. Not only do we conclude that the monopolies posed by SOEs do not promote efficiency or equality, but also there are other side effects. For example, we estimated the welfare losses resulted from administrative monopolies which consists of three parts: "social welfare loss I" as the production losses due to monopolies; "social welfare loss II" as the losses due to the high monopolistic prices; and "social welfare loss III" as losses due to the low monopolistic prices. All these three social welfare losses are shown as follows.

[Note: The deep grey part in the figure is the net loss of social welfare caused by administrative monopolies, we call it "social welfare loss I"; the light grey part in the figure is distribution distortion caused by sellers' monopolistic (regulating) prices, we call it "social welfare loss II"; the grey part in the figure is distribution distortion caused by buyers' monopolistic (regulating) prices (lower or zero resources prices), we call it "social welfare loss Ⅲ".]

The so-called "monopoly high price" means the higher price at which monopolistic enterprises sell their products in the market. For instance, petroleum products sold by PetroChina and Sinopec are of the same quality as those in any other country, however they are sold at a pre-tax price 31% higher than that in other countries. The so-called "monopoly low price" means by exclusive prerogatives, monopolistic enterprises gain access to scarce factors for free or at very low prices, such as land, capital, or the mining rights. These monopolistic enterprises purchase land for free and mobilize capital with very low interest. For example, monopolistic enterprises paid 26 RMB per ton as one tenth of the crude oil price for the mining rights with the truth being that the price for a barrel of crude oil was 80 USD, which makes the price for obtaining the mining rights 300 RMB per ton.

As we collected and processed data of 2010, we estimated that the social welfare losses due to administrative monopolies accounted for 1,910.4 billion RMB just in five monopolistic industries, namely, the banking industry, oil and petroleum, telecommunications, railway and table salt. What does this figure mean in macroeconomics? As we know in the "social welfare loss I", this part of the loss can be transformed into products if there are no administrative monopolies; in the "social welfare loss II", this part of the loss in the form of currency can be used to purchase other products as competition exists in the market; in the "social welfare loss Ⅲ", this part of the loss can be transformed into products if monopolistic enterprises do not obtain factors for free or at a monopolistic low price. To sum it up, if there are no administrative monopolies, the economy could have gained 1,910.4 billion RMB of social products. Divide this figure by the GDP of 2010, which is 39,798.3 billion RMB, we get 4.8%, which means that the existence of administrative monopolies has caused a decrease of 4.8% in the economic growth rate.

In one of my articles published in 2006 entitled "Mega-Government Effect: Will China have Decades More of High-Speed Economic Growth?", I proposed that China would still have another two or three decades of rapid economic growth. One of the most important reasons is that the urbanization process has not been completed. The urbanization rate was only 44.3% in 2006, and 51.3% in 2011. And the goal of urbanization is in general above 80%. If the urbanization process grows at 1.2% per year, it will still take another two to three decades.

Urbanization means enormous demands. Firstly, there is huge demand for investment in urban infrastructure and municipal utility. According to data from 2003, this investment accounted for 22,305 RMB per capita. With 20 million growth in population annually for the last ten years, this investment alone made 400 billion RMB in 2003, and now would be well over 1 trillion per year. People would need housing as they move to the cities, so do they need electrical appliances. Therefore, for each person who moves to the city, another 100,000 RMB or more investment and "utility demands" will be created.

Besides investment, for someone who moves to the city, he will also bring in perpetual needs for consumption. The first item will be "urban property expenses". Once someone moves to the city, he will be charged fees for electricity, water supply, natural gas, heating, phone services, wideband, waste processing, and water recycling. He will also have to pay road maintenance fees, mobile insurances, parking fees, and property management fees. I wrote in "Urbanization Age" that it was estimated that for a middle-class family in Beijing, the "urban property expenses" would be more than 20,000 RMB a year. According to the National Bureau of Statistics, the sum urban residents pay for "transportation and communication" and "water, electricity, energy, and others" totaled 2,991 RMB per person in 2011. If we multiply this figure by 20 million, it makes 60 billion RMB. Besides, for farmers and villagers who move into cities, their living standards will rise, so will their life styles. As purchasing becomes easier, demands for consumption will increase as well, which will all constitute the driving force for rapid economic growth.

In this way, the reason why the economy slowed down from 10.4% in 2010 to 7.6% in the first half of this year is not the loss for demand which drove the economic growth, but the existence of monopolistic state-owned enterprises. Monopolistic SOEs possess a big proportion of the resources, but provide non-equivalent products and services. The problem of SOEs and administrative monopolies are not micro enterprise problems, or medium industrial problems, but a very influential macroeconomic problem.

In fact, monopolistic SOEs not only slow down the economy, but also bring inflation risks. As demonstrated that the latter two kinds of social welfare losses accumulate to some 1,616.9 billion RMB (2010), in essence, this is a big loss in currency as there are no products or services. As this loss could have been transformed into consumption demands in other products, the prices of these products will be raised.

For example, if there are 10 people in a society, each produces 10 products and sells them for 10 RMB. The total income is 100 RMB. Now one of the 10 people obtains monopolistic position in a scarce product and he raises the price to 20 RMB without increasing his output. Now he gets 200 RMB. But for others who purchase his products, they'll have to pay 10 RMB more, which decreases the purchase for other products by 10 RMB. At this moment, if other products are competitive products with floating prices, to achieve an equilibrium, the price of these products will have to decrease by 11.1% offsetting by 100% with monopolistic products. However, this is not the end of the story. The one with monopolistic power can use his gain of 100 RMB to purchase the products at a lower price, making their price raise to the previous level. Considering that the price of monopolistic products increase by 100%, an inflation rate of 10% therefore takes place. And the rooting cause if that currency flow is sped up by the gains of monopolies.

The monopolistic low prices can be seen quite regularly, therefore, there is no need to illustrate. If we compare the losses of 1,616.9 billion RMB due to monopolistic high prices and monopolistic low prices with the average M2 money supply of 6,749.55 million RMB (suppose the velocity of money is 1), the inflation will be 2.4%, equals to 78.8% of increase of retail price index. Therefore, monopolistic SOEs also bring inflation risks, putting macroeconomic policy in a dilemma: there needs to be growth stimuli, but inflation should also be avoided. This is exactly the problem faced by China.

To take one step forward, what's worth noting is that monopolistic SOEs do not create inflation in a particular year, but by "stagflation" every year as there is this compound interest effect. That is to say, the very existence of SOEs will lead to continuous decrease of the economy. This decrease does not follow an exponential pattern, but speeds up after a certain threshold. Besides, as monopolistic SOEs possess political resources, they will pursue even more their interest in a time of economic stagnation by applying administrative monopolies. They can raise the monopolistic price and set entry barriers with more vigor to avoid competition in certain areas, which will lead to worse economic situations and tension between social groups, even social unrests.

In conclusion, it can not be left alone but it is very urgent to push reforms in SOEs and eliminate monopolies. This does not only involve several enterprises or a couple of industries, but relates to the bigger picture, even to the economic prospect of China. To look at it from another perspective, pushing reforms in SOEs and monopolistic industries will not only bring about benefits of marketization, but will also promote healthy and long-term macroeconomic growth.
(First published by China-Review)

Professor SHENG Hong
Director of Unirule Institute of Economics

Current Events

Unirule Institute of Economics Joined Hands with FT Chinese to Hold “FT Chinese Annual Forum 2013”

On November 1st, Unirule Institute of Economics supported FT Chinese in holding the "FT Chinese Annual Forum 2013" at Grand Millennium Hotel, Beijing. This forum is entitled "Present and Prospects: Upgrading and Rebalancing China's Economy" and was joined by guest speakers from the academia and various businesses. Topics on the status quo, development, and prospects of China's economy were heatedly discussed and debated. On the forum, Professor MAO Yushi, Honorary President of Unirule, joined in the Keynote Dialogue with Dr. ZHANG Lifen, Editor in Chief of FT Chinese. Professor MAO Yushi shared his opinions on China's social and economic development, moral and ethical challenges faced by the society, and the possible paths of economic and political reforms. Professor SHENG Hong, Director of Unirule, joined the Panel Discussion on "Likonomics and Rebalancing the Chinese Economy" and proposed on the direction and contents of the on-going reforms from an academic perspective. Professor YAO Zhongqiu (Qiufeng) hosted the Panel Discussion on "the Role of China's Private Entrepreneurs" and shared his understanding of the significance of entrepreneurs in China's economic development.

Seminar "Unrest in Egypt: Tough Road to Democracy" Held in Beijing

On October 18th, the seminar entitled "Unrest in Egypt: Tough Road to Democracy" was held by China-Review/Unirule Institute of Economics in Beijing.
Professor WANG Jianxun, Professor WANG Yan, Mr. WANG Congsheng, Mr. TAO Duanfang, Dr. YANG Junfeng, and Mr. MA Junjie along with some other researchers from areas of politics, law, and international relations as well as the media joined the seminar.
The attendees analyzed and discussed the unstable status quo of Egypt's democratization process and the causes and experience from the political transformation.

Professor ZHAO Nong Receives the Student Delegation from Frankfurt School of Finance and Management

On the afternoon of October 31st, Professor ZHAO Nong from Unirule Institute of Economics received the student delegation from Frankfurt School of Finance and Management led by Ms. Kathrin Valder.
The delegation was shown around by Professor ZHAO Nong and Project Researcher Mr. ZHANG Lin to learn about the Unirule history and its current development. At the meeting room, Professor ZHAO Nong addressed the delegation on China's economic progress and the prospect of reforms. He looked back to the phases and accomplishments of China's social and economic development and illustrated the on-going reforms with a focus on the progress and the prospect. After the speech, young master students of the delegation asked questions concerning the paths, repercussions, and options of China's economic development and the social reforms. Professor ZHAO Nong answered with insights and humor which won agreeing smiles and applause. After the meeting, Ms. Kathrin Valder, on behalf of the delegation and Frankfurt School of Finance and Management, expressed gratitude for the speech and the hospitality. She also hoped young scholars and researchers from Unirule would visit and carry out research at Frankfurt School of Finance and Management in the future. This meeting was interpreted by Mr. MA Junjie, assistant to the director of International Cooperation department of Unirule.

Visiting Scholar Mr. Julian F. Mueller at Unirule Institute of Economics Speaks on Order Ethics

November 4th, visiting scholar Mr. Julian F. Mueller gave a speech entitled "Order Ethics: Bridging Economics & Ethics" at the Unirule convention. Mr. Mueller presented his research on traditional ethics, order ethics, and the relation between ethics and economics by referring to examples taken from real life, such as corruption and pollutions issues, from the perspective of ethics and economics. After the speech, Unirule Professor SHENG Hong, Professor ZHAO Nong, and Professor FENG Xingyuan commented respectively.

“Unirule Saloon for Young Scholars from the East and the West” Was Held

 On “The Chinese Model of Development and Its Ethical and Economic Implications”

“Unirule Saloon for Young Scholars from the East and the West” was held at the office of Unirule Institute of Economics on the evening of November 12th, from 18:00-20:00. This saloon is to promote communication between Chinese and western young scholars, and to provide a platform for equal and open dialogues.
This saloon was proud to be joined by famous economist Professor MAO Yushi, and visiting scholar Mr. Julian F. Mueller from Munich Technology University. They both gave a keynote speech on “The Chinese Model of Development and Its Ethical and Economic Implications”. Professor MAO argued that the so-called Chinese Model of development is underpinned by a strong government which is able to allocate mass resources to achieve its goals, such as the construction of infrastructures. He also pointed out that one of the reasons for its success was market economy. Mr. Mueller argued that there is ambiguity in the definition and a lack of consistency in the practice of the Chinese Model of development. In the discussion, Mr. LI Renqing from Chinese Academy of Social Sciences proposed the meaning for this Chinese model in political and academic discourses, and he thought it was limited due to geographical, cultural, and historical reasons. Ms. Luftensteiner from the EU Delegation to China raised the issue of the experience of the Chinese model of development and implications for developing countries. She agreed to Professor MAO’s opinion that “other developing countries should learn from the experience of the Chinese model of development besides the market economy.” Project researcher Mr. LI Shuran from Unirule also shared his understanding of the Chinese model of development in terms of organizational cost and transaction cost. This saloon was hosted gracefully by Mr. ZHANG Lin from Unirule Institute of Economics.
“Unirule Saloon for Young Scholars from the East and the West” is an open and free platform for academic discussion; it encompasses a wide range of social, economic, political and cultural topics; held once a month, the working language of the saloon is English. We believe that discussion will bring about the light of thoughts, and we hope in free discussion, young scholars from both China and the west will harvest inspiration, thoughts, and wisdom. We look forward to having young scholars from home and abroad join us. Please check our website for the upcoming events.
(Provided by International Cooperation Department)

News

Professor SHENG Hong Interviewed by Ifeng Finance.com

Professor SHENG Hong was interviewed by Ifeng Finance.com and talked on the nation-raised SOEs. (For more information)

Professor YAO Zhongqiu (Qiufeng) and Professor FENG Xingyuan Attended EU-China Urbanization Partnership-Guangzhou Forum

On November 17th, Professor YAO Zhongqiu (Qiufeng), President of Unirule, and Professor FENG Xingyuan, Deputy Director of Unirule, were invited to the EU-China Urbanization Partnership-Guangzhou Forum. This forum was entitled "China-Europe Dialogue and the Construction of Sustainable Cities", and was organized by China-Europa Forum, China International Urbanization Development Strategy Research Committee, and JunZeJun Law Offices. This forum aims to engage Chinese and European officials and experts in dialogue on various aspects of the transition to a sustainable city, to create more opportunities for cooperation as the EU-China Partnership commences.
Professor YAO Zhongqiu (Qiufeng) and Professor FENG Xingyuan were invited to join Workshop 4, "Evolution of the Governance Model, Training and Communication", giving presentations in the afternoon session. Professor YAO Zhongqiu (Qiufeng) started with the Confucian traditions and illustrated his understanding on the traditional Chinese governance model. He pointed out the pragmatic implications of the traditional autonomous governance model and traditional culture on the evolution of modern city planning and governance. He proposed that the contribution to governance by Confucianism was the concept of "self-governing". He also took questions from the guests and participants. Professor FENG Xingyuan proposed the ideal standards of Chinese city planning by comparing contemporary experience in China and the benchmarks in the developed countries from an institutional perspective. He pointed out that the ideal city planning should be a collaborative planning combined with local democracy which was impossible to separate from individual freedom. Professor FENG also attended the welcome banquet and gave a speech on behalf of Unirule. He said that it was very helpful for China to promote urbanization and city planning based on property rights protection by drawing lessons from the EU. He ended his speech by quoting the late Nobel Prize winner, Professor Ronald Coase, "The struggle of China… is the struggle of the world."

Current Researches/ Consulting

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

Promotion: "Unirule 20th Anniversary Series and Collector Books" Signed for You

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: 6th December, 2013
Biweekly Symposium No. 489: 20th December, 2013

Previous Biweekly Symposiums

Biweekly Symposium No. 483: Institutional Entrepreneurs, Institutional Capital, and the Evolvement of Institutions
Time: August 16th, 2013
Topic: Institutional Entrepreneurs, Institutional Capital, and the Evolvement of Institutions
Lecturer: ZHOU Yangmin
Commentators: ZHU Junsheng, ZHOU Kecheng, LIU Feng

In this session, the speaker Professor ZHOU Yangmin stated that entrepreneurs should take caution in speaking out and achieving the corporate social responsibilities by promoting social advancement and pushing forward institutional reforms. Professor ZHOU also illustrated the definition and institutional managing strategies of institutional capitals, and institutional entrepreneurs, and proposed the micro-mechanism of the evolvement of institutions.
Commentator Professor ZHU Junsheng thought we should consider the political environment of entrepreneurs before criticizing entrepreneurs and institutional management, and emphasis should be given to the political institutions. He also suggested entrepreneurs should take efforts in self-improvement, which is also a pragmatic way to improve the institutions.
Commentator Professor ZHOU Kecheng thought there was cost calculation in the behaviors of corporates and individuals. He suggested that contributions could be made to the institutional reforms even without disclosing the market performance information by entrepreneurs. And he claimed that entrepreneurs could participate in the political agenda in many ways including acting silently.
Commentator Professor LIU Feng thought we should not be too picky with entrepreneurs' social responsibilities as people were used to judge entrepreneurs in an irrational way. He suggested that the foundation of justice and politics should be built upon rationality.
Commentator Professor SHENG Hong agreed to Douglass North's classification of institutions. He proposed that this classification should be referred to in the analysis of institutional entrepreneurs. This classification also illustrated people's attitude towards institutional innovations. He claimed that the cynicism expressed in the public discourse was a method to protect and uphold the principles of constitutionalism and institutional innovations.

Biweekly Symposium No. 486: The Three Years of Great Chinese Famine 1958-1962
Time: September 27th, 2013
Topic: The Three Years of Great Chinese Famine 1958-1962
Lecturer: YANG Jisheng
Commentators: SHI Xiuying, WANG Yuesheng, CHEN Ziming
In this session, Professor YANG Jisheng started with several different sets of statistics on the people who died during the Great Chinese Famine, commenting on the statistical resources and introducing his own method of calculation. He then illustrated some unusual phenomena during the famine, criticized and clarified some rumors and false accounts of the famine. He concluded that the Great Leap Forward was the direct cause of the Great Chinese Famine, putting millions of people to death by excessive social control from the government.
Commentator Mr. WANG Yuesheng believed it was very meaningful to clarify the real death toll. He proposed a method for accounting the death toll by underestimate the domestic flow of population when measuring the whole population of a country, therefore, avoiding non-disclosure and false statistics. He thought the institutional causes of the Great Chinese Famine were excessive concentration of social resources, scandalous wastes of food in the community canteens, and the paralyzed social relieve system. Professor CHEN Ziming thought there was little doubt about the fact that millions of people died during the famine. He claimed that political persecution and physical humiliation led to death and hunger. Professor SHI Xiuyin proposed to improve the categorization of those who died of unnatural reasons and their social identities. He thought we should reconsider three factors which directly led to the Great Chinese Famine, namely, subjectivism, bureaucracy, and sectarianism. Professor ZHANG Shuguang stated that the analyses stood plausible and proposed that another two causes of the death toll during the famine were excessive spending and wasting, and nutritional deficiency. Professor ZHANG Shuguang claimed that we need to respect the truth of history, and he appraised Mr. YANG for the example he set for the academia.

Executive Editor: LIU Qian
Editor: MA Junjie
Revisor: Hannah Luftensteiner