Yao Yang: The Past, Present, and Future of Chinese Economics
Dean of the National School of Development at Peking University looks at how Chinese economics evolved from the planned economy era.
Yao Yang is Liberal Arts Chair Professor; Dean, National School of Development; Executive Director, Institute of South-South Cooperation and Development; Director, China Center for Economic Research at Peking University.
Cowihg worked 25 years as a U.S. State Department Foreign Service Officer including 10 years at the U.S., Embassy in Beijing and U.S. Consulate General in Chengdu and four years as a China Analyst in the Bureau of Intelligence and Research of the State Department. Before State, he translated Japanese and Chinese scientific and technical books and articles into English for freelance for six years. Before that, he taught English at Tunghai University in Taiwan for three years.
I have also separately consulted with Yao, who agrees to this publication as well.
The Chapter is made of five parts and we will share them one by one.
I. The Development of Chinese Economics
II. Contributions of Chinese Economists to the Development of Economics
III. Chinese Economics Today
IV. Which of China’s Problems are Worth Studying by Economists Today?
V. Can a Chinese School of Economics be Formed?
Below is Part One: The Development of Chinese Economics which is also one side of the history of the development of China’s market economy.
The Past, Present, and Future of Chinese Economics
I. The Development of Chinese Economics
In the 1980s, before the reform and opening up, we engaged in a planned economy, so the economics research at that time mainly centered on the planned economy. However, our planned economy was not as thorough as that of the Soviet Union, and thus the study of planned economics did not achieve what the Soviet Union had achieved. The Soviets’ research on planned economy produced people like Leonid Kantorovich, who was able to win the Nobel Prize in Economics. At that time, the mainstream of Chinese economics was the study of Marxist political economy. Marxist political economy mainly analyzes capitalism, not socialism. Marx actually said very little about the future of socialism and communism and he had a kind of intellectual caution – he didn’t want to get into predicting the future as it might take too much. Of course, Karl Marx had his own set of scientific socialist theories, but this was also an extrapolation made based on the analysis of capitalism.
Karl Marx said very little about how to go about socialism or how to go about communism. Therefore, in the era of planned economy, what we studied was practically all new: on the one hand, we did some research work for the formulation of economic plans, and on the other hand, we had to build up a Chinese socialist political economy. The masterpiece was Jiang Xuemo’s Political Economy, 蒋学模《政治经济学》which was used as the textbook for our studies at that time. [See Google Translate machine translation: Jiang Xuemo (1918-2008): a Marxist economic theorist who constantly repented 原文： 蒋学模（1918-2008）：不断改悔的马克思主义经济理论工作者] There were 14 editions of this textbook, with a total of nearly 20 million copies printed, which is a record in the field of textbooks.
With the introduction of the market economy by the reform and opening up, there is a need for a field of economics that suits the market economy. Since the 1980s, we have been introducing such economics. I heard from Mr. Zhou Qiren, who was a student at Renmin University of China at the time, that he came to Peking University specifically to listen to lectures given by Chen Daisun, Hu Daiguang, Zhang Peigang, and Li Yining 陈岱孙、胡代光、张培刚、厉以宁 , all of whom were old men. They ran a workshop on Western economics in the office building auditorium lectures, this auditorium can seat 800 people, at each lecture it was crowded. Chen Daisun and Zhang Peigang, both of whom had returned from studying abroad, reintroduced Western economics; Hu Daiguang and Li Yining had been studying Western economics for a long time, but they were in the minority before 1978. These four gentlemen started to teach Western economics and made Western economics popular in China.
Throughout the 1980s, we only learned the methods of analyzing problems in Western economics, but we were far from applying these methods to do rigorous research ourselves. In other words, we still mainly used the analytical thinking of Western economics to study China’s problems.
In this regard, we must mention the Development Group of that year. The Development Group was based in the guest house of Peking University. Two people played an important role in the establishment of the Development Group: Deng Liqun and Du Runsheng. Deng Liqun’s son, Deng Yingtao, was a student of economics at Peking University and participated in the spontaneous discussions among young people at that time. He went back and told his father, Deng Liqun, about these discussions. Deng Liqun thought that these young people were good prospects, and that they could not be allowed to go astray, and that they had to be organized.
The work then fell to the Rural Development Research Center of the State Council （a double-hatted organization, within the Communist Party named the Rural Policy Research Office), the famous Courtyard #9 [ 九号院的“建立”与演进]. The director was Mr. Du Runsheng, who also read what that group of young people wrote from another source. Old Mr. Du brought these young people together and became the spiritual leader of these young people. Some of the big names we can remember today, except for Deng Yingtao who died still young, are Mr. Zhou Qiren, Mr. Song Guoqing, as well as Wang Qishan, Chen Xiwen, Du Ying, and Wang Xiaoqiang, all of whom participated in the Development Group in the early days. The members of the Development Group were mainly young students from Peking University and Renmin University of China. Later, the Institute of Institutional Reform (IOR) and the Institute of Rural Development (IRD) were established based on the Development Group. The Institute of Institutional Reform studies institutional reform issues and the Institute of Development studies rural issues.
The roots of the China Center for Economic Research (CCER) are the Institute of Development and the Institute of Institutional Reform. Mr. Justin Yifu Lin became the deputy director of the Institute after he returned from the United States; Deng Yingtao, who passed away in his prime and Mr. Zhou Qiren were leaders of the Institute; Mr. Huang Yiping and Mr. Shen Minggao also worked in the Institute; and I wrote my master’s thesis in the Institute. I wrote my master’s thesis at the Institute. Wang Qishan was the first director of the Institute, and then Chen Xiwen succeeded Wang Qishan, and both of them were very good administrators. There was also Du Ying, who later became the deputy director of the Institute. When our NDI moved to Chengze Park in 2021, both Chen Xiwen and Du Ying attended the opening ceremony. Over at the Institute of Physical Reform, there were two teachers, Zhang Weiying and Song Guoqing. Both institutes have since been absorbed by other organizations, and here at CCER, a spark has been preserved. This is an important historical source for CCER to be able to take root in China and do problem-oriented research.
I recall the 1980s as a vibrant era. One significant reason was that many things were new at that time. Economics was also a completely new field, and the transition to a market economy required new analytical methods. The dominant forces in the economic community at that time were mainly the State Reform and Development Commission, the Development Research Center, the Economic Research Institute of the Chinese Academy of Social Sciences, and the Beijing Youth Economic Research Association 北京市青年经济研究会 initiated by Chen Yuan. The prominent figures we think of today were scholars back then.
So, what were the characteristics of economic research in the 1980s? In simple terms, the first characteristic was being grounded in reality. The prevailing trend at that time was to conduct in-depth investigations. Whenever there was a question, researchers would go out to investigate and come back to write a report based on their findings. Because I focused on development economics, especially rural issues, I read articles by scholars such as Professor Zhou Qiren more often. Reading their investigation reports at that time was truly inspiring. They systematically analyzed every detail and could grasp what was really happening in China.
The second characteristic was direct involvement in reform. The research findings at that time could directly influence policy. As mentioned earlier, the dual-track pricing reform, an outcome of the Moganshan Conference, was directly adopted by a central government document. You can read Professor Zhou Qiren’s memoirs for a more detailed understanding of the situation at that time.
Although in the planned economy era, some economists were involved in policy formulation, it was limited to high-level experts like Sun Yefang and Ma Hong. However, by the 1980s, regardless of seniority, young people began to participate. This was undoubtedly related to the shift towards a market economy, requiring economics that aligned with it.
Among the older generation of economists, the most successful in transitioning was Professor Wu Jinglian. Born in 1930, he was nearly 50 years old during the reform and opening-up period. Nevertheless, he went abroad as a visiting scholar, learned English despite initial difficulties, and upon returning, transformed himself into a crucial figure in our country’s market-oriented economic reform. He earned the nickname “Wu Market” because of his advocacy for market-oriented reforms.
Professor Li Yining‘s transition was also highly successful. Unable to teach initially, he became a librarian and took advantage of the opportunity to read a lot of foreign literature, thus teaching himself a great amount of Western economic knowledge. Both of these senior scholars are highly respected intellectuals. One is called “Wu Market,” and the other is called “Li Stock.” Despite differing reform approaches, it seems like they were always debating. Their debates, though intense, were at the highest level. I believe having these two individuals among the older generation was fortunate for us, the young scholars and students of that time.
The third characteristic is a particularly close connection with young students. The State Reform and Development Commission organized seminars for graduate students from Peking University, Renmin University of China, and Nankai University. Students could enroll on their own, and once registered, they could participate. I enrolled at that time, and it seemed like there was no review process; my name was simply added to the list, and then I could attend the activities. The seminar included irregular lectures, mainly given by researchers from the Institute of Economic System and Management, National Development and Reform Commission (NDRC) 国家发展和改革委员会经济体制与管理研究所 and the Development Research Center of the State Council.
In addition to organizing lectures, the State Reform and Development Commission encouraged students to conduct research. In the summer of 1988, they arranged for us to conduct research nationwide. The director of the office at the State Reform and Development Commission took us there, but after briefing us, she left, so we followed the local staff of the State Reform and Development Commission to conduct research and had to write reports afterward. This was a very enriching experience.
To summarize, the 1980s were an exciting era. During that time, Chinese economics primarily relied on on-site investigations to produce results and actively participated in reform discussions. Many reforms involved economists directly providing input, ultimately shaping policies.
In the 1990s, there was a widespread trend of individuals venturing into business, and economics experienced a period of relative silence. In 1994, CCER (China Center for Economic Research) was officially established. I have always emphasized that there are two main threads in the roots of our academy (China Academy of Social Sciences) and CCER. One thread stems from the State Reform and Development Commission and the Development Research Center of the 1980s, and the other from the Chinese Economists Society in the United States. Among the founders of CCER, Professor Lin Yifu and Professor Zhang Weiyi, one from the Development Research Center and the other from the State Reform and Development Commission, and Professors Hai Wen and Yi Gang both served as presidents of the Chinese Economists Society in the United States (中国留美经济学会（The Chinese Economists Society ，简称CES) . The combination of these two threads determined the genealogy of CCER – rigorous academic research on China’s practical issues.
In the 1990s, CCER set benchmarks for economic education in China, especially in graduate education. This included several key aspects.
Firstly, we introduced graduate textbooks and teaching methods from modern economics, which was crucial in significantly elevating the standard of our graduate education. Now, most major university economics departments’ doctoral programs focus on teaching the “Three Highs,” setting a benchmark that we established.
Secondly, in undergraduate education, we pioneered the dual-degree program at Peking University. This initiative had a significant impact, and now many other schools have similar programs. Starting from 2016, our academy also began its undergraduate program, selecting students from the first year at Peking University. It is a liberal arts education project based on economics, aiming to explore a new path in the field of economic education.
Finally, we developed textbooks, and Professor Hai Wen [see via Internet Archive article 从北大荒到北大园 一个记者眼中真实的海闻校长] played a crucial role in this regard. He authored a series of intermediate-level economics textbooks for undergraduates, which had a substantial influence – I still have a copy today. Additionally, he collaborated with Professor Liang Jing from the China Renmin University Press to translate foreign textbooks. I was involved in the translation of several books. Translation is a demanding task, but it has had a very big impact.
Thus in the field of economics, CCER (China Center for Economic Research) gained significant prominence. Later, Tsinghua University also established a China Economic Research Center, and Fudan University established one as well (though later Professor Zhang Jun changed it to the China Socialist Market Economy Research Center). Additionally, Professor Huang Shao’an at Shandong University, previously known as the China Economic Research Center, renamed it the School of Economics. All these instances indicate that the CCER brand has been widely recognized.
Since the start of the 21st century, there have been some changes in Chinese economics, primarily with an increasing number of scholars returning from abroad, leading to a rise in institutions founded by returnees. If in the 1990s, our focus was mainly on importing knowledge, by the 21st century, it shifted to digesting and absorbing that knowledge, and then conducting research. We have now assimilated the methods from others. In this process, I believe institutions founded by returnees have played a significant role. CCER has also continued its efforts.
One initiative is the publication of the “Economics (Quarterly)”《经济学（季刊）》 journal. As I mentioned earlier, Professor Lin asked me, a young person who had just graduated with a Ph.D. five years ago, to be the editor-in-chief, and I naturally put a lot of effort into it. Leveraging my connections and CCER’s influence, I convinced renowned scholars to contribute articles; Yang Xiaokai, Tian Guoqiang, and others have written for the journal. We didn’t pay a cent for contributions, yet these scholars supported us, which was truly touching. “Economics (Quarterly)” adopted an anonymous peer-review system, a relatively short review period, and quickly gained favor in the academic community, especially among young scholars. At the time, the journal didn’t even have an issue number, making it quite challenging to receive so many submissions (with Professor Lin’s help, “Economics (Quarterly)” finally obtained an International Standard Serial Number nearly ten years after its founding). “Economics (Quarterly)” has become a significant academic journal in the field of economics, second only to “Economic Research,” contributing to the advancement of Chinese economics.
Another highly impactful initiative is the “Chinese Female Economists Research and Training Program,” a collaboration between Professor Zhao Yaohui and Professor Dong Xiaoyuan from the University of Winnipeg in Canada. I consider this one of the best-funded projects by the Ford Foundation in China. The program lasted for over ten years and nurtured a large number of female economists.
Professor Hai Wen also accomplished a major feat by founding the China Economics Annual Conference in 2001. This was an entirely privately initiated conference with minimal organizational structure, only having a conference secretariat sustained by conference fees. Nevertheless, it played a significant role in promoting the dissemination of modern economics, especially in the early stages by uniting economics departments from various universities and fostering economic research and teaching. Professor Hai Wen served as the chairman of the conference for 20 years, and in 2021, I took over. If, under Professor Hai Wen’s leadership, the conference promoted the spread of economics in China, my upcoming task is to enhance the Chinese economics community’s ability to set research agendas and contribute to the development of Chinese economics.