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Wang Hui, part of China's "new left" movement, is a professor of humanities at Tsinghua University and the editor of the journal Du Shu. He spoke with Global Viewpoint contributing editor Jehangir Pocha in Beijing about the new left as well as about the growing gap between rich and poor in China, one of the main topics this week at the Chinese National People's Congress annual session.

Q: In the Chinese context, what is the new left?

A: Today China is caught between the two extremes of misguided socialism and crony capitalism, and suffering from the worst of both systems. We have to find an alternate way. This is the great mission of our generation.

I am generally in favor of orienting the country toward market reforms, but China's development must be more equal, more balanced. We must not give total priority to GDP growth to the exclusion of workers' rights and the environment.

The common objective of China's new left is to create an understanding of the full implications of China's current policies. I think if people see what is really happening in China, they might be less excited about reforms.

China's overly export-oriented economic policy, for example, is causing quite a few serious problems, like unbalanced regional development and income gaps. China's exports are a much larger proportion of its GDP than in the U.S. or Japan.

That's actually a very funny situation. Normally, a large country has the benefit of a large domestic market. But in China that is not the case, which means our huge domestic market is underdeveloped. Our total reliance on export markets means our local people are too poor to buy products.

So it makes sense that the Chinese domestic incomes need to be raised. One practical step is to completely eliminate the Export Tax Credit, already reduced under U.S. pressure, which gives Chinese exporters a tax break and skews production away from the domestic market.

Q: Jiang Zemin, China's former president, oriented the country along the lines of the U.S. model. Is that changing?

A: Yes, once China only looked to the U.S. Now, if you notice, Hu Jintao's government is looking much more seriously at the whole world — not just to the U.S. but to Europe, Latin America, India and elsewhere.

The current leadership, Hu Jintao and Wen Jiabao,are much more concerned about social equality and the environment. Basically we're seeing a reorientation of the policies of the last government.

Q: Are they also rejecting Jiang Zemin's Three Represents theory, which sought to "empower the productive forces" of Chinese society — entrepreneurs — and came to be seen as a kind of Reaganeseque trickle-down economics?

A: The Three Represents has been used by too many people to say that China should have GDP growth at any cost — that it's OK even if peasant migrant workers who build a great building will never get their salary.

But Wen Jiabao has personally intervened at the national level to try and get workers their payments,and a large amount of their salaries have been paid due to this intervention. At one level it's quite laughable — that the premier of the country had to intervene to get workers their salaries. But on the other hand,it's a symbol of the concerns of the current government. For example, these things did not happen in the previous government. Jiang Zemin didn't do it.

Q: What would you say is the most dominant economic thinking in China today?

A: In general, there is a misunderstanding among average Chinese people about economics. Partly, it's cultural, partly it's social. Today, the most popular and influential economist in China is a professor from the University of Hong Kong, Steven Cheung.

His famous example is about a group of boat rowers who take people across a river. They all own the boat, but they hire people to whip them — because they fear that some of them might try not to row, to be a free rider. But if they all free ride,there will be no business, so they agree to hire someone to watch them and whip them for group benefit.

So Cheung says workers need that one person to watch them or they will not work and free ride off the work of others. According to him,the crucial thing is to create a capitalist who will watch the workers and care for the business.

Q: How do you counter that?

A: I know this is the popular economic theory — that private ownership is the best incentive. Well, capitalists can also free ride. The reality is that owners are always looting their own businesses. Look at Enron. This is (Nobel-prize-winning economist George) Akerlof's theory.

It's a myth that capitalists will not steal from their own enterprise, because they don't own their whole enterprise. The idea is very simple. The owner of a firm is only interested in the net assets, the part that can be redistributed to owners. But the firm has total assets over and beyond net assets. These are debt to banks and also implicit debt to workers — like pensions and benefits. Under certain conditions an owner can loot both the implicit and explicit debt of the firm.

Q: Who are the global economists or thinkers guiding your own thinking?

A: John Stuart Mill. He saw himself as a liberal socialist who understood the value of workers getting a share of the profits,too.Also Joseph Stiglitz and Amartya Sen. And, of course, Akerlof.

Q: Is the European idea of social democracy a model for China's new left?

A: I like the German system quite a bit. But there is one big difference. The European model of social democracy is based on high tax as the primary tool of redistribution and social welfare. In other words, the European system's concern is already with redistribution, and not about trying to avoid the inequities of an unfair society in the first place. I think China still has the hope of innovation in the basic institutional arrangement of the market economy — such as venture capital and shareholder cooperatives — so that distribution is fair from the start and not much redistribution is required.

Q: What approach would you suggest?

A: Let's look at privatization. Currently the dominant view in China is that management buyouts are best — to ask the existing managers of the state-owned enterprise to buy a large stake in the business. This is at the local level; so far this trend has not reached the biggest corporations and the central government. But in the local, provincial and county governments, what is happening is that managers are buying companies at very cheap prices, sometimes even for free, and then sack the workers.

Now in China there still exists something like a shareholders cooperative system. Here everyone working in the company gets a minimum salary and then also gets a return on profit proportional to their shares. So there is the profit motive, but also the element of a cooperative as well.

The main thing is that a worker's claim to profit is not only proportional to their investment but also proportional to their contribution in terms of work — how long they have worked, what kind of job they did.So that gives them a claim to profit in addition to their salary. So this kind of setup is what we should look at in the future — something that combines shareholding with being a member of a cooperative.

(c) 2005, Global Viewpoint
Distributed by Tribune Media ServiceS, INC. (Distributed 3/7/05)