“Cross the river by feeling the stone”: a valuable lesson after 40 years

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Editor's note: Liu Chunsheng is an associate professor at the Beijing-based Central University of Finance and Economics, and deputy dean of Blue Source Capital Research Institute. The article reflects the author's opinion, and not necessarily the views of CGTN.

"Crossing the river by feeling the stones" is an important concept in China's reform and opening-up led by Deng Xiaoping and a valuable methodology to guide practical work. It refers to partial reforms in an experimental manner, often starting in a few regions, and expanding them upon proven success.

The concept has been of great significance for policy design in the past 40 years, especially for actively and steadily promoting reform and opening-up. The academic community generally believes that this gradual reform approach distinguishes China's reform from the shock therapy in Eastern Europe and is one of the important reasons for China's sustained economic growth.

Invitees receive flowers during the 40th Anniversary of Reform and Opening-up at the Great Hall of the People in Beijing, China, on December 18, 2018. /VCG Photo

The gradual approach was based on the fundamental realities of China at the beginning of reform and opening-up. In the late 1970s and early 1980s, China's social productivity level was very low, the marketization of production was underdeveloped, and various economic forms existed at the same time.

These economic conditions demonstrated that market-oriented reforms could not be achieved in one step. There was an obvious imbalance in China's economic and social development at that time.

The urban-rural dual structure, uneven regional development, and unbalanced industrial system determine the degree of demand for reform and opening-up between urban and rural areas, among different regions and different industries which were the constraint conditions for gradual reform.

A special exhibition is being held to mark the 40th anniversary of the country's reform and opening-up policy in Beijing's National Museum of China on December 18, 2018. /VCG Photo

The success of China's gradual path of reform and opening-up lies in the observation of the reality of China, its compliance with a series of constraints, and the creative exploration of various key links.

The logic of China's gradual reform and opening-up is reflected in the incremental reform prior to the stock reform. That is to say, the reform outside the system is a breakthrough, so as to promote the stock reform within the system. This approach has the nature of the “Pareto improvement,” that is, some people gain benefits, while others' interests are not significantly damaged, thereby reducing the resistance to reform.

A special exhibition is being held to mark the 40th anniversary of the country's reform and opening-up policy in Beijing's National Museum of China on December 18, 2018. /VCG Photo

For example, at the beginning of the reform, China did not fundamentally reform the state-owned economy, mainly allowing and encouraging the development of private enterprises. With the deepening of the reform, private enterprises gradually developed, and the state-owned enterprises increasingly felt the pressure of external competition. The reform has formed a mechanism to force the reform of SOEs. This moderate and gradual reform achieved development at a lower cost and avoided the serious consequences of “shock therapy” in the former Soviet Union.

Another reason for the success of China's reform is that it balances the relationship between reform, development, and stability. The essence is to put the reform strength, the development speed, and the social affordability into consideration when applying a new economic policy. By these means, China's reform and opening-up have adopted a moderate approach to achieving interest adjustments, greatly reducing social friction and maintaining social stability.

A special exhibition is being held to mark the 40th anniversary of the country's reform and opening-up policy in Guiyang, Guizhou Province, China, on December 18, 2018. /VCG Photo

However, along with the continuous process, the internal and external environment and objectives of reform and opening-up have undergone fundamental changes, compared with 40 years ago. Since the direction, goals and paths of reforms and opening-up in many fields have been clarified, it needs to be comprehensively promoted under the guidance of theory.

China's reform and opening-up has entered the critical period. This requires the reformers to dare to take responsibility and risks. The “cross the river by feeling the stone” reform cannot be an excuse for delaying reforms and blocking reforms. There is an urgent need to comprehensively deepen the top-level design of reform.

It is necessary to make overall plans for the reform and development in the economic, political, cultural, social, and ecological fields.

(If you want to contribute and have specific expertise, please contact us at opinions@cgtn.com.)