Economic, social and political reforms needed to promote 'five-in-one' development and establish a modern society

The 18th national congress of the Party indicated a shift from economy-centered development to "five-in-one" - economic, political, cultural, social, and eco-civilization - development.

Since 1978, when the Party launched reform and opening-up, continuous efforts have been made to reform the country's economic system, which has resulted in a 30-year period of fast development. However, research suggests that the dividend from this fast growth is now coming to an end, and more reforms are needed for further development.

It is clear that the change from a planned economy to a market economy was accompanied by social and political reforms. So with the deepening of economic reform there is an urgent need for complementary social and political reforms.

From the acknowledging of farmers' autonomy at the start of reform to the household contract responsibility system, and from enterprises' ownership reform to the 1992 goal of a socialist market economy and then to the establishing of a modern enterprise system, we see the development of a market economy is a continual process in which the government keeps transferring power and access for business activities to individuals and entities and also a process of decentralization and diversification.

Under the planned economy, the government monopolized the management and distribution of all resources, including living resources, social security, and work benefits. The market, on the other hand, provides room for economic activities by individuals and entities whose choices comprise the basis for the distribution of resources. Those mechanisms with a heavy planned nature, such as the organizing of administrative units and social organizations, and a highly centralized process for policymaking have been declining as the private economy keeps expanding.

Since reform of the economic system was launched in the late 1970s and mid-1980s, reforms in education, culture, medical care and technology, and systematic reform of administrative institutions and administrative structures, and fiscal and taxation policies have also been introduced. These came naturally as the market economy developed.

Social and political reforms must not lag behind or the market economy will be unable to get enough social, political, cultural and moral support. And if the strain between the market economy and the planned social and political systems persists then economic structural problems will accumulate and social conflicts can break out. More worryingly, the social structure will be challenged. So reforms of the social and political systems are urgently needed.

For the next round of reforms, the question of what social and political systems fit the market economy needs to be answered first. Unlike the centralized decision-making of the planned system, the market system is essentially polycentric, whereby individuals are independent decision-makers. In other words, the transformation from the planned system to a market system increases the room for individual decisions.

More room for economic freedom brings more room for development. This needs to be stressed as monopoly groups with vested interests hamper the workings of the market. Monopolies, such as those controlling land, oil and mines, and restrictions on access to financial services, and the telecommunications and aviation sectors, as well as the barriers erected by the household registration system can, to a large extent, be ascribed to forceful arrangements by administrative power. So political restructuring is related to the deepening of economic reform and needs to focus on overcoming vested interests.

Only if administrative power is restrained and market monopolies broken can further reform be stimulated. There needs to be more tolerance for civil freedoms, especially freedom of speech stipulated by the country's Constitution, and wider participation in the political process. Political reforms are therefore a precondition for deepening economic reform, and a corollary to the polycentric and open structure created by economic freedoms.

Those social reforms that have already been launched are the interim period between economic reform and political reform. They not only include efforts to reduce social inequality and ease social contradictions, they also restructure social power distribution and promote the growth and maturation of a civil society.

A modern society with a market economy and technological progress is a humane society, an informed society and an open society. These characteristics mean such a society must be based on individual rationality, personal responsibility, equal rules and open systems. A planned society is outdated and limited under such circumstances, and self-governance according to the law should be established instead. For reform and opening-up to stay on track and progress further, the freedoms delivered by the market economy should be gradually extended to social and public governance fields.

The author is deputy director of NGO Research Center at Tsinghua University.