China's Economic Challenge: Smashing the Iron Rice Bowl

China's Economic Challenge: Smashing the Iron Rice Bowl

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China's reformers insisted over two decades ago that the iron rice bowl, symbol of the Communist Party's compact to provide cradle-to-the-grave security for all, had to be broken if China was going to modernize. China's leaders knew they had to risk their careers and the Party's future, yet the reforms they initiated have not gone far enough. The iron rice bowl is still unbroken.

China's Economic Challenge reveals how transition from a planned economy to a market-oriented one has been fraught with contradiction, dilemma and difficult choices. Membership in the World Trade Organization poses the greatest challenge yet, because while Party leaders are gambling that more new jobs will be created than old ones are lost, most state enterprises are not ready for international competition.

Author Neil Hughes captures the complexity of China's economic revolution, involving wide-open competition, traditional networks exploiting new opportunities, civil servants "privatizing" state assets, provincial governments putting up regional trade barriers, and the Communist Party's determination to shield a core of state enterprises from the full impact of competition. Meanwhile, fast rising corruption and defiance of the law undermine the reforms.

While 300 million people have been raised out of poverty, in one of the great achievements of human history, and millions more are benefiting from economic reforms, many millions are being left behind or made redundant. Hughes points out how the fast rising number of disaffected impact every economic policy decision, as the government puts maintaining stability at the top of its economic agenda.

Following the principle that knowledge of China's past is essential to understanding the present, China's Economic Challenge concludes that despite their commitment to change, the attitudes and values of China's leaders are deeply rooted in the country's imperial past. Not only the future of economic reform, but the very survival of the Communist Party, depends upon their capacity to change those values.