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China The Repercussions of Urban Reform
The party leadership benefited from the success of the rural
reform program and the generally enthusiastic public response it
generated. The leadership sought to use this success as a basis for
tackling reform of the much more complicated and diverse urban
sector. The overall goal of the highly experimental urban reform
program has been to create a mixed economy in which the market
plays a significant role and in which state planning is concerned
more with regulating than with directing the economy. This
approach, however, has led to tensions both in conceptualization
and in the reform's effects of implementation on people.
At the conceptual level, the reform's emphasis on leasing
industrial and commercial enterprises to individuals and
collectives raised the issue of diversification of ownership and
challenged the orthodox concept of state ownership. The
introduction of securities markets and stock exchanges raised the
question of how many Western-style reforms China could absorb and
still call itself a socialist country. The same question applied to
the adoption of a controversial bankruptcy law. These emerging
problems were bound to be troublesome to party leaders like Chen
Yun, who adhered to more orthodox socialist concepts.
At the level of implementation, questions emerged concerning
the speculation and exploitation that was believed to accompany the
operation of stock exchanges. The introduction of bankruptcy
provisions was viewed as contributing to unemployment and hardships
for the workers. Also, the introduction of a labor contract system,
while providing opportunities to motivated and competent workers,
might well threaten the livelihood of the less skilled. Even the
new value being placed on entrepreneurship challenged the previous
way of life, in which the state made all decisions and provided the
means of sustaining life.
Although these challenges were serious, the most important
dimension of the reform program was its distribution of power and
authority. This function can be viewed as the dominant political
role of the urban reform program, affecting the structure and
organization of the party itself.
Data as of July 1987
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