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在线翻译:
szdaily -> Opinion
Washington Consensus needs a revamp
    2017-November-13  08:53    Shenzhen Daily

Wu Guangqiang

jw368@163.com

OVER the past decades, the world economy has been influenced to a great extent by the Washington Consensus, a set of broadly free market economic ideas, supported by prominent economists and international organizations, such as the IMF, the World Bank, the EU and the U.S.

Essentially, the Washington Consensus advocates free trade, floating exchange rates, free markets and macroeconomic stability.

Originally, English economist John Williamson stated 10 principles as policy recommendations: low government borrowing, avoidance of large fiscal deficits relative to GDP, redirection of public spending from subsidies toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment, tax reform, broadening the tax base and adopting moderate marginal tax rates, market-determined interest rates, competitive exchange rates, trade liberalization: liberalization of imports, liberalization of inward foreign direct investment, privatization of state enterprises, deregulation and abolition of regulations restricting market entry and competition, prudential oversight of financial institutions, and legal security for property rights.

To be fair, the object of the consensus is correct, that is, to promote global economic development and prosperity. Many of the recommendations in the 10 principles are also pertinent and applicable, such as trade liberalization, deregulation and abolition of regulations restricting market entry and competition, and adopting moderate marginal tax rates.

For decades, economic globalization has swept through the world with the free flow of capital, goods and services, benefitting much of the world, lifting an increasing number of people around the world out of poverty and modernizing more nations and regions.

As one of the largest beneficiaries of economic globalization, China has taken full advantage of the positive aspects of the Washington Consensus, successfully absorbing foreign capital and importing foreign equipment and skills, to turn itself into an economic powerhouse that sells its goods across the world within a mere 30 years. As a result, China has ascended to the world’s second-largest economy at a speed human history had never witnessed.

That’s why China has become a strong advocate, firm supporter and active participant in economic globalization and free trade.

But many have wondered why China has achieved remarkable success without fully implementing all of the doctrines prescribed in the Washington Consensus while few of the strict adherents to the consensus have achieved equal success.

This is because China’s support of such principles as globalization and free trade doesn’t mean that it agrees with all of the other principles.

In fact, China has distanced itself from excessive emphasis on the role of free economy and excessive negation of the role of the government in economic activity, both of which are described as market fundamentalism or neoliberalism.

There has never been a consensus on fundamentalism or neoliberalism. China has demonstrated an excellent example of achieving maximum success by combining the role of the invisible hand and the visible hand.

Yes, the free market force is so powerful that once it is unleashed and encouraged, it can turn barren soil into fertile fields and produce a variety of crops and fruits. During the decades before China began to reform and open up, the huge country was in dire poverty with a scarcity of everything. That was chiefly because the nation had strangled the market force.

With the same population, land and resources, China has produced huge amounts of wealth, thanks to its embrace of the market economy.

However, wise Chinese know the indispensable role of the government. Profit-chasing private enterprises will not voluntarily and actively invest in infrastructure that requires massive investment with a longer payback period.

It is the nonstop investment in infrastructure from Chinese governments at all levels that has laid a solid foundation for the economic take-off.

Nor does China blindly privatize State-owned enterprises (SOEs). Instead, China has adopted a wide range of comprehensive measures to reform and revive SOEs, including diversifying the ownership of SOEs and adopting the modern corporate system.

As a result, Chinese SOEs are becoming increasingly stronger and more competitive. Their role as the backbone of the State economy and pillar of State security is irreplaceable.

The Washington Consensus should be replaced with a consensus more applicable to guiding the world economy. But whatever consensus there may be, local conditions must always be considered.

(The author is an English tutor and freelance writer.)

 

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