Original link: https://www.latepost.com/news/dj_detail?id=1819
In late June, in a conference room at the National School of Development at Peking University, Yao Yang talked about the current challenges facing the Chinese economy. He sees the economy sluggish because real estate and local government contribute close to 40 percent of GDP growth, but both sectors are now contracting.
To solve the problem, one is to loosen the real estate. The second is to issue special treasury bonds, such as 4 or 5 trillion yuan, to local governments to tide them over. “It is too difficult for local governments now. Last year, they spent so much money on epidemic prevention. This year, they have no money, so they misappropriate local debt, which means less investment. In the short term, we can stabilize this demand. In the long run, increasing residents’ income as a share The ratio is the key, but this adjustment may need a process.” Yao Yang said.
Yao Yang, 59, is the dean of the National School of Development at Peking University and a distinguished professor of Boya. He is a representative of Chinese economists who care about personal development and social equality. Looking back at his thought process, we can not only see the relationship between the environment of the times and personal growth, but also help us understand and think about reality, and look forward to the future of China.
After graduating from Peking University with a bachelor’s and a master’s degree, Yao Yang applied to study abroad for a doctoral degree with the help of his mentor Justin Yifu Lin. But the first application was unsuccessful, so he had no choice but to go home and work in Xi’an Electric Machinery Manufacturing Company (referred to as Xidian Company) as an ordinary employee in the enterprise management office. “Working in a state-owned factory, there are too many people to do, and there is nothing to do.” Yao Yang fell into the lowest point of his life.
He wrote to Lin Yifu to express his confusion, and Lin Yifu wrote back to encourage him to persevere. In 1991, Yao Yang applied for a full scholarship for the doctoral program of the Department of Agricultural Economics at the University of Wisconsin-Madison, and got his wish.
“Because I have been waiting for two years, if I can’t go again, then I will definitely go to Shenzhen to ‘go to the sea’, and maybe become the ’92 faction’ among entrepreneurs.” Yao Yang said with a smile. The “92 faction” refers to the wave of entrepreneurship among officials and scholars after Deng Xiaoping’s Southern Talks in 1992. Representatives include Chen Dongsheng, Guo Guangchang, Feng Lun, and Pan Shiyi.
In 1997, Dr. Yao Yang returned to China after graduation and worked at the China Center for Economic Research (CCER) at Peking University. CCER was founded in 1994 by six economists including Justin Yifu Lin, Zhang Weiying, Yi Gang (former Governor of the People’s Bank of China), and Hai Wen (Deputy Director of the Academic Affairs Committee of Peking University, former Vice President). In 2008, CCER expanded into the National Development Research Institute (National Development Institute for short), gradually becoming one of the most influential think tanks in China. In 2012, Yao Yang succeeded Zhou Qiren and served as the president of the National Development Institute until now.
According to Yao Yang, the “roots” of the National Development Institute have two lines, one is the American Economic Association, and Yi Gang and Hai Wen have both served as the chairman of the association; the other is the Development Research Institute affiliated to the Rural Development Research Center of the State Council in the 1980s ( Development Institute for short) and the Institute of Economic System Reform of China (referred to as Institute for Economic Reform) under the State Restructuring Commission. Zhang Weiying and Song Guoqing worked in the Economic Reform Institute, and Lin Yifu and Zhou Qiren worked in the Development Institute. The Rural Development Research Center of the State Council is the legendary “No. 9 Courtyard” (located at No. 9 Courtyard, West Huangchenggen South Street, Beijing), which symbolizes the reform temperament of China in the 1980s. The spiritual leader is Du Runsheng, an important promoter of China’s rural reform .
These historical and personal origins not only established the style of the National Development Institute – using rigorous academic research on China’s practical problems to promote reforms, but also shaped Yao Yang. He grew up in such an atmosphere. He is a typical Peking University student in the 1980s, caring about reality and China’s progress, and full of idealism and enlightenment.
He recalled Li Yining’s economics class at Peking University; read the investigation report of Zhou Qiren and others, and was “excited”; participated in the workshops and national surveys of the Institute of Economic Reform, and won the first prize for writing the report on the reform of state-owned enterprises of Xidian Corporation. The reward is the two volumes of “Ci Hai”, “keep it all the time”; the master’s thesis written in the development of China’s rural surplus labor force; every month, I have to go to the bookstore in the “triangle” of Peking University to buy a copy of “Dushu” magazine , and the “Towards the Future” series opened the door to his knowledge, and Luo Dayou is his favorite singer.
But it was Lin Yifu who had the greatest influence on Yao Yang at that time, leading him to the door of economics research. Yao Yang remembered that on January 2, 1988, he and two classmates went to a guest house in Xizhimen to meet Lin Yifu, who had just arrived in Beijing. Justin Yifu Lin asked them: “If you go to Xinjiang to buy watermelons and sell them back to Beijing, do you buy the best local watermelons or the inferior ones?” At that time, they couldn’t answer.
“This is essentially a classic problem in the price theory of the University of Chicago.” Yao Yang said. According to the price theory, you should buy the best local watermelon. Because the freight is fixed, good watermelons weigh the same as bad watermelons, and good watermelons can be sold at a higher price in Beijing, so the relative cost is reduced and the profit margin is also increased.
“This is a very simple logic, which can explain the common phenomenon, that is, all good things are sold to other places.” After hearing the story of “selling watermelons”, Yao Yang was attracted by the charm of economics and began to learn from Justin Yifu Lin.
At the University of Wisconsin, Yao Yang’s tutor, Michael Carter, taught Marx as soon as he was in class. This surprised and puzzled him. China has turned to teaching Western economics. Why did he come to the United States and learn Marxist economics instead? Later he realized that the University of Wisconsin has a left-wing tradition and was one of the three most active schools in the American student movement in the 1960s. At that time, there was Harvard in the east, Berkeley in the west, and Wisconsin in the middle. Earlier, institutional economist John Commons and his students pioneered the study of American labor history and directly participated in the labor movement.
Carter studied Latin American land issues and sympathized with the revolutionary movement. Yao Yang said that land ownership in Latin American society is extremely uneven, with a sharp contrast between a small number of large estate owners and the majority of landless farmers. Therefore, many Latin American and Latin American intellectuals are left-wing. From the classroom, Yao Yang realized that the picture of the ideal market economy in previous textbooks was completely different from that in the previous textbooks. The real market has many imperfections, such as information asymmetry, market failure, and market defects. It made him more aware of the value of equality and social justice.
During the period, Dr. Yao Yang participated in a research project on China’s land system in the hands of his supervisor. The partner was the Rural Department of the Development Research Center of the State Council. “Actually, it’s the Development Institute. After a long time, I came back.” During this process, Yao Yang met Liu Shouying and worked on projects with him. Liu Shouying is now Secretary of the Party Committee and Dean of the School of Economics at Renmin University of China, and an expert on land issues in China.
Yao Yang. Image source: National School of Development, Peking University.
When talking about teachers and friends, Yao Yang is full of warmth and respect, but when talking about reality and dissatisfaction, he raises his tone and expresses sharply. “Many of our so-called theoretical workers fall headlong into the sand, point their butts at reality, talk nonsense in the sand, and feel that they have created a lot of theories that have nothing to do with reality, deceiving themselves and others.”
He believes that economists who study China must integrate themselves into China’s historical process, pay attention to the most important issues in China, feel the pain and happiness of the research objects, and participate in public discussions, policy discussions, and policy consultations. This is taking economics as a “vocation” rather than just a “vocation” to make a living.
Yao Yang felt that his research was related to the most important issues at that time. For example, he started to study rural issues, and rural development in China was a huge problem in the 1990s; at the end of the 1990s, the development of private enterprises and the reform of state-owned enterprises became the biggest problem, and he turned to this; after the 2008 financial crisis, Sino-US trade As frictions increased, he turned his attention to economic development under open conditions and promoted Sino-US non-governmental dialogue. The full name of the dialogue is “Sino-U.S. Economic Track 2 Dialogue”, which is now in its 13th year. The chairman of the Chinese delegation is Qin Xiao (former chairman of China Merchants Group and China Merchants Bank), and the organizer of the U.S. side is the National Committee on U.S.-China Relations.
Since returning to China from the United States in 1997, Yao Yang has been writing articles for the public. For example, the anthology “Walking Between Reality and Study” included an article “Thoughts on India” written two weeks after his visit to India in 2006. After this essay was published, Yao Yang received an unexpectedly large amount of feedback. Writer Zha Jianying is the Chinese consultant of this India research project. Yao Yang communicates with her frequently, and the two became friends because of this.
In the past 10 years, due to “administrative affairs”, he has been more involved in discussing government policies, and his public writing has been much less, mainly speeches and interviews. Even though he is so busy, he has published two popular books in the past two years – “Common Sense of Economics” and “The Significance of Economics”.
Left: “Common Sense of Economy”, by Yao Yang, October 2022 edition of CITIC Publishing Group. Right: “The Significance of Economics”, by Yao Yang, April 2023 edition of Mechanical Industry Press.
In “Common Sense of Economy”, Yao Yang wrote that his attitude was to tell the truth, “If I can’t tell the truth, I would rather shut up.” He dislikes people saying “correct nonsense”, and feels that “more people talking nonsense will cover up the real problem” and “create a hypocritical social atmosphere”.
In “The Significance of Economics”, Yao Yang said that he set two “useful” standards for his research: one is useful for understanding (or even building) China, and the other is useful for the advancement of economics. “What economists can do is not to prescribe medicine to change the world, but to explain the economic phenomena that have occurred, discover the causal relationship among them, and finally form ideas that affect society.”
“Equality and social justice” is a thread that runs through his academic research and public expression. He agrees with Amartya Sen, a Nobel laureate in economics, that ideology can guide a social science researcher to find suitable research topics and entry points, but it cannot affect his research process.
Yao Yang believes that we must ask: Who is the freest? Is a starving African as free as Bill Gates? Freedom certainly involves some implicit question of what can you do. Due to the influence of nature, family and social environment, everyone is born with inequality in terms of personal endowment and social resources. The society should create an environment where everyone can freely display their abilities, narrow the income gap, and give people the motivation to work hard.
He said that to achieve common prosperity, the government should invest in the earning capacity of the people and provide better education, medical care, social security, etc. for “disadvantaged groups”.
The countryside as a source of ideas
When Yao Yang was 10 months old, his parents sent him back to his hometown in Xingan, Jiangxi Province, where he was raised by his second uncle and aunt. At the age of 8, he returned to his parents, and later studied in the school for the children of factories and mines managed by Xidian Company. The experience of living in the countryside when he was young, and the experience of returning to the village every few years, left a mark on Yao Yang. This made him deeply aware that the living conditions of many Chinese people are poor and they need basic fairness. The countryside has also become the source of his thinking and research on many issues.
From his master’s degree and Ph.D. to his initial working years, Yao Yang focused on China’s rural economy, especially the land system. One of his important discoveries is that rural land has a social security function. At first, Yao Yang had the same idea as many economists, believing that rural land should be privatized. But after thinking about it based on his own rural experience, he realized that it might not be possible to immediately privatize the land, because the land can provide farmers with a “basic pocket” to maintain their basic livelihood and provide social security.
For example, when China was affected by the Asian financial crisis in 1997, 40% of those who went out to work returned to the countryside to live in a stable society. At that time, he felt that when the social security system was not perfect, the collective ownership of land should be insisted on. Of course, due to the improvement of the rural social security system, the social security function of land has become very weak. Therefore, Yao Yang believes that the “separation of three rights” in rural land (referring to the separation of land collective ownership, farmers’ contract rights, and land management rights) Parallel) is no longer meaningful.
In recent years, Yao Yang still cares about rural issues, but extends from the land system to a broader system—the interaction between political and economic levels, especially rural elections. He said that in the past 10 years, the two best articles he published were on rural elections.
Yao Yang believes that the past, present and future of the small-scale peasant system are the basic characteristics of rural China. Therefore, relying solely on agriculture cannot make farmers rich, and turning farmers into non-farmers is the fundamental way out to solve the “three rural” issues. And the countryside itself should take the road of “low development, high harmony”.
He explained that low-level development means not expecting farmers to make a fortune from agriculture, nor do they expect township and village enterprises to flourish everywhere like in the 1980s; The villages have completed the process of reorganization under the framework of democracy.
“My research shows that there is a mutually reinforcing relationship between democracy and traditional resources such as clans—where traditional resources are well developed, village democracy works better in terms of governance; Governance is also unsatisfactory. The reason is that democracy provides incentives for village cadres to do things for the people; while traditional resources give village cadres more authority and reduce the cost of collective action. Therefore, democracy can be a link between the country and traditional rural society. This bond can become an opportunity for the emergence of a new culture in rural China.”
Yao Yang has written several rural essays, such as “Three Days Back Home”, “Before Grandfather’s Portrait” and “The Disappearing Town”. This is one of the few words in which he reveals his inner feelings. From these essays, we can also find clues to his thoughts.
For example, “Before the Portrait of Grandfather” is about his third grandfather Yao Youguang. Although his father was a scholar in the late Qing Dynasty, Yao Youguang received modern education. In the 1920s, under the influence of revolutionary thoughts, he joined the Communist Party of China, led and launched peasant mass movements many times, and participated in the “Nanchang Uprising”. In 1927, 21-year-old Yao Youguang was shot dead after being arrested by the Kuomintang.
Yao Yang stood in the middle hall of the old house in his hometown and looked at the portrait of the third grandfather. “The grandfather in the portrait has a typical cobblestone face of the family male, with a thin face, single eyelids, and a high nose bridge.” Wearing a decent Chinese tunic suit, with a reserved face that does not belong to his age.” Yao Yang ponders the meaning of the life of his third grandfather who became a martyr at the age of 21: “Is his sacrifice worth it? Has his pursuit been realized? How would he feel if he saw China today? Is this the China he dreamed of? ?”
“Three Days Back Home” mainly writes about the second aunt who raised him and the current situation in the countryside. At that time, the second uncle had passed away, and the second aunt was 76 years old. The two had no children. Yao Yang decided to send the second aunt to a nursing home. But within two months, the second aunt said that she was not used to living in a nursing home, the food was not good, and she had pimples on her body, so she wanted to go home. Yao Yang knew that apart from being uncomfortable, the second aunt’s biggest problem was loneliness, so she asked her relatives to send her back.
At that time, Yao Yang also discovered that the whole village was filled with a foul smell due to the cross flow of sewage from the pigsty, but the villagers were unwilling to spend money to repair the underground ditches. Compared with the unimpeded sewers in his childhood impression, Yao Yang believes that this is the result of the disorganization of the countryside. In the past, the public affairs in the village were coordinated by the clan. During the period of the People’s Commune, clan relations were completely lost, but a strong production team system played a substitute role. Now, the production teams are no longer strong, social networks and organizations are disintegrated, and the communal spirit of the village is lost.
Moreover, “the consequence of the disorganization of the village is not only that public works cannot be carried out, but also the behavior of obviously encroaching on public interests cannot be stopped. A family not only built a three-story building on the open space by the lake, but also built a building next to it. built a biogas digester, the base of which has been extended into the lake”.
In 2016, Yao Yang returned to his hometown to celebrate the 90th birthday of his second aunt, and the county officials insisted on following him. As a result, the cadres were shocked when they went there. They found that the village was very dilapidated, the muddy roads were full of sewage, and many dilapidated houses had been collapsed for a long time. The cadre said on the spot, Professor Yao, I will give you the money for “new rural construction”.
Yao Yang, his second aunt and other relatives in front of the former residence of the third grandfather Yao Youguang. Image credit: Respondents.
The next year, the village sent bulldozers to bulldoze the dilapidated houses, and the villagers began to build new ones. The family meeting hall was also rebuilt. After the repair, the village invited a dance team to perform and sing pop songs. Yao Yang “can’t laugh or cry” when he received the video they sent.
“The only benefit I did for our village outside was to repair roads and erect street lights,” Yao Yang said. The last time he returned to his hometown was two years ago, and he found that the village was in decline. Everyone was slowly building houses, but due to the decline in population, many houses were stopped.
The Mystery of China’s Economic Success
Since 1978, China’s economy has made great achievements, but many Western economists can’t understand it. They often doubt how far China’s economy can go. Every once in a while, there are voices like “China’s economic collapse theory”. Therefore, explaining why China’s economy has succeeded has become a puzzle. “Whoever can explain the miracle of China’s economic development will win the Nobel Prize” has almost become the consensus of the academic circle.
Yao Yang said that Daron Acemoglu (Daron Acemoglu), the most popular economist in the international economics field, and others have proposed inclusive systems and extractive systems to explain national growth and stagnation. According to their classification, China is an extractive system, but this obviously cannot explain China’s rapid economic catch-up. Chinese scholars need to positively construct theories to explain China’s economic success, especially the theory of political economy.
He’s working on it himself. For example, Yao Yang and his students have studied the issue of China’s rule of law and economic growth: China’s rule of law is weak, but why is China’s economy still functioning? Their explanation is that China’s financial development is incomplete, and state-owned enterprises can easily obtain loans, but private enterprises need a lot of collateral to obtain loans. After state-owned enterprises got loans, a lot of money went into the gray area, such as the shadow banking that emerged later, and was re-loaned to private enterprises. The weak rule of law, on the contrary, is conducive to the on-lending of loans by state-owned enterprises to private enterprises.
For another example, it is generally believed that corruption is not conducive to economic growth, but corruption was prominent in China before the central government stepped up anti-corruption efforts. Why did such corruption not hinder economic growth?
Yao Yang believes that it is necessary to find the factors that “despite corruption in China, they can still stimulate officials to develop the economy”. He felt that the positive selection of officials was an important reason. Officials may be promoted if they promote the local economy. Therefore, although some officials accept bribes, they also want to be promoted and will develop the economy.
He and his collaborators also study the human capital of officials, exploring how their capabilities are shaped and affect promotion. Yao Yang said that China’s official promotion experience tells us that the system should not only control officials, but also motivate them to do the right thing and give them positive incentives. China’s official selection system has the characteristics of selecting talents and appointing talents, which he called the “meritocracy system”.
“Neutral government” is Yao Yang’s most controversial concept in explaining China’s economic growth. Yao Yang said that a neutral government is not influenced by minority interests when allocating resources, but more about the effect of resource utilization, so it is more likely to focus on long-term economic growth and promote reforms.
But no model is perfect, and the economic miracle has also given birth to new social realities, including the widening gap between the rich and the poor, weakening social mobility, and the formation of powerful groups.
In recent years, due to changes in the world situation, Yao Yang wanted to develop a set of corresponding theories, and became interested in Confucian political philosophy. During the epidemic, he and his collaborators wrote a monograph “Good Governance: Enlightenment from Confucian Culture” to be published.
He talked about the article “Confucianism and Common Prosperity” published in “Confucius Studies” some time ago: “Confucius said, ‘Don’t worry about scarcity but inequality’. A society should not be too uneven. This is a macro ideal. But in At the micro level, Confucius is very realistic, he does not reject wealth, he said, “Wealth can be sought after, and even a man with a whip will do it for me”, which means that if it makes me rich, I will also drive a horse-drawn carriage.”
“Confucius is contradictory on the macro and micro levels. Modern people want to resolve this contradiction. I propose that we should talk about equality and freedom. How can we talk about equality and freedom? Then the government should invest in the income capacity of the people, such as education, training, assistance, etc. , narrowing the gap in the income capacity of the people.”
The concept of “ability” mentioned by Yao Yang comes from his favorite economist, Amartya Sen. He once explained that the so-called personal “ability” refers to the combination of functions that are necessary for a person to engage in meaningful activities, such as knowledge, health, and basic income. Possessing “basic ability” is the basis for a person to realize self-worth and contribute to society. It does not require equality in everything, but only requires the state to provide individuals with the conditions to climb the social ladder.
Amartya Sen, born in India in 1933, won the Nobel Prize in Economics in 1998. He pays attention to the suffering people all over the world, and is known as “the bearer of economic conscience” and “the economist of the poor”. Sen’s academic contributions are manifested in five areas: the theory of social choice, the relationship between individual freedom and Pareto optimality, the measurement of welfare and poverty indices, the relationship between famine problems and unequal distribution of power, and issues of moral philosophy. Image source: Wikipedia.
Moreover, not everyone needs the state to provide these capabilities. Those with good family backgrounds, high self-conditions or good luck do not need state help, while those with poor family backgrounds, low self-conditions or unlucky people do. “If we base our theory of justice on the basis of the goal of individual development, the state must take care of the requirements of the second category of people.”
The Tension Between Joining the WTO and Watching
Yao Yang, like Amartya Sen, has never shy away from his ideology and practical concern, but he has also made clear the boundaries. Ideology cannot affect the research process, and practical concern cannot allow him to fully intervene in society. At times, this scholarly discipline can appear “ruthless.”
For example, in 1999, Yao Yang went to a village in Dongguan, Guangdong to investigate immigrants. There are many foreign-funded factories in the village, and almost all the migrant workers are from inland provinces. One day, he called workers in a factory to fill out a questionnaire. Most of the workers who came were female workers in their teens. Many of them had not finished elementary school, so they couldn’t fill out the questionnaire at all, so they had to ask others to do it for them. But he found that one of the girls filled out the form very quickly. It turned out that she had finished her second year of high school, but dropped out of school because her family had no money. After filling out the form, the female worker told Yao Yang about her experience.
The female worker’s family is in Henan. She likes to sing very well. Her father asked her to drop out of school because the family had no money to support her. There is no way, she came to Guangdong to work with her friends a year ago with 200 yuan. As she spoke, she began to cry to Yao Yang: “I just want to go to school and sing. Please help me!”
“What can I do for her except heartache? The foreman came and yelled at her and told her to go back to work, so she had to wipe away her tears. I can’t forget the way she turned and looked at me, it was a kind of feeling that caught my heart. The hopelessness of rooting for a life-saving straw, and the straw quickly broke.” Yao Yang recalled.
Yao Yang feels that although he has the impulse for justice and the ambition to benefit the people, as a scholar, he should still be a bystander of society, because the division of labor in society requires scholars to be impartial, calm and deeply analyze society. However, attaching importance to onlookers and analysis does not mean hypocritical value neutrality. He believes that what is worth vigilant is that some people in the economics circle abuse economic rationality and ignore other social values.
He gave an example, such as the explosion of a huge firecracker factory in Jiangxi, but the families of the dead workers urged the government to continue to allow the firecracker factory to operate. Therefore, some people will say that workers are rational. The implication is that the harsh working environment of the firecracker factory does not need to be changed. However, for workers, they have only two options, one is to wait at home without food, and the other is to work in a dangerous firecracker factory. Under the former option, they may have to wait to starve to death, while under the latter option, they still have the hope of surviving. Two-phase trade-offs, it is of course rational to choose the latter.
“However, what we should see is that the choice of workers is actually a ‘choice’ without choice. This kind of choice is rational, but the external institutional arrangement and its implementation process that lead to this kind of choice are inhumane. “, Yao Yang discussed, “Man is not a dung beetle who can only carry cow dung, and economic pursuit is only a part of all his pursuits. The institutional arrangements of a society must recognize this, protect and encourage the noble side of people, and should not put citizens reduced to insects scrambling for survival at a very low level”.
Between joining the WTO and watching from the sidelines, Yao Yang expressed his views on many practical issues. “Equality and social justice” are his value concerns, but unlike some leftists, Yao Yang is an economist after all, with a liberal background. His pursuit of equality should be consistent with “Pareto improvement”, that is, at least one person’s welfare can be improved without harming anyone’s interests. That is, if we can improve equality without hurting efficiency, then we should do it.
For example, Yao Yang said that the gross enrollment rate (the ratio of the number of students in school to the population of the right age) of China’s higher education has reached 60%, but at the same time, there are still many rural children who have not even finished junior high school. Taking the data he recently saw on the education of people born in 1995 as an example, 40% of them have a college degree, 40% have only a junior high school diploma or below (the vast majority are in rural areas), and 20% have a high school diploma. If the government can increase investment in education in rural areas and increase the number of years of education for rural children, it will not only promote equality, but also improve efficiency.
Because it has been estimated that, on average, one more year of education from elementary school to university will increase the income of the educated by 10% per year, and the increase will be faster at the university level. At present, China’s fiscal education expenditure accounts for about 4% of GDP, compared with the average level of 4.9% in OECD countries, there is a lot of room for improvement. If the government increases its investment by 1 trillion yuan, mainly for education in rural areas, it is equivalent to an increase of more than 20% in the overall education expenditure, “it is conceivable how much gain it will produce.”
He also has two specific reform proposals. One is to reform the university fee system. Because for more than 20 years, the tuition fees of Peking University and other key undergraduate colleges are about 5,000 yuan a year, but the tuition fees of “three-book” colleges are tens of thousands a year. Yao Yang even saw schools with 80,000 yuan a year. And these schools are attended by many rural children.
“This is a double blow to rural children. Educational resources are not good enough, and they have to pay more tuition fees after being admitted to university.” Therefore, he suggested that Peking University and other schools should increase their fees. Accordingly, the government should reduce their allocations. Transfer to the “two” and “three” schools, so as to bridge the educational gap.
The other is to cancel the “division of the senior high school entrance examination” and adopt a 10-year consistent “vocational general integration” education, focusing on general knowledge and integrating technical courses. “Secondary entrance examination diversion” means that after the high school entrance examination, students can only go to vocational high schools instead of general high schools. In the past few years, this kind of separation was even mandatory, and the ratio of “50-50 split” was guaranteed.
According to Yao Yang, 75% of the children in vocational high schools are from rural areas. The “diversion of senior high school entrance examination” makes vocational education a tool for class differentiation in a sense. Premature or forced diversion makes a child’s future life path more likely to be locked at the bottom of society, without the conditions to freely develop his abilities.
He said that his team has done in-depth research in two cities and found that there are many problems in China’s vocational education. One is that many of the skills taught in vocational education are becoming obsolete. Especially because after AI is automated, many skills are no longer needed; second, even if they go to vocational high schools, most students still want to go to college, so what is the goal of vocational high education? “We should cultivate creative talents, not talents who work on the assembly line, otherwise you will be replaced by AI after half a day of teaching.”
Yao Yang believes that we should return to the origin of education – to cultivate a complete person, instead of letting children be bound by the questions in front of them. He suggested that “communication of vocational skills” be started from elementary school, so that children can be exposed to modern technology step by step, ask more questions about why, and cultivate creativity. “This is the future of China.”
A still from the documentary “Returning Train”, which tells the story of migrant workers in rural China.
In addition to education, Yao Yang also cares about social security, which is also an element of “basic ability”. For example, he suggested that China set up a “menu-style social security plan”, that people should have the most basic social security, and decide on their own, instead of “one size fits all”. Because after the “one size fits all” social security, many companies can’t afford it, so they don’t provide it to their employees. “We will realize modernization in an all-round way by 2035, and fully realizing modernization will definitely require full coverage of medical insurance and social security.”
Related to social security, China will face the challenges of declining birth rate and aging population in the future. Yao Yang is worried that after 2035, the national pension may be short-lived. He suggested that state-owned enterprise shares be allocated to social security funds. “State-owned enterprises are owned by all ordinary people, and the transfer of social security funds will be a matter of course.”
There is also the question of housing. He believes that many local governments are in the right direction to engage in affordable rental housing, but the method needs to be improved and depends on the market. “Guaranteed rental housing is the government’s job, but once the government does it, there will be troubles. For example, Shanghai’s ‘same rights for renting and selling’. I rent here, and my children can go to school here. The rent for the first hall is 7,000 to 8,000, which is relatively cheap. For such an entire apartment, everyone has to grab it, and after the snatching is over, there will definitely be a second landlord, or a rental company, and they will have to lottery their numbers in the end.”
He suggested starting at the source and letting developers do it themselves. The government sets land quotas for developers, and how much area they have to rent out, for example, 1/4 must be built for long-term rental. Houses can also be graded, depending on the level of rent. For example, houses with communal kitchens and toilets are built with low rents, and better houses are built in the central business district.
In addition to “equality and social justice”, Yao Yang also cares about the proper role of the government in economic activities. For example, in the past few years, a lot of funds invested by the government in chip research and development have been in vain.
“In large-scale industrial policies, and from the local government to the central government, corruption is inevitable. Innovation should be done by the private sector. I don’t know why there is a deep misunderstanding in China, that private entrepreneurs do not have long-termism. It is good that the vast majority of enterprises can survive today. The so-called long-termism is rare. But there are also many entrepreneurs in China who are investing in the future, but they are not seen. Looking at the rewards, you can’t see the rewards.” Yao Yang said.
The relationship between the government and enterprises also involves the international situation. Yao Yang wrote in “Economic Common Sense”: “Today’s world can hardly tolerate mercantilism or state capitalism like the 19th century. China must take the initiative to guard against this. Don’t think that what you have formulated is only China’s domestic policy. Policies, many policies have global implications. As long as the international community sees that the Chinese government is still intervening in industries and companies, they will worry or even fear China’s unfair competition, and they will suspect that there is a government behind the companies.”
He said: “Many people from academic circles to government departments still believe in state capitalism, and feel that state capitalism has great power and quick results. This is untenable in theory, and it is also denied in reality. In the past 45 years in China, Were the great achievements of reform and opening up due to state capitalism? Obviously not, it is because we accept the market, open up, and mobilize everyone’s enthusiasm that we have come to where we are today.”
Regarding the future path of China, he insisted on the view of 10 years ago – there are probably only two paths to take, one is more democratization, and the other is to give more authority to the law. “In a society without the basic rule of law, it is impossible to give people stable expectations, especially entrepreneurs. Entrepreneurs don’t need any special treatment. We should put everything in the framework of the rule of law.”
“On the other hand, we need more democratic mechanisms. For example, to finally solve the local debt problem, we must include all local debts, including all state-owned enterprise debts, into the budget and final accounts. In this way, the local people’s congress will play a supervisory role. Cure the debt. This is the process of democratization,” Yao Yang said.
This article refers to “Walking Between Reality and Study”, “The World Significance of the Chinese Road”, “Common Sense of Economics”, “The Significance of Economics” and other materials.
Title picture: Yao Yang, source: CITIC Publishing Group.
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