Xue Muqiao
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Xue Muqiao (Chinese: 薛暮桥; pinyin: Xuē Mùqiáo; October 25, 1904 - July 22, 2005) was a Chinese economist who was instrumental in introducing and implementing economic reforms that transformed China into a market economy.
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Professor Xue Muqiao 1904 - July 22, 2005
Pragmatic economist who provided the theoretical underpinning for China's free-market reforms
WHEN the head of a visiting delegation of US economists to China in the mid-1970s asked Professor Xue Muqiao, one of his country’s leading economists, where he had graduated, he responded: “In a prison in a feudal China.” It was a remarkable reply, but of a piece with the extraordinarily long and eventful life of a man whose influence on economic policymaking belied the fact that he taught himself much of what he knew.
Xue’s influence was particularly apparent during the 1970s and 1980s, when he capped an already distinguished career by providing novel theoretical underpinnings for the free-market reforms championed by Deng Xiaoping that have since transformed China’s global standing — much to the astonishment of the international community.
Xue was not an enthusiast of every aspect of China’s embrace of primitive capitalism, but he played an important, if usually behind-the-scenes, role in ensuring that the reform bandwagon kept moving. He often had to do so in the face of formidable resistance from party ideologues, notably immediately after the military suppression of the Tiananmen Square student-led democracy protests in 1989.
Then aged 84, Xue urged the embattled party leadership not to return to central planning and state control as part of their new determination to impose political orthodoxy. Fortunately, Deng was of the same opinion.
Xue was born in Wuxi, a prosperous county in Jiangsu, one of the country’s richest provinces that forms the hinterland of Shanghai. Curiously, several other leading Marxists economists were born in the same county. One of them, Chen Hansheng, with whom Xue worked, also enjoyed remarkable longevity: he died last year aged 107.
Xue joined the Communist Party in 1927, just before Chiang Kai-shek, the Nationalist leader, decided to wipe out his erstwhile revolutionary allies with a brutal purge. Xue was jailed for his part in organising railway workers in Hangzhou and spent three and a half years in a military prison. In his “university”, Xue was able to teach himself economics, philosophy and even some natural science.
On his release, he was ready to try to match his newly acquired theoretical knowledge with some solid fieldwork. This he undertook with Chen Hansheng, helping to pioneer statistical and empirical surveys of the rural economy of southeast China in the 1930s.
In 1938, shortly after Japan occupied much of south China, Xue joined the New Fourth Army, the sole Communist force operating south of the Yangtze, hundreds of miles from Mao’s party headquarters in Yenan. He later moved farther north to Shandong, where he taught economics at the provincial university.
During the early years of Mao’s regime, Xue held a string of important posts with responsibility for private enterprise (soon to be sequestered); and the collation and dissemination of statistics (a vital commodity in any economy, but one prone to neglect and manipulation under Chinese Communism).
In 1955 he and other members of the Department of Philosophy and Social Sciences under the Academy of Sciences were chosen to form a new body, the Chinese Academy of Social Sciences — still a major think-tank and a means of ensuring that, as far as possible, intellectual endeavour remains subject to the wider needs of the Party.
Xue’s reluctance to embrace Mao’s revolutionary romanticism when it came to economic policy made him an easy target in the Cultural Revolution. His cast of mind was pragmatic and his work based on surveys and statistics rather than on revolutionary nostrums. Xue Xiaohe, his daughter, said that until the Cultural Revolution, her father had not even read Marx’s On Capital.
In 1967 he was criticised, dismissed from most of his posts and sent to the countryside to relearn revolution. He did not resume work as an economist until the eve of Mao’s death in 1976.
With Deng soon elbowing aside Hua Guofeng, Mao’s chosen successor, and setting China on a new course of reform and openness to the outside world, Xue Muqiao came into his own as an economic theoretician whose views were informed by long familiarity with the facts.
He discussed many of the issues at stake in his Research into Problems in China’s Socialist Economy (1979). The first edition of this book was fairly orthodox, but subsequent editions became more radical as free market reforms took root — reflecting that the theoretical legitimacy of profit is still a relative newcomer in the Chinese political economy.
During much of the 1980s, practice — whether in the return to family farming in everything but name or profit-sharing in state-owned factories — had leapt ahead of theory and thus of what was politically acceptable. Price reform, the emergence of labour as well as commodity markets, and the growth of the private sector, meant that the economists and theoreticians had to catch up with what was happening on the ground. They also had to put flesh on the bare bones of Deng’s remarks that: “The main task of socialism is to develop the productive forces, steadily improve the life of the people, and keep increasing the material wealth of society. There can be no Communism with pauperism — to get rich is not a sin.”
Subsequent revisions of Xue’s book, a kind of textbook for the new State Commission for the Restructuring of the Economic System, called for obedience to the “objective laws of economic development”. He championed the “socialist commodity economy”, and criticised “leftist errors” of blindly worshipping public ownership. There should be a mixed economy with competition between state, collective and privately owned sectors. This state of affairs would endure for decades since the party had decided, contrary to what had been believed under Mao, that China was only at the “initial stage of socialism”.
Xue’s 1990 work, On Certain Theoretical Problems in the Socialist Economy, was equally timely. The party, shorn of its reformist leader Zhao Ziyang, (obituary, January 18, 2005) sacked for allegedly stirring up the Tiananmen Square protests, favoured a neo-Stalinist restoration, with economic reform kept firmly in check.
In his book, and in letters to the Central Committee, Xue argued that further reform was essential. It was a view shared by Deng who, though officially retired, broke the conservative stranglehold in Beijing, spurring the national rejuvenation of China that is now reshaping the global economy in ways that even Xue can hardly have envisaged.
Xue Muqiao, economist, was born in 1904. He died on July 22, aged 101.
