Xue Muqiao; The architect of China's market transformation
Hyfler/Rosner
The architect of China's market transformation
John Gittings
Wednesday August 17, 2005
Guardian
When China under Deng Xiaoping began to discard the
socialist legacy after Mao's death in 1976, the economist
Xue Muqiao, who has died aged 100, played a leading role in
formulating theory for the new era, but never lost touch
with everyday life. His essays gave outsiders a clue to the
pace of change, and Xue also called for the return of street
stalls and snack bars in the capital - banned for a decade
as "remnants of capitalism". And he travelled to small
provincial towns to check prices in the local markets.
In the first edition of his standard work, Socialist
Economics (1979), Xue had envisaged a future for China in
which state and collective ownership would rise "to a higher
form". Two years later he added that the market should be
given more freedom and that private enterprise could have a
share. By 1987, as the reforms moved into higher gear, he
was arguing that "capitalism need not become extinct".
Xue had long believed that China should embrace market
economics, but was unwilling to say so publicly until the
top leaders had agreed. The underlying conflict between
observing party discipline and exercising his own judgment
was, according to his daughter Xiaohe, "the cause of great
unhappiness".
At an internal party conference in 1981, Xue first told the
audience that his views were "faulty" and should be
criticised - and then set them out for discussion. This
caution was shared by many intellectuals of his generation,
who had helped to build the "new China" in the 1950s and
were then punished in the 1960s and 1970s.
Born in Wuxi, a prosperous agricultural centre in the lower
Yangtze valley, Xue took part as a school student in the
patriotic demonstrations of the May 4 1919 movement that
sprang up in protest against the decisions of the post-first
world war Versailles peace conference which adversely
affected China. A year later he had to interrupt his studies
when his father committed suicide after falling into debt.
Forced to support his family, he became a clerk on the
Shanghai-Hangzhou railway, and by 1926 was the youngest
station-master on the line. In the militant atmosphere of
the time, he was active in the railway workers' union and
joined the Communist party.
He was arrested in Chiang Kai-shek's bloody crack-down
against the left in 1927, and spent three years in jail.
Another inmate introduced him to a Soviet textbook on
political economy: Xue liked to say later that he had
"graduated from prison". Released from jail, the self-taught
Xue found an intellectual soulmate in the older and more
experienced fellow-Marxist Chen Han-seng, the pioneer of
modern Chinese social science (obituary, April 1 2004).
Chen encouraged Xue to investigate the harsh realities of
rural life in south-west Guangxi province. In 1934, Xue
joined Chen's Rural Studies Institute in Shanghai and
secretly rejoined the party.
After the Sino-Japanese war broke out, Xue moved to the
guerrilla areas, teaching simple economics in the
communist-led New Fourth Army. After the army was
treacherously wiped out by Chiang's forces, Xue moved, via
the communist capital of Yan'an, to a new base area in
Shandong province. Here he devised a scheme to undermine the
currency used in adjacent Japanese-controlled areas, and to
stabilise prices in the guerrilla-held zone.
After the 1949 communist victory, Xue was drafted to tackle
inflation at the national level and served on so many
committees that at one point he collapsed from exhaustion.
Later, as head of the state statistical bureau, he promoted
the moderate policies of the party leader Chen Yun, arguing
that a rational pricing policy was still essential under
socialism.
Attempts by Chen and Xue to decentralise economic
decision-making and to give the market a greater role were
condemned in the cultural revolution (1966 to 1976) as
"economism". Xue was denounced by red guards as a
"capitalist-roader" and spent 18 months in detention before
being sent to a rural reform school for erring officials. He
was brought back to work in Beijing, sent down again, and
brought back once more in 1975. His talents were too rare to
be wasted, even in the ultra-left climate of the time.
After the 1989 crackdown which followed the Tiananmen Square
massacre, Xue again found himself unable to speak out
freely. Within two years he had been diagnosed with
Parkinson's disease and finally retired.
When Xue reached his 100th birthday last year he was widely
praised as the architect of China's "market transformation"
and was visited by premier Wen Jiabao. He had come on a very
long journey from the booking office on the Hangzhou line.
· Xue Muqiao, economist, born October 25 1904; died July 22
2005