He said that China followed three basic strategies that allowed it to experience relatively successful reform. The policy also provides SOEs with competitors and forces them to reform, he said. Another reform strategy China adopted was the promotion of domestic reform by opening up to the outside world, a policy that Zhang said helped broaden people s outlook toward reform and provided policymakers with the necessary knowledge for developing their plans. And with World Trade Organization entry nearing, Zhang added, this lesson will soon be learned again. One such problem is the low efficiency of SOEs, which China has been reforming for the past 20 years.
High unemployment is another issue.
In 2000, the official figure was 3.1 percent, or about 5.8 million, but according to Zhang, that was only the registered urban unemployment rate. If hidden unemployment is included, he argued, the actual urban unemployment rate is around 10 percent and this does not even taken into account the rural areas. Although Zhang did not offer his thoughts on how each of these problems can be specifically addressed, he seemed fairly confident that China is on the right path in the series of reforms it has taken so far. According to Zhang, today, such an economy is one where there is public ownership of the means of production, whereas traditionally, it also meant the existence of a planned economy and income distribution according to labor and not capital and land. And in Zhang s analysis, in the long run, even public ownership of the means of production will fade away, based on China s history of economic reform.