Recently, friends often ask how to view the short-term, medium-term, and long-term prospects of the Chinese economy? How to get out of the current predicament?
There is a most basic premise for discussing this issue: we should realize that the rapid, unconventional, catch-up development has come to an end. China’s future development needs to be built on a new foundation. What is this foundation? I think there are three main things: effective rule of law, limited power, and a normal society. With this foundation, the economy may not be able to advance as rapidly as before, but it can make its development based on a healthier and more sustainable foundation. Whether this foundation can be formed determines the future prospects of China’s economy.
What are these three things?
First is the rule of law. What exactly is the rule of law? Since last year, relevant departments have introduced many measures to revitalize the economy, including encouraging the development of private enterprises, but the results have been minimal. Why? It’s not that there are few documents or that the policy intensity is insufficient. Perhaps we need to realize a problem: the era of establishing economic operations on the basis of documents and policies is over. What is needed now is the rule of law, the real rule of law. Only the real rule of law can lay a solid foundation for economic development and rebuild society’s confidence in economic development.
This is not to say that policies are not important. Policies are always important, but the rule of law is the real foundation, and policies must work on this foundation.
So what exactly is the rule of law? Some people may first think of laws, so people often call for the formulation of laws. Those who think more deeply also think that the laws should be sound, or that laws must be followed. But in fact, it’s really not that simple, and even the key is not here.
The rule of law and law cannot be simply equated. First, there can be rule of law without legal provisions. Many countries have unwritten laws, and some countries even have unwritten constitutions, and there are also various customary unwritten regulations in daily life. Second, there can be laws without the rule of law. If the laws are arbitrarily designated, arbitrarily interpreted, and arbitrarily enforced by power, it is not the real rule of law.
So what is the rule of law? The rule of law embodies the supremacy of rules, and it is social governance in which law replaces power.
Then there is limited power. Emphasizing the rule of law does not mean that power is not important, and emphasizing rules does not mean that the government can be weakened. In modern society, a strong government is necessary. But there are two most basic principles. First, power must be under the rules, and power is the maintainer and user of the rules. Second, the scope of power and its functions have boundaries. Therefore, the key to power is not its strength or weakness, but its nature and characteristics.
Where are our problems in these years? It is the rapid expansion of power, the rapid expansion of power across boundaries, and the excessive direct participation of power in economic affairs. This is an important reason for many problems today. So why does power expand rapidly? It is because of the increasing belief in the national system, which will inevitably lead to increasing trust in power, increasing distrust of the market, and believing that relying on the power of power can be more conducive to the realization of some of the most important goals, and can overcome the drawbacks of the market.
In fact, what is the market system? It can be said that it is an arrangement based on self-awareness. In other words, facing such a complex economic system, I admit that I will not be able to do better than the market. Not only can’t do better, sometimes the problems caused may be even greater. The most important function of the government is to formulate rules for the market, not to do everything itself.
Compared with the rule of law, the biggest characteristic of power is arbitrariness. In the simple economy of the past, power could sometimes barely cope, but for the current extremely complex economy, the direct intervention of power often disrupts economic operations. Of course, power will also correct errors, but the way power corrects errors is often like making a big pancake. Making a big pancake embodies the arbitrariness of power. So a few days ago I emphasized that modern social governance relies on a clear, transparent, and stable rule system, rather than flexible power skills (see “Sun Liping: Today more than ever, the rule of law is needed, and the rule of law determines the future“).
The third point is a normal society. This point seems very abstract, but it is actually very important. A normal society involves many aspects, but the most important thing is that this society must have strong vitality, a minimum degree of tolerance, and a soft environment that encourages innovation and doing things.
As early as the beginning of 2022, I said that now, rather than reform, we need a relaxed social environment, and we need to give the economy vitality and society elasticity with a certain degree of flexibility. This seems very ordinary and simple, but it is actually very important. I call the reason for China’s rapid development in the past few decades the release of freely flowing resources and the expansion of free activity space. In other words, it is the flexibility of society. It is this flexibility in society that has accumulated strength for the development of China’s economy later.
But it can be said that our society is too tense at the moment. These days, some people are again hyping the lawsuit against Mo Yan. Don’t underestimate such things, don’t think that this is just some self-media trying to attract attention. When such things happen more, the atmosphere of the whole society will deteriorate. These things are like those small stones on the road. They don’t seem big and don’t have much hindrance, but when there are too many, the car can’t run.
Now, we are facing the initial stage of a new round of technological revolution, and the vitality of society directly determines our innovation ability. The recent development of artificial intelligence in the world has given people a clear sense of urgency. Whether we can keep up with this technological revolution depends to a large extent on what kind of society we are. A few days ago, I published an article “The Underlying Code: The Gap in AI Seems to Be Widening Dramatically, Where Exactly Are Our Gaps“, discussing the soft environment for technological innovation. Innovation requires more than just hardware.
I repeat again the sentence I have quoted countless times when discussing football: What we need is a free will and a stretched soul. This sentence was not said by me, but by someone decades ago.
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