Li Yining 厉以宁 is one of China’s most noted economists. He is the director of the Department of Social Sciences at Peking University, and Honorary President at that university’s Guanghua School of Management. Li has participated in the professional committees advising the National People’s Congress, and is one of the most frequently quoted economists on current economic and social issues in China. Besides his scholarly achievements, Li is also known as the tutor of senior government officials including Li Keqiang 李克强, Li Yuanchao 李源潮 and Lu Hao 陆昊.
Li has been called ‘Mr Stock Market Li’ 厉股份, a nickname that first appeared in English in a New York Times article in 1989: One of his best known concepts is the idea of selling shares in Chinese state-owned enterprises on stock markets which he first proposed in the early 1980s. At that time, China’s policies of Reform and Opening Up had just begun. State-owned and collectively-owned enterprises were extremely inefficient: there were a myriad of problems brought about by unclear property rights and the lack of specialised skills, not to mention the challenges resulting from the devastation that the Cultural Revolution had unleashed on China’s manufacturing sector. With large numbers of sent-down youth returning to cities in the late 1970s and early 1980s, there were also great imbalances in labor supply and demand.
In an Employment Forum organised by the Research Department of the CPC Central Committee Secretariat and the State Labor Bureau in April 1980, Li first proposed a share-holding system for state-owned enterprises: ‘Call on everyone to raise funds, set up a number of enterprises, and allow companies to solve unemployment problems by issuing stocks and expanding their business’ (“可以号召大家集资，兴办一些企业，企业也可以通过发行股票扩大经营解决就业问题”). Three months later, at the National Conference on Employment in the summer of 1980, Li again raised his share-holding proposal.
In the early 1980s, adopting the share-holding system was discussed mainly as a tool to fight unemployment but in 1986, Li began to discuss his share-holding idea as a major direction of economic reform. In September 1986, he wrote an article titled ‘A Proposal for China’s Ownership Reform’ 我国所有制改革的设想 which was published in the People’s Daily. The piece raised economic as well as political concerns and included a pre-emptive defense of his proposal against the criticism that share-holding was tantamount to privatisation. The orthodox party-state view of the time held privatisation to be unacceptable. Li argued:
The share-holding system itself has no social nature, its nature depends on the nature of the investors. The relationship between these two are like the relationship between form and content. The share-holding system is a form of business organisation in accordance with the development of a commodity economy and not peculiar to the capitalist system. A socialist society adopting a share-holding system does not imply a change in public ownership, but replaces the old type of public ownership instead with a new type of public ownership.
Though the share-holding system was first adopted experimentally in 1980, it was not officially acknowledged until the 15th National Congress of the Communist Party of China in 1997.
Li is also known for his macro-economic analysis of China’s development, especially the idea of the ‘unbalanced Chinese economy’ 非均衡的中国经济, which Li himself says is his most representative economic idea. In Socialist Political Economics 社会主义政治经济学, a book published in 1986, Li argued that demand being greater than supply is helpful in stimulating economic growth. In the late 1980s, Li began to talk about another type of imbalance in the economy, namely that micro-economic participants and companies did not have full investment and operational rights, and were therefore unable to take proper responsibility for investment and operational risks. Li proposed a variety of enterprise reforms and a greater role for the market alongside the state.
In recent years, Li has remained an active commentator on such economic and social issues as skyrocketing housing prices and employment problems. In 2002, he proposed a controversial way to calculate the Gini coefficient (the universal measure of income disparity) which he argued was more suitable for China’s uniquely Chinese conditions. In Li’s approach, the Gini coefficient of urban and rural areas had to be calculated separately first before being combined, using differently weighted proportions, to derive the final overall figure. Thus, while many economists have calculated China Gini’s coefficient to be above 0.4, indicating a significant degree of income inequality, in 2007 Li famously came up with a figure of 0.2, projecting a far brighter and much less unequal state of affairs (thereby putting China on a similar footing to countries such as Germany, Norway and Sweden).
In November 2013, Li published a book titled Chinese Economy in Dual Transition (sic) 中国经济双重转型之路. The book’s release coincided with the holding of the Chinese Communist Party’s Third Plenum in Beijing. Chinese media reports indicate that Li’s book, in particular those sections concerning his ideas on reforming property rights and rural land rights, had an influence on official discussions at the Third Plenum.
Li Yining’s columns in the People’s Daily: 厉以宁专栏
2010 Netease Interview 厉以宁：非均衡的中国经济
2013 Interview: 厉以宁：我与股份制
New York Times: ‘MR. STOCK MARKET’: Li Yining; Selling China on a ‘Public’ Privatization
Beijing Review: What’s the Real Income Gap