Zhang Weiying 张维迎 is a prominent Chinese economist best known for his advocacy of free markets and entrepreneurship. He is a vocal critic of big government and its interference in market activities. He is also a champion of judicial reform and argues in favor of the constitutional protection of private property.
In 1984, when he was just twenty-three, Zhang wrote an article lauding the merits of profit making. Titled ‘A Justification for Money’ 为钱正名, it sent shockwaves throughout the Chinese economic world when it appeared in China Youth Daily. At a time when China’s economy was still following the Soviet-style state-owned model, Zhang’s provocative thesis put him at odds with many mainstream economists. However, Mao Yushi 茅于轼, a veteran economist who would later become a pioneer in China’s micro-finance and poverty eradication programs, took the younger man under his wing, defending him and helping him with his career after he graduated from China Northwest University. In a 2009 article, Zhang lavished admiring words on his mentor, calling Mao his ‘role model’ (张维迎：我的榜样茅于轼先生).
Zhang’s economic view is heavily influenced by the theories of the Austrian School (in particular von Hayek), which puts a strong emphasis on individualism. In 1990, Zhang left China to study at Oxford under James Mirrlees (the 1996 Nobel laureate) receiving his doctorate in 1994. In his PhD thesis, Zhang elaborated on the relationship between entrepreneurship and private property. He argued that capitalism is the only system in which real entrepreneurs can be distinguished. Entrepreneurship, according to Zhang, is central to the sustainable operation of any form of economy.
Entrepreneurship and leadership would be a recurring theme in Zhang’s work. He wrote several books on the topic, including Incentives and the Art of Leadership 激励与领导艺术 (2005), Price, Market and Entrepreneurs 价格市场和企业家 (2006), Leadership and the Fate of Enterprise 领导人与企业成败 (2007). In a book called Theory and China Enterprise Reform 企业理论与中国企业改革 (1999), Zhang proposed the ‘Theorem of the impossibility of the entrepreneur in a state-owned economy’ 国家所有制下的企业家不可能定理. Zhang has such a marked enthusiasm for entrepreneurship that on one occasion he told an economics magazine that ‘The more active entrepreneurs are in a particular region, the smaller the social and income gaps’ (China Review 权衡, 2006.12.27).
Zhang was heavily involved in China’s economic reform policy making through late 1980s to 1990s. He claims that he was the first Chinese economist who proposed the ‘dual-track price system reform’ (in 1984), a hybrid price system that allowed the coexistence of a free price system and a fixed one. The system served as an interim solution before the government mustered enough confidence in committing wholeheartedly towards a market-oriented system. Though praised, the dual-track system has also been criticized for unleashing large-scale corruption, especially the kind involving government officials selling government-controlled commodities at inflated prices through back door channels. This particular form of corruption, called ‘official sales’ 官倒, is believed to be one of the factors leading to popular discontent in the 1980s that climaxed in the bloody Tian’anmen incident of 1989.
In a recent interview with a Chinese newspaper, Zhang commented that corruption was the necessary price paid in exchange for the support of government officials for economic reform. However, questions have been raised as to how significant a role Zhang played in the formulation of the dual-track price system. Hua Sheng 华生, another prominent economist, contended that Zhang shouldn’t be given all the credit for it was the outcome of ‘collective wisdom’. (华生等联手反击张维迎’发明双轨制’论:说谎触及道德底线)
Zhang is highly critical of Keynesianism, especially governmental economic stimulus, a method that is endorsed by the Chinese government under the name ‘macro-controls’ 宏观调控. At a conference of Chinese entrepreneurs in 2009, Zhang called for ‘burying Keynesianism completely’ (see 张维迎：彻底埋葬凯恩斯主义). More recently, Zhang argued against government stimulus aimed at bolstering the economy in the wake of the 2008 Global Fiscal Crisis. In a lecture at the Guanghua School of Management of Peking University, Zhang mocked the government’s stimulus package as ‘prescribing morphine to a drug addict’ (政府面临的不是市场危机而是国家危机). In light of such a track record, Zhang’s opposition to the government’s popular policy of restricting housing purchases in some major cities so as to cool down the real estate market is only natural.
Another target of Zhang’s criticism is the size of the government and its taxation regime. He appears to be a believer that a big and rich government can only hinder economic growth. In a recent interview, Zhang remarked: ‘If we compare different parts of China, it is obvious that the areas with a low ratio of government officials to employed population have faster economic growth’ (China Review). Ever the iconoclast, he suggested that reducing the number of government officials would contribute to economic growth.
Some of Zhang’s arguments, including that a Kaldor Hicks improvement should proceed a Pareto improvement, namely that the government should be more preoccupied with the generation rather than the distribution of wealth, are interpreted by critics as defending vested interests. His pro-free markets opinions have also drawn the ire of Maoists, who call him a ‘new rightist’ and a ‘blind follower of neoliberalism’. Criticism of Zhang intensified after he was found to be on the list of attendees of the New Xishan Meeting, a close-door session that gathered some of China’s most prominent liberal intellectuals, including the legal scholar He Weifang 贺卫方 (previously featured in this section) and the economist Gao Shangquan 高尚全. After the discussions at that meeting were leaked, Ma Bin 马宾, a former State Council economic adviser, wrote a letter to President Hu Jintao accusing Zhang and other attendees of conspiring to foment a ‘colour revolution’ in China (好与左派斗的张维迎：会等到他们向我道歉的一天的).
Zhang is in the news for non-academic reasons too. In 2010, during an online mania for exposing celebrity fraud, questions were raised about his master’s degree and academic awards, but he was able to refute the allegations of resumé-faking. Zou Hengfu 邹恒甫, a former professor and economist with the Guanghua School of Management which Zhang led until his removal in 2010, has published several extremely critical articles about Zhang. His removal led to rumours that he was cashiered due to his radical views.