In conclusion, effective incentive mechanisms, market-oriented economic restructuring and opening to the outside world should be the three major driving forces that push its development continuously forward.

Justin Yifu Lin (Director of China Center for Economic Research at Peking University): China's opening up to the outside world was a success in the 1980s. Its GDP had maintained a high growth rate for 10 consecutive years since 1979, granting further openness and narrowed gaps between rural and urban areas. Despite this, world observers were not optimistic about

China's economic prospect by noting some institutional problems, for example, non-privatized ownership and a double-track price system. They even predicted that the Chinese economy was heading for a crisis and would eventually collapse.

It was "shock therapy" reached by the "Washington Consensus" popular at that time, which advocated elimination of government intervention and distortion so as to create a private property-based open, competitive market economy. The governments were suggested to do macro-control in strict line with budgetary goals. Most economists believed that, though there may be slumps at the beginning, it would soon bounce back and move toward rapid and long-term development.

But facts proved the opposite. Since the "shock therapy" was applied to former Soviet Union republics and East European nations, serious inflation struck and long stagnation plagued these economies, and it didn't improve until very recently. China's national economy, though long disturbed by poor performance of state-owned enterprises, a widening rural-urban gap and a vulnerable financial system, in addition to its fledgling legal system, has maintained a good momentum since the 1990s.

The "shock therapy" failed due to an assumption, taking it for granted that every business had been capable of surviving the market economy, and could earn profits if well managed. The fact is, without competence, profits are baseless.

But in China, either farmers or workers are entitled to have some discretionary rights to deal with surplus. In a bid to boost their enthusiasm, farmers, as well as non-public and foreign-funded businesses, are allowed to enter into sectors of light industries to help raise the efficiency of resources allocation. For those who cannot survive competition, they are given necessary subsidies by the government to avoid a collapse caused by too fast a transition. That is the reason why China has achieved a balance between stability and growth. But due to coexistence of the old planned system and a new market system, conflicts and problems are inevitable. As it further develops, the government will gradually withdraw most sectors to realize a full market economy.

Li Yining (Dean Emeritus of Guanghua Business Management School, Peking University): The old planned economy had two pillars-state ownership and a dual rural-urban structure. The rural household contract responsibility system implemented at the initial stage of reform proved effective in raising agricultural productivity. In the 1980s, the focus of

China's economic restructuring shifted to a share-holding transformation of state-owned enterprises.

However, the breakdown of the dual rural-urban structure has made little progress for the past three decades. As far as efforts in this regard are concerned, the focus should be a reform of the land system instead of an overhaul of the household registration system. Since the rural household contract responsibility system should be persevered for the time being, more emphasis can be placed on how to legally transfer the right of land use through subcontracting, lease and buying into shares for joint stock holding.

The social security system that emerged at post-industrialization in the Western world was evolved from social assistance programs before the mid-industrialization period. Will China be able to establish an overall social security network at its current development stage? One thing for sure, if it is true, the vast low-income group will be given a chance to share the prosperity. In recent years, fiscal revenues have increased faster than GDP growth, enabling China to build up its social security network covering the poor in both rural and urban areas, which will in turn boost domestic consumption.