Europe’s Lessons for China’s Reformers

BRUSSELS – The most important economic-policy decision of 2013 might well have been taken in November at the Third Plenum of the Chinese Communist Party’s Central Committee, which pledged that the market should be given a “decisive” role in guiding China’s economy. Because China is now the world’s largest exporter after the European Union, and accounts for about half of global growth, decisions taken in Beijing could have a more important impact on the world economy than those taken in Berlin, Brussels, or Washington, DC.

But, while China’s embrace of the market and opening to the outside world has enabled it to achieve astonishing economic progress over the last three decades, the country might now have reached a level of income at which the problem is no longer “too little market.” On the contrary, some of China’s key problems today require a stronger role for government.