China should develop its own economic theories

China's "supply-side reform" is a catchphrase constantly invoked by government officials. This has attracted widespread attention across the country. But some scholars have confused "supply-side reform" with "supply-side economics," with the macroeconomics school advocating capital investment and business expansion to boost economic growth. This misconception shows that, at least in the academic field of economics, there are still people applying Western economic paradigms mechanically to China's practices, rather than exploring theories that fit into China's specific economic situation. The proposed "supply-side structural reform" is mainly aimed at resolving the current structural overcapacity to achieve "structural adjustments" and "promote growth." From an economic perspective, studying economic problems from a supply-side angle is nothing new. But the concept of "supply-side reform" based on China's specific economic situation has fundamental differences with the macroeconomic theory of supply-side economics. As a result, we should not indiscriminately apply Western economic theory to evaluate contemporary Chinese economic issues or use it to understand current macroeconomic policies in China. Admittedly, the so-called Chinese economics has been based on imported ideas. For a long time, China had merely "imported" economic theories from the West. This historical background has led to the worship of Western economic concepts, which has impeded independent thinking and theoretical innovation in Chinese economics. During the past 30 years, China's economic reform has made substantial achievements and won worldwide recognition with an enriched repertoire of practical experience. But, until now, China's economists have yet to propose a complete theoretical framework to explain the Chinese experience, let alone the capability to extract the Chinese experience. That is why some Chinese economists seem to have formed a pattern of "path dependence" toward economic theories from the West. Whenever China achieves economic growth, they tend to simplify it as an outcome of studying and utilizing Western economic theories. And whenever there are glitches along the way, they either consciously blame the reasoning process in the theoretical application of the Western paradigms or unconsciously attempt to look for solutions and theoretical explanations from Western economic textbooks. This anomaly reflects the absence of economic concepts that suit the Chinese context, as well as the absence of independent thinking and confidence in Chinese economics. At this stage, China's economic development is in urgent need of theoretical formulation and subjective consciousness, and more importantly, its own system of academic terminology. Many structural reforms that have happened in China during the past three decades have shown that actions emanating from bottom-up practitioners can be summarized and extracted by Chinese economists, and then adopted by China's highest-level decision-makers with terminologies hard to comprehend. Then, after numerous trial and error, authorized reform documents can be formalized and publicized throughout the country with more straightforward and plain language, hence generating momentum and finally success. Examples of specific Chinese practices include the household contract responsibility system, double price regulation, ownership structure theory, and income distribution theory. It is these concepts and terminologies, which are hard to find in Western economics, that forms the common thread running through China's economic reform during the past three decades, and made the economic miracle come true. Therefore, Chinese scholars should absorb and extract theoretical elements from China's own experience of economic growth, and form their own development theories and terminology system.