Transformation in China

In his Presidential Address, Professor Janos Kornai (2005a) evaluated the transformation in the eight Central Eastern European countries (CEE8) from two perspectives. From the perspective of everyday life, the transformation in the last 15 years brought much disappointment. Part of it is due to the change of the reference point — now the bar is raised to the level of the developed Europe, but part of it is real, as the evidence shows that negative sentiments among the population are strong. On the other hand, from the long-term historical perspective, the transformation is a major success: not only have both the economic and political transformations been completed in the main direction of Western society, that is, capitalism and democracy, but also its completion was fast and peaceful. The long-run gain from the transformation could be high, even though the short-run pain is not negligible. In addition, because there is an intrinsic value of the political rights that were brought about by the transformation to democracy, transformation itself has an intrinsic value.