【2】When Shanghai announced plans to build a second interna-tional airport in Pudong in 1997，skeptics argued that the old air-port was not even used to capacity.The newPudong airportbegan operations in 1999 with one runway，which soon provedinsufficient.A second runway was added in 2005，and a third runway，with an added terminal，was built in 2008.A secondrunway for the old airport is nowunder construction，so that Shanghai ended up building one additional runway every 2.5years.
Today，office construction continues unabated in Pudong，but at the same time many buildings standvacant.Yet property prices there are rising.There is only one explanation for the seeming contradiction:People are waiting.They invest and wait，on the expec-tation that when China drops exchange and banking con-trols，Shanghai-Pudong will immediately become a lead-ing financial center.
The statistics do not add up.An official friend work-ing on themadmitted that there is no way to put the fig-ures together coherently.In 2005 Beijing substantiallyrevised past growth rates upwards，but the adjustmentsdid not cover dramatic improvements in the quality of products and services.What is more，the growth ratesreported by nearly all provinces were higher，some-times much higher，than Beijing’s calculation of the growth rate as a whole.In 2006 the City of Guangzhoureported a spectacular increase in per capita income,but mainly because they divided total output value bythe registered population and ignored the several mil-lions of unregistered floating workers.There is noquestion that the livelihood of peasants has gonestraight up since about 2000，but official statistics show slower per capita growth than the cities.They must have used registered population in these calculations,because nobody knows how many farm-hands have“floated” away.I believe more than one-third of theworking population has been floating around the coun-try.Not knowing the pitfalls，outside organizationshave severally reported the Gini index of China to be rising dangerously.These reports miss the target by miles.
Ⅱ.The Impact of Ideas
Robert Mundell，honorary citizen of Beijing and Coase admirer，on hearing that the great man is orga-nizing a conference on China，suggested that some-one should write a paper eulogizing Coase’s contribu-tions and that I should be the person to do so.I have been invited by Coase to write this lead-off paper on China’s economic reforms，not on himself.However,it would still be appropriate to begin with the impactof Coasian economics.In doing so，I cannot avoidinvolving myself，because I alone was responsible forintroducing Coase’s ideas to the Chinese people.I published my first Chinese article in Hong Kongin October 1979，on “One Thousand Rules，Ten Thousand Rules，in Economics There is Only OneRule.”3 This strange title was adopted in response toa piece I read a year earlier，written by a notedChinese economist，Sun Yefang，on “One ThousandRules，Ten Thousand Rules，Economic Value is the First Rule.”4 During the cultural revolution，Sunmade such a statement and was imprisoned for seven years.I of course was sympathetic，but disagreedwith Sun regarding his Marxian notions of value andprice.My article elaborated just one point:Competition is inevitable under scarcity; to determinewinners or losers criteria are essential; of the numer-ous criteria that can be applied，only market priceentails no dissipation of rent.5 The argument consid-ered various alternatives，such as allocation throughqueuing，seniority，etc.，and showed that all led toincremental wastage in terms of rent dissipation.Butnot so on the criterion of market pricing，and the useof market price is uniquely associated with private
【3】张五常，《千规律，万规律，经济规律仅一条》，一九七九年十月《信报财经月刊》。
【4】孙冶方，《千规律，万规律，价值规律第一条》，一九七八年十月《光明日报》。
【5】The important thesis of the dissipation of rent originated in the analysis of common property resource usage，where rentalvalue may be competed away or replaced by a higher cost of usewhen the resource is subject to unrestrained common exploita-tion.I have further argued that，so long as the market price isnot used or is suppressed by policy measures，some other criteriamust emerge to determine the outcome of competition，and any such criterion would lead to rent dissipation.The interpretationof economic behavior in terms of rent dissipation is truly impor-tant，but it has been neglected by the profession.In particular，I have found the approach to be very useful when analyzing con-straints arising from transaction costs.
On the literature，see Frank H.Knight，“Some Fallacies in the Inter pretation of Social Cost,” Quarterly Journal of Economics（August 1924）; H.Scott Gordon，“The Economic Theory of aCommon Property Resource: The Fishery,” Journal of PoliticalEconomy（April 1954）; Steven N.S.Cheung，“The Structure of aContract and the Theory of a Non-exclusive Resource,” Journalof Lawand Economics（April 1970）; Idem，“A Theory of PriceControl,” Journal of Lawand Economics（April 1974）.property.6
Years later I discovered that this article had been wide-ly read in Beijing，and according to many friends it had something to do with China’s later practice of chargingprices for just about everything.A systematic expositionof Coase’s ideas on the clear delineation of rights and transaction costs first appeared in Chinese in 1982，in atranslation of my IEA paper，Will China Go Capitalist？.7
