I began Chinese writing in earnest in November 1983.“The Communist Systemas Viewed through the CoaseTheorem,” in which the example of cattle raising andwheat farming is discussed in detail，appeared in January1984.8 I have now written 1,500 Chinese articles，abouthalf on economics.Pieces on economic reformand poli-cies come to about one-third of the total.But I amnoreformer.However，having nearly starved to death as a
【6】Using price is costly，but as a criterion of competition it isunique in that no further rent is dissipated.For the costs of usingprice，see R.H.Coase，“The Nature of the Firm,” Economica（November 1937）; George J.Stigler，“The Economics ofInformation,” Journal of Political Economy（June 1961）; StevenN.S.Cheung，“The Contractual Nature of the Firm,” Journal ofLawand Economics（April 1983）.boy in Guangxi，there is no hiding the fact that after sur-viving to become an old man I do care.It is not impor-tant whether people agree with me，so long as they readwhat I write.I believe anyone who reads another’s writ-ings must to some degree be influenced.
【7】张五常，《中国会走向资本主义的道路吗》，一九八二，重刊于张五常，《中国的前途》，一九八五年八月初版，再版多次，今天由香港花千树出版。
【8】张五常，《从科斯定律看共产政制》，一九八四年一月二十七日发表于《信报》，转刊于《卖桔者言》，后者一九八四年十一月初版，再版无数次，今天由香港花千树出版。
There was no better time，no better place，and perhapsno better sales person，than this writer in popularizingthe ideas of Coase to the Chinese in the 1980s.The ide-ological gate was beginning to swing open: Comradesknew what they had believed in did not work，and were looking for something new.I was appointed to the Chair of Economics of the University of Hong Kong in May1982，the best position at that time to follow China’sdevelopment.I knew Ronald’s works by heart，and peo-ple knew he was a good friend of mine.9 I was expert on Chinese culture and history，so comrades could not tell me that I did not understand China，as they routinely told out siders.I could write in Chinese，and soon developeda style people say was popular though distinctive.Ontop of all this are the seminal ideas of Coase，which at that time were easy to sell.Had China then been like the China now，I would be out of luck.
【9】During the 1980 American Economic Association annualmeeting in Detroit，Coase urged me to return to China because he heard that the country was considering reform，and he believed I was the best person to impart knowledge on the opera-tion of economic systems to the Chinese people.A few monthslater，I was informed that the Chair of Economics at the University of Hong Kong would soon be open.I was appointedto that chair in May 1982，and retired eighteen years later.
First is the idea of transaction costs.Chinese livingunder the earlier regime were all too familiar with such chores and headaches as memorizing political slogans,waiting in line，making connections，dealing through the backdoor.They had to spend hours every day doing these things.When I wrote that if these costs werereduced income would shoot up，even the most stalwartdefenders of the old regime could not handle the chal-lenge.The level of transaction costs were so high at thattime，things often did not make sense.This was clearenough，but it took time and many articles to convincepeople that transaction costs could not be reduced unlessthe systemwas changed.I should take credit for that.
Change the systemto what？This time，it was more dif-ficult to do the convincing.The first point made in my1979 paper，that market pricing is the only economic crite-rion that entails zero rent dissipation，was not difficult forpeople who had to stand in line for hours to comprehend,but the proposition that the use of market price is uniquelyassociated with private property was difficult for comradesto swallow.The word ‘private’ did not bear a singlerespectable connotation in Chinese culture at that time，and‘private property’ was in strict contravention with the offi-cial stance of maintaining a socialist or communist state.
It was here that Coase’s idea on the delineation ofrights worked magic，especially since I as the scientificsales person knewthat the same product can be sold with new packaging.When I took the Friedmans to meet theGeneral Secretary of the Chinese Communist Party inthe fall of 1988，Mr.Zhao lost no time in elaborating toMilton the importance of delineation of rights.This dia-logue is on record，and it is in print in a number of places.I take credit for selling Coasian economics to theGeneral Secretary.Today on Baidu，the popular ChineseInternet search engine，the “Coase Theorem” appearsmore than 100,000 times in translation.
What turned out to be crucial is the idea of separatingownership rights fromuse rights.I was able to drawonmany case-examples.At that time，all land in Hong Kongwas owned by the（British）Crown，and a private owner ofCrown land merely held a long land lease.As a student atUCLA，I bought a small Fiat on borrowed money.I wasthe registered owner and the bank the legal owner，but myuse of the automobile was essentially unaffected by thisseparation of rights.In Coase’s analysis of the delineationof rights，illustrated in terms of beautiful examples in his1960 paper，I did not see private ownership rights beingimportant in the allocation and use of resources.10 Theissue cropped up when I turned my attention to the so-called responsibility contract，which emerged in China inearly 1983.I saw that in the（logical）limit，this would
