After his political rehabilitation in 1978, Li Yining became a bold proponent of
Deng Xiaoping's fledgling policy of economic reform. He insisted that the key first step of reform should be to privatize state-owned companies by introducing a shareholding system. However, the prevailing opinion among the reformers at the time was to first loosen price control. Li Yining unsuccessfully argued that ownership reform would initiate accountability for profits or losses and create a driving force for development, whereas price reform would only create a competitive environment for companies. For this theory he became known as "Mr. Stock Market Li". Li's vocal advocacy for the reform of state ownership, the bedrock of China's
socialism, was supported by
Yu Guangyuan (于光远) and Dong Furen (董辅礽), but met strong resistance from conservatives and exposed himself to significant political risk. In 1983 and 1984, his ideas were attacked as
spiritual pollution and he could not have his articles published; in early 1987 he was again criticized in a campaign against "bourgeois liberalization". Li Yining's theory was vindicated in 1988, when premature price liberalization resulted in severe inflation and social instability that endangered the entire reform process. In the early 1990s, the shareholding system that Li had been advocating was implemented by the central government of China.
Shanghai Stock Exchange and
Shenzhen Stock Exchange were established in 1990, and many state-owned companies have since become publicly traded. Li's economic theory is believed to be an important contribution to China's stunning economic growth that ensued. In 2004 Li was awarded the Academic Prize of the
Fukuoka Asian Culture Prize by the Japanese city of
Fukuoka, and in 2009 he was awarded a prize for innovation in economic theory by the Chinese government. ==Academics==