How China Escaped Shock Therapy: The Market Reform Debate (Routledge Studies on the Chinese Economy)

China has become deeply integrated into the world economy. Yet, gradual marketization has facilitated the country’s rise without leading to its wholesale assimilation to global neoliberalism. This book uncovers the fierce contest about economic reforms that shaped China’s path. In the first post-Mao decade, China’s reformers were sharply divided. They agreed that China had to reform its economic system and move toward more marketization―but struggled over how to go about it. Should China destroy the core of the socialist system through shock therapy, or should it use the institutions of the planned economy as market creators? With hindsight, the historical record proves the high stakes behind the question: China embarked on an economic expansion commonly described as unprecedented in scope and pace, whereas Russia’s economy collapsed under shock therapy. Based on extensive research, including interviews with key Chinese and international participants and World Bank officials as well as insights gleaned from unpublished documents, the book charts the debate that ultimately enabled China to follow a path to gradual reindustrialization. Beyond shedding light on the crossroads of the 1980s, it reveals the intellectual foundations of state-market relations in reform-era China through a longue durée lens. Overall, the book delivers an original perspective on China’s economic model and its continuing contestations from within and from without. "China has become deeply integrated into the world economy. Yet, gradual marketization has facilitated the country's rise without leading to its wholesale assimilation to global neoliberalism. This book uncovers the fierce contest about economic reforms that shaped China's path. In the first post-Mao decade, China's reformers were sharply divided. They agreed that China had to reform its economic system and move toward more marketization-but struggled over how to go about it. Should China destroy the core of the socialist system through shock therapy, or should it use the institutions of the planned economy as market creators? With hindsight, the historical record proves the high stakes behind the question: China embarked on an economic expansion commonly described as unprecedented in scope and pace, whereas Russia's economy collapsed under shock therapy. Based on extensive research, including interviews with key Chinese and international proponents and World Bank officials as well as insights gleaned from unpublished documents, the book charts the debate that ultimately enabled China to follow a path to gradual reindustrialization. Beyond shedding light on the crossroads of the 1980s, it reveals the intellectual foundations of state-market relations in reform-era China through a longue durée lens. Overall, the book delivers an original perspective on China's economic model and its continuing contestations from within and from without"-- Provided by publisher Cover Endorsement Page Half Title Series Page Title Page Copyright Page Dedication Table of Contents Preface Abbreviations List of Figures List of Illustrations Introduction Part I Modes of Market Creation and Price Regulation Chapter 1 Bureaucratic Market Participation: Guanzi and the Salt and Iron Debate Chapter 2 From Market to War Economy and Back: American Price Control during the Second World War and Its Aftermath Chapter 3 Re-creating the Economy: Price Stabilization and the Communist Revolution Part II China’s Market Reform Debate Chapter 4 The Starting Point: Price Control in the Maoist Economy and the Urge for Reform Chapter 5 Rehabilitating the Market: Chinese Economists, the World Bank, and Eastern European Émigrés Chapter 6 Market Creation versus Price Liberalization: Rural Reform, Young Intellectuals, and the Dual-Track Price System Chapter 7 Debunking Shock Therapy: The Clash of Two Market Reform Paradigms Chapter 8 Escaping Shock Therapy: Causes and Consequences of the 1988 Inflation Conclusion Key Chinese Reform Economists Author’s Interviews Bibliography Index