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The Process of China's Market Transition (1978-98): The Evolutionary, Historical, and Comparative Perspectives

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  • Yingyi Qian

Abstract

April 1999 In the past two decades, China's transition from a planned to a market system followed a different path from those countries in Eastern Europe and the former Soviet Union. So far the Chinese path has been a remarkable success. This paper provides detailed accounts of this process, which evolved in two stages. In the first stage (1979-93), the centrally planned system was reformed incrementally to improve incentives and increase the scope of the market in resource allocation. In the second stage (since 1994), new institutions supporting a market system are being built, but before old institutions are destroyed. To gain a deeper understanding of this transition path, the paper traces the roots to the evolution of the Chinese central planning system from 1958 to 1978, which differed significantly from the textbook model of the Soviet system. The Chinese path of transition challenges the conventional wisdom of transition but apparently fits well Popper's notion of "piecemeal social engineering."

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  • Yingyi Qian, 1999. "The Process of China's Market Transition (1978-98): The Evolutionary, Historical, and Comparative Perspectives," Working Papers 99012, Stanford University, Department of Economics.
    • Handle: RePEc:wop:stanec:99012
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    References listed on IDEAS

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    1. Granick, David, 1990. "Chinese State Enterprises," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226305882, December.
    2. Kornai, Janos, 1986. "The Hungarian Reform Process: Visions, Hopes, and Reality," Journal of Economic Literature, American Economic Association, vol. 24(4), pages 1687-1737, December.
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    Cited by:

    1. Xiangming Fang & Rodney Smith, 2008. "Barriers to Efficiency and the Privatisation of Township-Village Enterprises," Journal of Development Studies, Taylor & Francis Journals, vol. 44(3), pages 409-424.
    2. Mohsen Bahmani-Oskooee & Yongqing Wang, 2007. "How Stable Is The Demand For Money In China?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 32(1), pages 21-33, June.
    3. Xiaogang Wu, 2002. "Embracing the Market: Entry into Self-Employment in Transitional China, 1978-1996," William Davidson Institute Working Papers Series 512, William Davidson Institute at the University of Michigan.
    4. Huang, Shuo & Fidrmuc, Jan & Fidrmuc, Jarko, 2015. "Whither China? Reform and economic integration among Chinese regions," China Economic Review, Elsevier, vol. 33(C), pages 94-110.
    5. Wang, Yizhong & Yao, Chengxue & Kang, Di, 2019. "Political connections and firm performance: Evidence from government officials' site visits," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).

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