China Model: Essence, Flaws, and Solutions

The direction of China’s reform, the transition of its growth drivers, and the leaps between development levels will be partly determined by how China sees the development path and successful experiences of its past. Due to its initial resource endowments and its political, economic, social, and cultural structures, China has found a transition dynamic that fits its national conditions and has thus attained amazing achievements. However, it also faces significant challenges, including the deep-seated problems mentioned in the first chapter as well as the need to achieve a smooth transition from factor-driven to efficiency-driven and then to innovation-driven development and change from an upper-middle-income to a high-income country. Many countries have failed to make such transitions due to serious social and economic problems, but several countries with cultural backgrounds similar to China’s—like Japan and South Korea—have succeeded. Their experience of success and lessons born of failure are both worth learning from.