Understanding China's Economic Performance
Two schools of thought have emerged to interpret China's rapid growth. The experimentalist school attributes the successes to incremental experimentation, and claims that resulting non-capitalist institutions have been successful in agriculture where land is not owned by the farmers; in township and village enterprises which are owned collectively by rural communities; and in state owned enterprises where increased competition and not privatization has been emphasized. The convergence school holds that China's successes comes from its institutions being allowed to converge with those of non-socialist economies, and that China's economic structure at the start of reforms is a major explanation for the rapid growth. China's gradualism and "innovative" non-capitalist institutions are responses to its political circumstances. Interestingly, China's recent policy trend is toward institutional harmonization rather than institutional innovation, suggesting that the government accepts that the ingredients for a dynamic market economy are already well-known.
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