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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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    File URL: http://www-econ.stanford.edu/faculty/workp/swp99012.pdf
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    1. 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. 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.

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