The Quiet Revolution: The Emergence of Capitalism. (China)

By Guthrie, Doug | Harvard International Review, Summer 2003 | Go to article overview

The Quiet Revolution: The Emergence of Capitalism. (China)


Guthrie, Doug, Harvard International Review


When Deng Xiaoping unveiled his vision of economic reform to the Third Plenum of the 11th Central Committee of the Chinese Communist Party in December 1978, the Chinese economy was faltering. Reeling from a decade of stagnation during the Cultural Revolution and already falling short of the projections set forth in the 1976 l0-year plan, China needed more than a new plan and the Soviet-style economic vision of Deng's political rival, Hua Guofeng, to improve the economy. Deng's plan was to lead the country down a road of gradual and incremental economic reform, leaving the state apparatus intact, while slowly unleashing market forces. Since that time, the most common image of China, promulgated by members of the US Congress and media, is of an unbending authoritarian regime that has grown economically but seen little substantive change.

There is often a sense that China remains an entrenched and decaying authoritarian government run by corrupt Party officials; extreme accounts depict it as an economy on the verge of collapse. However, this vision simply does not square with reality. While it is true that China remains an authoritarian one-party system, it is also the most successful case of economic reform among communist planned economy in the 20th century. Today, it is fast emerging as one of the most dynamic market economies and has grown to be the world's sixth largest. Understanding how this change has come about requires an examination of three broad changes that have come together to shape China's transition to capitalism: the state's gradual recession from control over the economy, which caused a shift in economic control without privatization; the steady growth of foreign investment; and the gradual emergence of a legal-rational system to support these economic changes.

Reform Without Privatization

During the 1980s and 1990s, economists and institutional advisors from the West advocated a rapid transition to market institutions as the necessary medicine for transforming communist societies. Scholars argued that private property provides the institutional foundation of a market economy and that, therefore, communist societies making the transition to a market economy must privatize industry and other public goods. The radical members of this school argued that rapid privatization--the so--called "shock therapy" or "big bang" approach to economic reforms--was the only way to avoid costly abuses in these transitional systems.

The Chinese path has been very different. While countries like Russia have followed Western advice, such as rapidly constructing market institutions, immediately removing the state from control over the economy, and hastily privatizing property, China has taken its time in implementing institutional change. The state has gradually receded from control over the economy, cautiously experimenting with new institutions and implementing them incrementally within existing institutional arrangements. Through this gradual process of reform, China has achieved in 20 years what many developing states have taken over 50 to accomplish.

The success of gradual reform in China can be attributed to two factors. First, the gradual reforms allowed the government to retain its role as a stabilizing force in the midst of the turbulence accompanying the transition from a planned to a market economy. Institutions such as the "dual-track" system kept large state-owned enterprises partially on the plan and gave them incentives to generate extra income by selling what they could produce above the plan in China's nascent markets. Over time, as market economic practices became more successftil, the "plan" part of an enterprise's portfolio was reduced and the "market" part grew. Enterprises were thus given the stability of a continued but gradually diminishing planned economy system as well as the time to learn to set prices, compete for contracts, and produce efficiently. Second, the government has gradually promoted ownership-like control down the government administrative hierarchy to the localities.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Quiet Revolution: The Emergence of Capitalism. (China)
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.