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How Reform Worked in China

Yingyi Qian

How did China move from a planned economy to one of the largest in the world, and which reforms made that possible?

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At a glance

Author
Yingyi Qian

Why read it

  • You will understand the finding that strong fiscal incentives for local governments, not decentralization alone, are linked to better local performance
  • You will see how China's dual track approach let markets grow beside the old plan, so reform could proceed without creating losers
  • You will learn why firms owned by local governments could thrive in China when private property rights were still insecure

Who it is for

  • An economics student studying transitions from central planning
  • An investor trying to understand China's growth record
  • A policy adviser comparing reform paths in Russia and China

Contents

  1. Introduction: A New Perspective on Reform
  2. 1. The Success of China’s Economic Reform
  3. 2. Two Perspectives on China’s Economic Reform
  4. 3. The Third Perspective on China’s Economic Reform
  5. 4. Chapters in the Book
  6. 5. Concluding Remarks
  7. 1 How Reform Worked in China
  8. 1. A Puzzling Reform That Worked
  9. 2. Perspectives on Institutions
  10. 3. Creating the Market: A Dual-Track Approach to Liberalization
  11. 4. Developing Firms: Non-Conventional Ownership Form of Township-Village Enterprises
  12. 5. Reforming the Government: Productive Fiscal Federalism
  13. 6. Constraining the Government without Reducing Its Revenue
  14. 7. From Transitional Institutions to Best-Practice Institutions
  15. 8. An Example of Failure: Reform of Large State-Owned Enterprises
  16. 9. Concluding Remarks
  17. I Dual-Track Market Liberalization
  18. 2 Reform without Losers: An Interpretation of China’s Dual-Track Approach to Transition
  19. 1. Introduction
  20. 2. The Theoretical Analysis
  21. 3. Discussions on the Conditions for Pareto Improvement and Efficiency
  22. 4. The Chinese Experience with Dual-Track Liberalization
  23. 5. Concluding Remarks
  24. 3 Pareto-Improving Economic Reforms through Dual-Track Liberalization
  25. 1. Introduction
  26. 2. The Model
  27. 3. Efficiency of a Dual-Track Equilibrium
  28. 4. The Pareto-Superiority of a Dual-Track Equilibrium
  29. 5. State Enforcement of the Original Plan
  30. II Unconventional Ownership of Firms
  31. 4 Institutional Environment, Community Government, and Corporate Governance: Understanding China’s Township-Village Enterprises
  32. 1. Introduction
  33. 2. Empirical Evidence on the Governance of TVEs and the Role of Community Government
  34. 3. A Theoretical Framework
  35. 4. Security of Property Rights
  36. 5. Financing of Investment
  37. 6. Why Do TVEs Have Harder Budget Constraints Than SOEs?
  38. 7. Conclusions
  39. Appendix: The Evolution of TVEs
  40. 5 Insecure Property Rights and Government Ownership of Firms
  41. 1. Introduction
  42. 2. A Simple Model
  43. 3. Local Government Ownership as an Organizational Response to State Predation
  44. 4. Revenue Redistribution across Localities
  45. 5. Interpreting China’s Experience
  46. 6. Conclusions
  47. Appendix: Proofs of Propositions
  48. 6 Public vs. Private Ownership of Firms: Evidence from Rural China
  49. 1. Introduction
  50. 2. TVEs and China’s Economic Reforms
  51. 3. Theories of TVEs
  52. 4. Estimation Method
  53. 5. Construction of Variables
  54. 6. Estimation Results: Provincial Variation of Ownership
  55. 7. Estimation Results: Ownership and the Community Government’s Objectives
  56. 8. Concluding Remarks
  57. Appendix: Definitions and Data Sources of Variables
  58. III Government and Reform: Federalism, Chinese Style
  59. 7 Federalism, Chinese Style: The Political Basis for Economic Success in China
  60. 1. Introduction

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